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City, 2 towns return power contracts to Allegheny

November 30, 2005|by ANDREW SCHOTZ

andrews@herald-mail.com

The City of Hagerstown is going back to Allegheny Energy Supply as its electricity supplier.

The Hagerstown City Council on Tuesday approved a new five-year, $130 million contract that will mean higher prices. How much higher, though, hasn't been determined.

Michael S. Spiker, manager of the Hagerstown Light Department, said the price of electricity delivered to the city went up 100 percent from 2004 to 2005. However, by negotiating a five-year, fixed-price contract, the city has kept the coming wholesale price increase to about 60 percent, he said.

The effect on customers' bills was not known yet Tuesday, but Spiker said it's projected at roughly 30 percent.

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

Hagerstown and three other municipalities - Williamsport, Thurmont, Md., and Front Royal, Va. - jointly buy their power to get better rates.

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Williamsport and Thurmont also approved new contracts with Allegheny Energy Supply on Tuesday, according to officials in those towns.

The Front Royal Town Council did not meet or vote Tuesday. Reached at home, Councilman Timothy W. Darr said the council hadn't made up its mind about the contract and hadn't set a time to discuss it. The council's next scheduled meeting is Dec. 12.

Spiker said the four municipalities were asked to act quickly because of the rapidly changing energy market. For the contract, the city received a price that was in effect from noon to 1 p.m.

Allegheny Energy Supply's proposed contract price only was available for 24 hours.

Spiker said he didn't think Front Royal's failure to vote on the contract would affect the overall deal.

Hagerstown, Williamsport and Thurmont each agreed to enter separate agreements with Allegheny Energy Supply. Front Royal, if it does the same, also would have its own contract, but likely at a different price, Spiker said.

Although the Hagerstown City Council unanimously approved the electricity contract on Tuesday, it will not be finalized until Allegheny Energy Supply officials sign the contract in the next few days, Spiker said.

Until then, the city will not release the contract or disclose its specific details, he said. The city also will not release the names of the other eight companies that bid.

Spiker only would say that Allegheny Energy Supply's bid was the lowest.

Allegheny began supplying Hagerstown's customers their electricity in 1972, when the city closed its electric power plant.

In 1998, around the time electricity was deregulated in Maryland, Hagerstown and the three other municipalities worked out a five-year contract with Allegheny.

Then, in 2003, Dominion submitted a lower bid and became the new supplier.

Hagerstown has about 17,500 electricity customers.

Spiker said the city will have a public education campaign to explain the new rates to customers once they are known.

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