Constellation NewEnergy, a subsidiary of Baltimore-based Constellation Energy,
has landed one of the biggest electricity contracts available in Rhode Island
– to supply 37 members of the Rhode Island League of Cities and Towns through
2008.
The deal is worth about $43 million over four and a half years, according to Daniel L. Beardsley Jr., executive director of the league. Constellation NewEnergy will supply roughly 850 million kilowatt hours to 37 communities for municipal buildings, streetlights, police and fire departments – everything but schools, Beardsley said.
The cities and towns are part of a consortium called the Rhode Island Energy Aggregation Program. The Rhode Island Association of School Committees has a separate energy program to cover schools’ energy needs.
The REAP program was established in 1999 to take advantage of deregulation that allowed companies other than Narragansett Electric to compete in the Rhode Island market. Until May, 35 cities and towns were part of a deal with Select Energy, of Berlin, Conn., Beardsley said. The Constellation NewEnergy contract began in June, with two more communities joining the program, Providence and Central Falls.
Beardsley wouldn’t disclose the rate the REAP members would pay, but he said they would save roughly 26.7 percent off the last-resort rate, which is currently 7.48 cents per kilowatt hour. That would put it at about 5.48 cents, more than a 1-cent savings off Narragansett Electric’s current standard rate, 6.68 cents.
By law, Beardsley said, once a customer has left Narragansett Electric, it cannot return to the utility company – and conversely, Narragansett Electric can’t bid for its business. The rule is meant to protect the utility from a sudden jump in demand, Beardsley said. To serve the REAP customers, he added, Narragansett Electric would have to provide an extra 130 million kilowatt hours of electricity per year.
Constellation NewEnergy was awarded the contract through a competitive bidding process, but there were only two bidders, Beardsley said: the Maryland-based company, and the original supplier, Select Energy.
“We extended a highly competitive package of supply, service and savings to the Rhode Island League of Cities and Towns,” said Clem Palevich, president of Constellation NewEnergy, in a statement. “The competitive market is robust in Rhode Island and league members will no doubt benefit from a long-term contract that provides financial stability and certainty.”
