Consumers may form groups to get cheaper power

February 02, 1998|By KERRY LYNN FRALEY

Consumers may form groups to get cheaper power

LINTHICUM, Md. - A potential employer is offering you two weeks vacation and a pretty good health plan, including dental and vision benefits.

But what kind of deal can they get you on kilowatt hours?

In the not-too-distant future, employers could be offering their employees group rates on electricity the same way they now offer group medical coverage, speakers at a statewide conference on energy deregulation speculated on Monday.

The free conference, held at the Marriott Hotel/Baltimore Washington International Airport, looked at the status of deregulation in Maryland and across the country and highlighted the benefits of pooling electric needs in a competitive market.


Speakers included government officials, business advocates for deregulation in Maryland, and representatives of utilities operating in deregulated states.

The coming free market for electricity generation will mean lower electric bills for all customers from heavy industrial users down to tiny households, the speakers agreed.

How much they'll save will depend to some degree on how a state handles various deregulation issues, including the percentage of transition costs a utility can pass on to customers, said Sidney Pelston, vice president of New Energy Ventures.

But customers of all sizes could make the most of the right to choose who to buy electricity from if they're allowed to join forces to negotiate with suppliers, said Pelston, whose company negotiates for electric power on behalf of customer groups.

Companies like his are operating in states like California, Illinois and Pennsylvania, where deregulation laws already have been passed, said Frederick H. Hoover Jr., director of the Maryland Energy Administration.

Hagerstown-based Allegheny Power formed an affiliate company, Allegheny Energy Solutions, to offer a group purchase option in Pennsylvania, which has a pilot choice program, said James D. Latimer, Allegheny Power's vice president of public affairs.

One concern in the deregulation debate has been that industrial and large commercial customers will gobble up the savings while residential and small businesses won't do as well, Hoover said.

The formation of buying groups is an important part of the deregulation process, because it allows the smaller-use customers to pool their needs and save by bulk purchasing, he said.

The voluntary alliances either will be based on some common interest or will be geographic in nature, like a municipality, Hoover said.

While customers still won't see the kind of discount rates industrial users get, and the company acting as middleman would take some of the savings, a residential or small business customer would get a better price than they could on their own, he said.

U.S. Rep. Dan Schaefer, R-Colo., said he envisions a day when homeowners' associations can band together and deal with a producer for a lower rate. The same could be true of churches or school boards.

Schaefer, chairman of the Commerce Subcommittee on Energy and Power, said he can visualize chambers of commerce providing group electricity rates as a benefit for members.

Thomas Saquella, president of the Maryland Retailers Association, said he sees a lot of potential in group affiliation as a marketing incentive.

For example, companies could offer group rates for electricity as an employee benefit, like insurance, Saquella said.

Banks could offer them to their bank card members, he said.

Maryland is moving toward customer choice, but many complicated issues remain to be addressed by the Maryland General Assembly before it can become a reality, said Bryan G. Moorhouse, general counsel for the Maryland Public Service Commission.

There will be time to address those issues now that the start date for implementing electric deregulation in the state has been pushed back from April 1999 to July 2000, he said.

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