HomeMy WebLinkAbout2000-03-15 00-137 ORDERItem No 00-137
Date: 3-15-00
Item/Subject: ORDER, Providing Authority to Commit the City of Bangor In Contract with
Maine Power Options for the Supply of Electricity Through Their Group Aggregation Program
Responsible Departman : Adminiatration
Commentary: This Order pmvldes authority m the Assistant City Manager to commit the City of Bangor
to contract with Maine power Options for municipal electricity needs. The need for this action follows a
decision by the Cumberland York Aggregation Coalition to join with Maine power Options, a statewide
aggregation program consisting of towns, cities, school departments, water and sewer districts, colleges,
hospitals and other non-profit entities. Maine Power Options is currently evaluatir expressions of
interest from power suppliers and has requested that each participating entity designate a representative
who an commit to the program on very short notice once the power supply ate is made public. At this
time, the other viable altemathe is to simply accept the "standard offer' rate, which Is currently in place.
It is anticipated that the MPO rate will be lower than the standard offer rate, thus providing some savings
to those participating In the program. ny. 1, , �
(t/ 41IW4R 07
Department Head
Managers Comments: This Issue was renewed and discussed at the Municipal Operations Committee
meeting on March T". The Committee recommends that the Assistant CM Manager be authorized to
commit to the MPO program, should it be determined to be in the best Inter oftheCity of ngor.
City Manager
Associated Information: Order, Memorandum to Municipal Operations Committee, Memorandum from
CMAC to Membership
Finance Director
City Solkiter
x Passage
_First Reading Page_M_
Referral
Assimed to Comcgor 6aldaccf nnrm 15. 2000
n CITY OF BANGOR
(MILE.) Order. Privirldona Wh rite toCommit the City ofBan to Contract
with Maim PEWSK Qptigol fgr the Supply f Electo 'ty Thirguoh Their
GrompAgareadal ProMirant
ORDERED,
WHEREAS, w Marts 1,2M, Me supply of Mentally has Immune deregulated, providing
WHEREAS the Unwhame for a decision to partc¢aaa Or not will W eamptonally shod and Me
MPO has requested be each paNtlooting entity desgnate an trdivkhml wiM the
auMorityto make a banding mmmittral
NOWT THEREFORE, BE IT ORDERED By THE MNSOR CI COUNCPLTHAT: Me Ambient
Ory Manger is hansW desigmtad as the repreaenta[Ne from Me City a Bangor who has authority
mmmRte an eleNk eneq/ mnha0 on whaff aft City; and
BE 1T PURTHER ORDERED,TNAT: in he shall: mmut with tlR
City manger and City Solicitor Helm any analysis which may he provided by MPO and/or CYAC,
iMushng a mmpammn of the proposed rate with the milled doodah offer rate, which is currently
In ple s and evaluate arty other WMfactors as may he thammid appmpdatt m amve at Me most
afteageo:a dmoision for the City Or Bangor.
users of electricity with the choke to saiett Meir power supplier; and
WHEREAS,
Me Ory of Bangor dgiresto purchase electriatyfor its avunidpal purposes at Me
bunt possble men; and
WHEREAS,
Maitre Fawr Op[gm(MM) a enalewale aggregalhor of elem"fm towns, Cfts,
ideal depar m ins, water and sewer dlstrlcts, hmpasH, mMges, universMes and
other mmpmfit entitles hes Invited has City of Bangor (as a member of the
CdhdwdaM.Ya AlBrageicn CioaiNon) M join Ma aggmgaoon program; and
WHERFA$
Me Nmisla:dNak Aggregation Coalition has recommended to las manbers that
joining Maine Options b Me most advantageous mum of action at this have
with nag elite purchasing pourer at Me least possible cart; and
WHEREAS
Maine Pamr Optons he presently levbwhg e.,p:essians Of interest fmun potential
power suppliers and will need a mneniment from Mone dialing M parhdpate,
holudi,g Me City Of Bangor; ate
WHEREAS the Unwhame for a decision to partc¢aaa Or not will W eamptonally shod and Me
MPO has requested be each paNtlooting entity desgnate an trdivkhml wiM the
auMorityto make a banding mmmittral
NOWT THEREFORE, BE IT ORDERED By THE MNSOR CI COUNCPLTHAT: Me Ambient
Ory Manger is hansW desigmtad as the repreaenta[Ne from Me City a Bangor who has authority
mmmRte an eleNk eneq/ mnha0 on whaff aft City; and
BE 1T PURTHER ORDERED,TNAT: in he shall: mmut with tlR
City manger and City Solicitor Helm any analysis which may he provided by MPO and/or CYAC,
iMushng a mmpammn of the proposed rate with the milled doodah offer rate, which is currently
In ple s and evaluate arty other WMfactors as may he thammid appmpdatt m amve at Me most
afteageo:a dmoision for the City Or Bangor.
IP CITY COMIL
March 15, 2000
Motion for Passage
Made 6 seconded
00-132
ORDER
fpr providing Authority to Commit the
City of Saeger to Contract with Safe
Power Options for the Supply of ffiectri-
city through Their Croup Aggregation
Program (niond4A
p� � _,T' Cm1ntlRM
GaG. I
W-13)
To: Municipal Operations Committee
From: Robert W. Farrar, Assistant City Manager
Subject: Electricity Aggregation -Update
Date: March 2, 2000
As you are aware, electrical power deregulation for the State of Maine became
effective on March 1, 2000. Electric companies such as Bangor Hydro Electric
and Central Maine Power officially began operation as transmission and
distribution companies and ceased their imroNement with power generation
operations. Under this transformation, transmission and distribution companies
remain regulated by the Public Utilities Commission while power supply became
deregulated.
The intent of the deregulation legislation was to create competitive markets for
the supply of power. The PUC established a bidding process for "standard offero
power supply, i.e. those not choosing a power supplier, which was intended to
create a competitive situation for this group of power users. Additionally, it was
anticipated that power suppliers would begin to solicit business from residential
customers, businesses, industrial and commercial users on an Individual or
aggregated basis, as well. The premise was that competition would drive power
costs down.
As has been reported extensively In the media, the anticipated Interest to supply
Maine electrical power has not yet materialized. The PUC was not successful In
obtaining competitive bids for standard offer power. Accordingly, they had to
establish "artificial' mes In the interim and direct the transmission and
distribution companies to find and secure power for customers. (Even though
they were supposedly not to be Involved with pourer generation/supply).
This situation, in turn, has created problems for those groups attempting to
aggregate power needs, as there is no competitively established standard offer
rate to bid against. The underlying assumption was that once the standard offer
rate was set, power supply companies could bid on aggregated power needs,
potentially at lower rates depending upon the composition and load profile of the
aggregation group. It was believed that aggregated groups might even obtain
lower rates than the standard offer rate, which presumably would be lower than
pre -deregulation rates. To date, none of what was "Pected to happen has
materialized.
Moving to the City's situation, we have been participating with the Cumberland
York Aggregation Coalition (CMAC) for more than a year. The group Is comprised
of some 50 Maine towns, cities, schor districts, water/sewer districts who joined
together to purchase electricity. The group had anticipated requesting bids on
our 20 megawatts of power, but has not done so for two reasons: (1) the recent
turn of events made it unlikely that we would recelve any bids; and (2) our
power needs (20 megawatts annually) were considered on the low end of what
suppliers might be interested In bidding for.
Given this situation, the CMAC has decided to join with another Maine
aggregation effort, Maine Power Options (MPO). This group has more than 200
participants (towns, cities, universities, colleges, hospitals, and other non -profits)
with annual power needs of approximately en megawatts. The combined power
needs of the two groups Is approximately 100 megawatts, placing the group in a
much better position to attract Interest from power suppliers. In fact, Maim
power Options has already received and is evaluating proposals from suppliers of
power.
Over the next several weeks, CYAC members will have an opportunity to join
MPO. Once the electric rates which they are evaluating are disclosed,
participants will have a choice to either accept that rate or continue Mh the
standard offer rate. Given the current market situation, the general expectation
Is that an initial power supply contract would probably only be for a short
duration —ane to two years. In the meantime, we will continue with standard
offer power.
At this time, I see no reason not to join with the MPO group. I anticipate the
vast majority of other CYAC participants will join as well. With this information
as general background, we will plan to update the Committee on Tuesday and
answer any questions which you may have.
RWF/j
cc: City Manager
School Business Manager
purchasing Agent
f
G�114IL/ro�mhM Al G/r(/'/A,�irg,/K^Cf oc -,
�rteAw-srr AJsIrljr9�il,. l#r o py -'f�/ I
(CYAC) CUMBERLAND -YORK AGGREGATION COALITION bx1 iref,,�l*�1�,{µ�y
IN APPO /"
RECs
TO: CYAC Members LU 14
MAA o _.
FROM: Esther Clenotl, Cc -Chair, Cumberland County
Larry Littlefield, Co -Chair, York County GIT/AOUWdiliuff cli
RE: Joining Maine Power Options
DATE: March 2, 2000
Dear CYAC Member:
It was not possible for us to contact all of you who did not attend our
February 170 meeting in Scarborough before the March 1" deadline. We
assume you know that all of us as well as our residents automatically were
switched to Standard Offer on March 1° until we would contract with a vendor.
Present at our meeting on the 17� were Rich Silkman, our consultant, and
Steve Gauthier, who represents Maine Power Options program, an aggregation
program sponsored by Maine Health & Higher Education Facilities Authority (a
division of fine Maine Bond Bank).
Only 17 of our 55 members attended. They unanimously agreed on the
following:
1) Remain in Standard Offer in the immediate. Remember our bills will
be broken dawn into generation, transmission, and distribution.
2) We are advising our members to loin Maine Power Options. Once
MPO receives a rate that they have negotiated with a vendor, CYAC
will forward the offer and an analysis of the offer. It is necessary to
7 have one representative with the authority to make the commitment on
behalf of your group without further consultation.
3) Each member unit must consent individually to the MPO offer and
inform Steve Gauthier of that decision. CYAC is not signing a contract.
Our individual members will. A unit member that accepts the MPO
price will be obligated forthecontracttenn(1-2years).
4) Al a follow-up meeting, Steve agreed that CYAC will pay MPO $5,000
from its remaining funds, and every member unit that has paid its
meter fee to CYAC and has sent in the necessary meter information to
CYAC prior to this memo, will be able to join MPO without individually
00-137
paying an MPO fee. If a member unk has not done so and wishes to
join MPO, the member unit will be requested to pay the MPO fee
directly. MPO needs the number of meters and total load.
5) We will have 2-3 CVAC representatives on the MPO Board.
8) We do not need to obtain a license if we loin MPO individually and not
as a group.
7) CVAC will remain together as an entity even as individual members
may choose to join MPO.
8) If members have questions, they should contact:
Esther Clenotl tel: 871-8380 fax: 871-8292
Larry Littlefield tel: 4396819 fax: 439-5409