Nonprofits save on energy with rate program Entities using Maine Power Options

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AUGUSTA – Over the last three years, some 360 nonprofit entities – hospitals, school districts, municipal governments, colleges and museums – have saved $7 million on electricity, thanks to Maine Power Options.

With electricity rates likely to climb steeply in the coming months, several eligible organizations are taking a closer look at what Maine Power Options offers.

The organization is an energy-buying consortium run by the Maine Municipal Bond Bank and the Maine Health and Higher Educational Facilities Authority. Maine Power Options was created as part of a change in laws regulating electricity distribution in the late 1990s.

Central Maine Power, Bangor Hydro and other utilities operating in Maine no longer generate electricity, but rather distribute it and bill users. Now, the Public Utilities Commission negotiates rates on behalf of residential users, but medium and larger users are able to negotiate contracts directly with electricity suppliers.

“It opened up the market,” said Bob Lenna, executive director of the bond bank and health and higher education group.

If a medium or large user is an organization eligible to borrow from the Maine Municipal Bond Bank or Maine Health and Higher Educational Facilities Authority, it can band together with others to have Maine Power Options negotiate an even more favorable rate, he said.

In addition to the eligible borrowers, nonprofit cultural organizations like museums and recreational entities are eligible to use Maine Power Options.

Lenna said the program offers the benefits of buying in bulk.

“The larger the number of kilowatts that you put together for buying electricity in the open market, the better your prices are. Instead of getting a price for 100 kilowatts, they’re getting a price for 100 million kilowatts,” he said.

The seller – Constellation NewEnergy, a supplier that bills itself as the largest competitive electricity provider in North America – is eager to offer discounts because it can reduce its marketing costs and lock in sales through contracts.

Mary Lou Gallup, Maine Power Options’ program officer, said eligible users are offered contracts that range in duration from six months to four years.

Maine Power Options makes offers to its members at least four times a year, she said. Prices quoted in the offers are held for three or four days by the supplier while the deal is contemplated, even though rates change more quickly than that.

“The electricity market is so volatile and changes minute by minute,” Gallup said.

But buying electricity as part of a group doesn’t guarantee savings, she cautioned.

Gallup said after the Sept. 11, 2001, terrorist attacks and the subsequent slowing economy, demand for electricity dropped and so did prices. Some users, locked in by contracts, ended up paying more than those purchasing power through the open market.

But in the next round of contracts, savings were again realized, Gallup said, including $5 million in 2004 alone.

“It always is a bit of a gamble. They have to be knowledgeable about the market and what it’s doing,” she said.

What the market is doing now, Gallup said, is hard to say. But with Maine’s electric generation relying heavily on natural gas, a fuel escalating in cost faster than others, higher prices seem likely.

Another advantage public institutions get with Maine Power Options is the ability to predict costs, making budgeting easier and more reliable.

No electricity suppliers have bid on providing power to Aroostook County users eligible for Maine Power Options, Lenna said, so the service is not available there.

For information, visit www.mainepoweroptions.org.

Entities using Maine Power Options

. Cities: Bangor, Brewer, Ellsworth and Old Town

. Towns: Bar Harbor, Bucksport, Castine, Dexter, Glenburn, Machias, Millinocket and Orono

. Waldo County

. School departments: Ellsworth, Medway

. SADs: 3, 22, 28, 34, 48 and 56

. Colleges and universities: Unity College and all University of Maine campuses except Fort Kent and Presque Isle

. Water districts: Bangor, Lincoln, and Old Town

. Hospitals: Maine Coast Memorial Hospital, Penobscot Valley Hospital, Waldo County General Hospital

. Others: Corinna Sewer District, Community Health & Counseling Services, Maine Maritime Academy, Group Home Foundation, Jackson Laboratory, Penobscot Marine Museum.