Interview: Program Officer of Maine PowerOptions

It was purely by accident that I arrived at the website of Maine PowerOptions when researching about a similar topic for the Blog. However, the more I read about the organization, the more interested I grew with it until I simply had to get in touch with its Program Officer, Mr. Jonathan Youde. Our discussion covered a whole range of topics; from the organization's relationship with its sponsors, suppliers and participants to the services and savings the aggregation model provides. I came away from our discussion excited about their efforts but more importantly convinced that the aggregation model Maine PowerOptions uses could be a model/service worth replicating across the country.

To learn more about Maine PowerOptions visit them at: http://www.mainepoweroptions.org

Question 1: What is Maine PowerOptions?

Maine PowerOptions is a program jointly funded and operated by the Maine Municipal Bond Bank (MMBB) and by the Maine Health and Higher Educational Facilities Authority (MHHEFA), working since 1998 to promote aggregated purchasing opportunities for governmental units and 501c non-profits throughout the State of Maine, including Municipalities, Schools, Water & Sewer districts and other not-for profit organizations. Maine PowerOptions (MPO) keeps members informed of key developments, pricing opportunities, Maine Public Utilities Commission rulings, default pricing and market trends. MPO provides competitive electricity supply pricing throughout the year for members consideration. Often the organizations that come to Maine PowerOptions need to make decisions about their energy costs and/or need an understanding of the “whole” energy picture. We try to give them as much information as possible to empower them in making the right decisions as far as their energy needs are concerned. The one-time membership fee for joining is a scaled-fee dependent upon annual electricity consumption, for those using less than $25,000 of electricity the fee is waived.

Question 2: What is your relationship with The Maine Municipal Bond Bank?

We are co-sponsored by The Maine Municipal Bond Bank and by The Maine Health and Higher Education Authority. Their sponsorship allows Maine PowerOptions to provide valuable information to members and to operate our Electricity and Oil program at no cost to members.

Question 3: How many members participate in Maine PowerOptions and what are some of the underlying characteristics members need to possess to work with Maine PowerOptions?

Currently we have about 752 members of which 270 are currently contracted in our electricity program and 110 members have current Fuel Oil contracts, while others receive informational updates from us. As a member, they will receive information regarding Maine’s Energy markets. In terms of underlying characteristics, participants can work with us to contract their Medium or large electricity accounts in Central Maine Power or Bangor Hydro territories. Our members have generally good credit ratings and consistent load profiles, as an aggregation we present an attractive group for Suppliers.

Question 4: Could you briefly explain Maine Power Option's aggregation model and how fruitful has this model been in terms of price negotiation with suppliers and savings for participants?

Maine PowerOptions goal is to bring together all its members regardless of size to combine the group purchasing power and influence into one group. Using this model, we have been able to create successful competitive request for bids and the winning bidder is required to provide competitive pricing opportunities for all our members. Members can then choose individual options based upon price, contract term and timing of the offer. Market timing can play a major role in competitive price and each member can choose when they wish to participate, additionally the choice of contract term allows them to fix their electricity supply rate for one, two or three years. Our estimate is that since our inception the electricity aggregation program has saved participants approximately $15 million dollars when compared to the Standard Offer.

Question 5: Is electricity the only commodity that Maine PowerOptions focuses on?

Our current primary focus is on Electricity and Fuel Oils. We operate a competitive bid process for the procurement of Propane, #2 Heating Oil, Diesel and Gasoline, members submit their fuel needs and MPO provides registered suppliers with that information. Bids are submitted and returned to members who can then choose to accept or reject by location. Fuel Oils procurement has fewer regulations and is more straightforward. Options offered to members are either fixed or index-linked price and rarely exceed one year. There are very few if any Fuel Suppliers who serve the entire State, this fact prevents MPO from using the same group-purchasing model as for Electricity. The competitive bid process gives all Suppliers large or small equal opportunity to compete on any location.

Question 6: How much electricity and fuel oil does Maine PowerOptions work to supply to its members at any given time and does Maine PowerOptions have a commodity trading division to do this?

Each offer or bid is driven by member participation, the greater the participation the greater the contracted kilowatts or gallons. The timing of each electricity offer is dependent upon market forces indicating when to provide the offer. The timing for the Fuel Oil bid is driven by participant response and by market timing. MPO does not own or trade in the Oil or Electricity markets.

Question 7: How strong is the demand for “green” electricity and does it make sense to be buying “green” power today when energy prices have fallen so dramatically?

Demand is strong but pricing tends to influence the ‘bottom-line’, the result is that those members who are requesting renewable or green options have been reduced in the last two years. There are a number of incentives and educational promotion by various groups, which will ultimately improve demand for Renewable Supply.

Question 8: What is Maine PowerOptions' relationship with Renewable Energy Certificates (RECs)?

At the request of members, we will provide REC products to fit their usage and load profile. A member can request any renewable or Green E certified product and we will add it in the form of a REC to their Supply package. REC’s allow members to purchase green energy in blocks based upon their demand, these purchases reduce their carbon footprint and reduce our dependence upon fossil fuels.