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City receives bids for power contract

August 02, 2005|by GREGORY T. SIMMONS

HAGERSTOWN

gregs@herald-mail.com

Hagerstown city officials received nine responses by Friday from companies seeking to be the city's next supplier of wholesale electric power beginning in July 2006.

The contract would last at least five years, according to the city's bid request, and could be worth as much as $80 million to $90 million over five years, City Light Department Manager Mike Spiker recently said.

The details of the bids now under consideration, including the proposed price of electricity and which companies submitted bids, will remain under wraps for now, Spiker said Monday.

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Friday was the deadline for companies to submit proposals for a new wholesale power contract, which is the main driving force of the cost of electricity for City Light customers.

The current wholesale power price is $44.43 per megawatt-hour, which is the price paid by City Light to Dominion Energy Marketing to bring electricity to the city. According to city budget documents, City Light planned on spending about $16.2 million this year on wholesale power.

For the average residential customer, whose electric utility bill is about $45 per month, the wholesale power costs represents about $30 of the bill, or about two-thirds, in pass-through costs.

The three-year contract with Dominion Energy Marketing will expire June 30, 2006.

Spiker said last month that there are concerns that the wholesale power cost could drive the average residential bill up another $15 per month. He said rising natural gas costs would be a major factor in the cost projection.

Spiker said the next step will be for the City of Hagerstown and the three other utility organizations working with the city - the towns of Williamsport, Thurmont, Md., and Front Royal, Va. - to develop a "short list" of bidders, likely by the end of August.

Spiker said it's not clear how many companies would be on the short list, but it would be determined by the price and negotiable terms of the contract.

Spiker said earlier that the contract could be completed in October.

Meanwhile, another increase in cost to City Light customers is being processed by the Maryland Public Service Commission.

The city has requested that the Public Service Commission allow the city to increase its base rate to increase revenues by 5.32 percent, or $865,496.

The Public Service Commission last week set a review schedule that will begin later this month, but a public hearing on the matter had yet to be determined, according to documents posted on the commission's Web site.

The city's base rate case is Public Service Commission Case No. 9039.

City Light has about 17,000 active customer accounts, about 15,000 of which are for residential customers.

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