The floodgates of customer choice for electric power users swungopen in New Jersey last week and among the first out the door was agroup, anchored by chemical manufacturers, of 64 large energy userstaking 360 MW and 843 federal government facilities, including theStatue of Liberty. (see report following)
Allegheny Power Supply, Greensburg, PA, the unregulatedaffiliate of Allegheny Energy, an electric utility holding company,claimed to have snagged the largest power contract so far in NewJersey’s unbundling market. The power supplier signed to deliver360 MW over the next 14 months to 64 industrial users aggregated bythe Chemical Industry Council (CIC) of New Jersey.
The important point to note, according to CIC’s ExecutiveDirector Hal Bozarth, “is that as New Jersey is beginning itscompetitive market, the largest industrial aggregation went outsidethe state for a supplier.” Bozarth said the chemical and industrialfacilities are mostly located in the territory of Public ServiceElectric & Gas. The Chemical Council pool also was open tomembers of the Coalition for Competitive Energy, which had pushedopening up the marketplace, and the National Paint & CoatingsAssociation.
While the New Jersey power market opened Nov. 1, the electricitywas scheduled to flow Nov. 14, which is the first day after ascheduled meter reading for the industrials. Bozarth credited Epex(Energy Purchasing Experts) Inc., a consulting group based in FortWashington, PA, with putting together the package and conductingthe bidding.
Bozarth said he expected to have more companies in theaggregation for the next round when the current contract runs out.Participants in the current contract with Allegheny Energy Supplyinclude facilities of General Motors and a Mobil refinery. Thoseparticipating in the pool are expected to save about 21% on theunregulated supply portion of their bill. “The size of thepurchasing aggregation is what helped us get a significantlyreduced price and significant savings.” Bozarth also said thecouncil was considering aggregating purchasing of natural gas. Thatmarket opens in January in New Jersey.
Sandy Barber, a principal with Epex, said the key to puttingtogether the transaction was limiting it to the membership of thethree organizations with similar-sized customers and use. “If youopen the floodgates to everybody it becomes unmanageable.” Barbersaid the chemical users pool group collectively spend about $135million/year on power with most of them using between 5 and 30MWh/year. “You can’t combine a pizza store with a refinery. If youdo the supplier has to adjust his bid to the lowest commondenominator.” Epex helped put together the RFP which went out to 15companies. Nine responded. The winner was based on price, Bozarthsaid.
Allegheny Energy Supply has served residential, industrial andcommercial customers in Pennsylvania since that market opened upthe first of this year. Their trading operation operates in marketsacross the eastern half of the country. A spokesman said they havebeen 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, MonongahelaPower, Potomac Edison, and West Penn Power, and West VirginiaPower, which now do business as Allegheny Power. The subsidiariesprovide electric service to more than 1.4 million customers inparts of Pennsylvania, Maryland and Virginia and West Virginia.
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