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Statue of Liberty Gets Freedom to Choose Power Supplier

Statue of Liberty Gets Freedom to Choose Power Supplier

The floodgates of customer choice for electric power users swung open in New Jersey last week and among the first out the door was a group, anchored by chemical manufacturers, of 64 large energy users taking 360 MW and 843 federal government facilities, including the Statue of Liberty. (see report following)

Allegheny Power Supply, Greensburg, PA, the unregulated affiliate of Allegheny Energy, an electric utility holding company, claimed to have snagged the largest power contract so far in New Jersey's unbundling market. The power supplier signed to deliver 360 MW over the next 14 months to 64 industrial users aggregated by the Chemical Industry Council (CIC) of New Jersey.

The important point to note, according to CIC's Executive Director Hal Bozarth, "is that as New Jersey is beginning its competitive market, the largest industrial aggregation went outside the state for a supplier." Bozarth said the chemical and industrial facilities are mostly located in the territory of Public Service Electric & Gas. The Chemical Council pool also was open to members of the Coalition for Competitive Energy, which had pushed opening up the marketplace, and the National Paint & Coatings Association.

While the New Jersey power market opened Nov. 1, the electricity was scheduled to flow Nov. 14, which is the first day after a scheduled meter reading for the industrials. Bozarth credited Epex (Energy Purchasing Experts) Inc., a consulting group based in Fort Washington, PA, with putting together the package and conducting the bidding.

Bozarth said he expected to have more companies in the aggregation for the next round when the current contract runs out. Participants in the current contract with Allegheny Energy Supply include facilities of General Motors and a Mobil refinery. Those participating in the pool are expected to save about 21% on the unregulated supply portion of their bill. "The size of the purchasing aggregation is what helped us get a significantly reduced price and significant savings." Bozarth also said the council was considering aggregating purchasing of natural gas. That market opens in January in New Jersey.

Sandy Barber, a principal with Epex, said the key to putting together the transaction was limiting it to the membership of the three organizations with similar-sized customers and use. "If you open the floodgates to everybody it becomes unmanageable." Barber said the chemical users pool group collectively spend about $135 million/year on power with most of them using between 5 and 30 MWh/year. "You can't combine a pizza store with a refinery. If you do the supplier has to adjust his bid to the lowest common denominator." Epex helped put together the RFP which went out to 15 companies. Nine responded. The winner was based on price, Bozarth said.

Allegheny Energy Supply has served residential, industrial and commercial customers in Pennsylvania since that market opened up the first of this year. Their trading operation operates in markets across the eastern half of the country. A spokesman said they have been rated the third largest supplier in Pennsylvania's new market. The parent company, Allegheny Energy Inc., based in Hagerstown, MD, operates regulated electric utility subsidiaries, Monongahela Power, Potomac Edison, and West Penn Power, and West Virginia Power, which now do business as Allegheny Power. The subsidiaries provide electric service to more than 1.4 million customers in parts of Pennsylvania, Maryland and Virginia and West Virginia.

Ellen Beswick

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