Eye on Energy Cuts
This article on a new nergy-buying consortium appeared in the Berkshire Eagle Tribune. Local businesses are banding together to purchase power at lower prices. Small businesses have been increasingly innovative at figuring out ways to compete in the wake of higher energy prices.
Eye on Energy Cuts
By Ellen G. Lahr,
Berkshire Eagle Staff
Wednesday, December 05
PITTSFIELD — Owners of 24 small and mid-size businesses in Central Berkshire are each committing $300 to join the Berkshire Chamber of Commerce’s new energy consortium, created to seek competitive prices for electric power.
Chamber President Michael Supranowicz said yesterday that two other larger power users may sign on this week, but that, even without them, the new buying group uses enough collective kilowatts to attract competitive bids for power.
In January, the energy co-op, assisted by a Maryland-based energy consulting group, will seek three-year contracts for electricity from power suppliers.
“It’s been like having another rent payment,” said George Garivaltis, owner of West Street Wine & Spirits, speaking of his rising electric costs to run his beverage coolers.
He was willing to gamble that his $300 investment would pay for itself; he said he has been paying $2,000 per month for electricity at his shop, which is heated with electricity.
“If I save a penny per kilowatt hour, it’s worthwhile for me to do it,” he said. “It seems like a no-brainer.”
The chamber led four information sessions this fall around the county to alert business owners who are struggling with power costs, which vary depending on a business’ service needs. Particularly for customers of Western Massachusetts Electric Co., power costs have spiked dramatically this year, but many business customers are too small to seek competitive bids for power and are at the whim of electric companies.
The effect of rising electricity costs was felt throughout the Berkshires this year when three companies announced the closing of mills in South County. All three said they struggled with high power costs before deciding to shut down their production.
In banding together, a group of businesses can command competition, and a long-term contract brings financial predictability, Supranowicz said.
“We’re selling this program on budget stability,” he said yesterday. “You’ll know your costs, and you can budget this.”
Richard Anderson, president of CQI Associates of Columbia, Md., the firm working with the Berkshire Chamber, said his consulting company has worked with 44 chambers of commerce to establish energy-buying cooperatives.
“Purchasing cooperatives are the fastest-growing area for support of natural gas and electric power procurement,” he said.
The first cooperative established by his company began in 2003 in Ocean City, Md., and is still in existence. Typically, he said, after the first co-op gets off the ground in an area, others follow.
“Once the success of that co-op is made public, there’s an outcry for a second group, equal to or larger than the first,” he said.
One chamber, he said, has spun off seven cooperative buying groups.
For Randy Kinnas, executive director of the Pittsfield YMCA, cost is one factor, and predictability is another. The YMCA, which runs a 98-year-old building with family recreation, child care programs and living quarters, opted in to help with planning and budgeting, he said.
“We have to stick to a strict budget, and knowing we can pay a particular amount makes sense for us,” Kinnas said. “It helps us in the issue of budgeting and planning.”
The Y has total power costs of about $200,000 per year, with about $75,000 to $85,000 earmarked for electricity.
“It fluctuates so much, we don’t have a handle on it,” he said.
A far bigger user in the consortium is Interprint Inc., a designer and printer of decorative paper used in the laminate surfaces of flooring, countertops, fixtures and other applications.
Interprint is big enough to buy power through competitive bidding, and does so; the company has one year left in a three-year contract with a supplier.
Once that contract ends, in 2009, Interprint will buy electricity through the local consortium and has already paid to join, said company spokesman Peter Stasiowski.
“This is an initiative the chamber has worked hard on, and a company like Interprint appreciates that work,” Stasiowski said. “It shows leadership on the chamber’s part, and we can buy into that.”
Electric power costs in the Northeast are the third highest in the nation, as the region has no coal-fired power plants and no immediate source of natural gas, Supranowicz said. Those issues, along with deregulation of the power industry and increased demand for power have dramatically affected power users, he said
“The next step is to get the applications and get request for proposals to the suppliers, and we’ll seek to get prices by mid-January,” Anderson said. “We’re looking for a long-term contract that provides budget stability in what can be a very vulnerable market.”
