A consortium composed of some of the state’s largest energy users could
save about 3 percent on their electricity bills through an agreement
reached with Select Energy of Connecticut, according to the group’s
executive director.
The Energy Council of R.I. chose Select Energy, which is a subsidiary of
Northeast Utilities, as the energy supplier for about 70 members of the
group, after a competitive bidding process, said TEC-RI’s Executive
Director Roger Buck. TEC-RI has almost 100 members, including schools,
large and small companies, and hospitals.
The contract, which had not been signed as of Dec. 22, is scheduled to
take effect in January and will last for 12 to 18 months. Buck said he
does not advocate signing long-term energy electricity contracts at this
early stage of electricity deregulation.
The request for bids drew about half-dozen responses, which was done in
conjunction with TEC-RI’s energy consultant, Reed Consulting Group of
Woburn, Mass. Since Rhode Island’s electricity market has only been open
to competition for barely one year, Buck said he didn’t expect any
bidders to be able to offer competitive prices to TEC-RI members yet.
But the bids were lower than expected, “because of the amazingly low
price of oil.” Thus, the energy supplier could commit to a lower energy
price for the duration of the contract, Buck explained. “I thought that
I would probably reject all bids.”
“I don’t see any real competition until the standard offer price goes to
3.8 cents in 2000,” he added.
Incumbent electricity companies are still obliged to offer a standard
offer rate to customers, who aren’t ready to shop around for electricity
suppliers, or who won’t be able to get significant savings by switching
companies. The rate is designed to gradually increase over the course of
several years, until all customers have selected new suppliers.
With electric suppliers offering a rate of about 3.2 cents a kilowatt
hour last year, no other energy marketers could beat that price. As a
result, residential electricity customers really had no choice but to
stick with their original utility company, while only some of the
largest energy consumers in the state could find savings by switching.
In April the Rhode Island Food Dealers Association became one of the
first energy aggregation groups to switch to a new electric supply
company. NorAm Energy Management and Vermont Public Supply Authority
took over responsibility for some members’ electric accounts at that
time.
Narragansett Electric Co.’s rate will rise to 3.5 cents a kwh in January
and both Blackstone Valley Electric Co. and Newport Electric Corp. have
proposed a similar increase.
Those participating in the TEC-RI pool require about 660,000 megawatt
hours of energy on an annual basis. About 25 of those participating will
cut the portion of their electric bill that charges them for electricity
generation by about 3 percent, according to a statement issued by TEC-
RI.
“When you’re dealing with annual electricity bills of $500,000 or more,
you’re talking significant savings on operating costs,” Buck said.
In other energy related news, Texas Instruments signed an agreement on
Dec. 15 to stop buying electricity from Massachusetts Electric Co. for
its Attleboro, Mass., manufacturing plant. Instead it will buy
electricity from TransCanada Power Marketing Ltd., of Westboro, Mass.,
according to an announcement issued by TI’s energy consulting firm
Alternate Power Source, Inc., of Westwood, Mass.
Texas Instruments expects to save “several hundred thousand dollars on
its electric bill” over the terms of the contract. Massachusetts also
opened its electricity market to competition earlier this year and
established a standard offer rate as well.
“This deal proves that competition is available today on a limited basis
for those that take the time to pursue lower cost electricity,” APS
President Stephen Tuleja said in a press release.
“Standard offer was created to spark competition slowly,” he added.
“Competition (in Massachusetts) should begin in 1999 for the largest
commercial and industrial users of electricity, in 2000 to 2001 for the
medium-sized commercial users and in, potentially, 2002 to 2003 for the
vast majority of small commercial and residential users.”
