Power Markets Week

The Maryland Department of General Services selected four energy companies to supply 829 million kWh to state facilities along the Baltimore/Washington corridor.

The one-year power contracts will cost the state more than $78 million, or about 9.4 cents/kWh. The state held a reverse auction last week, but did not announce winners until May 6.

Under the reverse auction, tranches of power are offered every five to 10 minutes for three hours with multiple sellers bidding down the prices. Amerada Hess won the largest amount of power by offering to sell 263.2 million kWh for $24 million.

Pepco Energy Services agreed to sell 253.3 million kWh for $23.6 million.

ConEdison Solutions agreed to sell 241.1 million kWh for $23.6 million.

Washington Gas Energy Services agreed to sell 71.5 million kWh for $7.5 million.

The state originally planed to offer more than one billion kWh for sale, but the state housing authority, which purchases bulk commercial power, elected to stay with regular utility service, said Boyd Rutherford, secretary of the Department of General Services.

The state held its first reverse auction two years ago when price caps came off the price of power, Rutherford said.

This year the power sales were for one year rather than two, which will allow the state to include the additional one billion kWh of power used by the University of Maryland system in next year's sale. That will double the amount of power auctioned in the Baltimore-Washington region.

Auctions are held for three separate areas of the state. The next auction will be for the Allegheny Power portion of the state, probably in November. Existing contracts expire in that region December 31. That auction will be for approximately 120 million kWh.

"The state was able to avoid an additional $10 million in power costs with the auction," Rutherford said. The new contracts will go into effect in July.