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Program helps businesses save on electric bills

April 14, 2005|by DANIEL J. SERNOVITZ

daniels@herald-mail.com

WASHINGTON COUNTY - As many as 14 businesses in Allegheny Power's service area will save between 4 and 15 percent on their electricity rates this year through an experimental buying cooperative arranged by the Hagers- town-Washington County Chamber of Commerce, President Brien Poffenberger said.

It was uncertain Wednesday which businesses opted into the three-year contract with Select Energy. The contract offered rates that would save small businesses about 4 percent, medium-sized businesses such as supermarkets 8 percent and large businesses such as manufacturers and hospitals 15 percent.

Savings could climb to 16 percent for small businesses, 20 percent for medium-sized ones and 27 percent for larger businesses by the third year of the contract, based on market estimates for increases with Allegheny's rates.

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On Jan. 1, businesses in Allegheny's service area were permitted to shop for their own electricity suppliers as part of the state's Electric Customer Choice and Competition Act, adopted in 1999. The businesses must still pay Allegheny for distributing the power through their lines.

The chamber began researching the issue last fall and hired the Columbia, Md.-based consulting firm of CQI Associates to represent its 14 test members. Poffenberger said the chamber initiated the pilot program because many small businesses feared they would lose out in the shift to market-based rates.

"We needed to do something for our businesses," Poffenberger said. "On Dec. 31, you only had one bill for one service. On Jan. 1, what you suddenly have (if you're a small business), suddenly your rates are going to go up because of the greater volatility."

Poffenberger said the test group was kept small for the first round and represented a mix of sectors from retail and manufacturing to for-profit and nonprofit organizations. He declined to release company names without permission and had not received any by Wednesday afternoon.

Richard Anderson, managing partner with CQI, said he believed the process was positive though only three suppliers competed for Allegheny's business customers. He said that was not unexpected in the first year of a market-based system.

Poffenberger said the chamber will determine, based on this round's results and the number of businesses that took part, whether to create a larger cooperative in the spring.

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