At 10:30 a.m. on Tuesday, October 1, the County Commissioners reconvened their weekly meeting to vote on the Purchasing Board’s final recommendation for the County government’s 2010-2011 electricity contract. The contract, which included service for over 150 other government entities through regional purchasing cooperatives, was awarded to Dominion Energy, Richmond, VA, for a total cost of approximately $21 million.
Although no details were disclosed regarding other bidders, Purchasing Director Barry Hitchcock indicated that Dominion was not the sole contractor that remained as of Tuesday. Rather, after the County released a second request for proposals this week, Dominion responded with a new low bid.
The $21 million price tag breaks down into individual service agreements and bills for the municipalities participating in the Lancaster County Cooperative Purchasing Board and Energy Consortium as well as the Berks County Cooperative Purchasing Board. Certain municipalities within Northampton County are also included in the deal.
The Lancaster County government’s portion accounts for about $3.2 million of the total figure. Commissioner Scott Martin estimated that, under this arrangement, 2010 electricity costs will fall $657,000 beneath the County’s projection for that budget year.
While the Commissioners, Hitchcock, and energy consultant David Butsack discussed the initiative, many voices echoed the same sentiment: This was an unprecedented situation. As Commissioner Craig Lehman put it, “My uncomfortableness is, while this seems very similar to issuing debt when bond rates are at historic lows…, this is brand new. And while we all may have a feel for the bond market, I know that I personally want to be cautious when it comes to predicting the electricity market.”
The search for a new energy provider was prompted by PP&L’s approaching 2010 deregulation and rate cap removal, which is expected to increase customers’ energy bills by as much as 40%. In addition to this, electricity prices are currently at a low compared to rates from the last 5-7 years, Butsack explained.
With electricity being such an intangible commodity, market prices are constantly and unpredictably fluctuating; therefore, a contract such as this must be secured within a brief window of time before it must be reevaluated. “It’s like chasing a train,” Hitchcock said to the Commissioners on Thursday. This restriction ultimately caused the County to postpone an earlier-scheduled Tuesday decision until the Thursday morning reconvention.
