Empowered Municipality

York County gets electric contract through online auction

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The reverse auction started out slow, said Scott Cassel, York County director of facilities. As he looked at a computer screen in an East Market Street office, six electricity providers made offers.


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But as the 90 minutes or so allotted for the auction began to dwindle, the offers came more quickly, as the various providers tried to best their competitors.

That was Wednesday. On Thursday, Cassel signed a contract with First Energy Solutions of Akron, Ohio, to provide electricity for the county at a cost of $2.2 million. That electricity will power everything from county office buildings to 911 towers to pavilions in the county parks.

That's an increase of about 6 percent, or $121,000, over what the county is paying this year. But it's the lowest increase the county's managed to get in recent years, Cassel said.
 
Better yet, the rate is locked in for 2011 and 2012. As a bonus, First Energy was able to guarantee that 10 percent of all the power for York County will come from renewable sources.

Overall, Cassel was ready to declare the county's first online, real-time reverse auction a success.

"It certainly is a great platform to get multiple vendors involved," Cassel said. "Having everything right there in front of you basically forces those vendors to sharpen their pencils and come up with the best prices."

The reason behind the reverse auction is the ongoing expiration of rate caps for power suppliers in Pennsylvania. The rate caps existed to allow

power companies that service given areas to recoup the money they put into building infrastructure. No competitors were able to offer lower bids to keep them from recouping that money.

But at the beginning of this year, the rate caps started to expire. Come 2011, additional companies, including Met-Ed, will lose the rate caps as well. Without the caps, electricity providers can compete directly.

Jeff Sherman is director of consulting for APPI Energy, the broker that represented York County in the reverse auction. He said the situation is generating a lot of business for his firm. They've conducted similar auctions for Carbon County and New York Wire Co. in Mount Wolf, and they are now talking to city officials in York about the concept.

When the rates first came off for PPL Corp. at the beginning of 2010, rates for some users went up 30 percent to 50 percent, causing widespread fears that such cost increases would occur throughout the state. But Sherman said electricity prices just turned out to be particularly high this year.

Those early concerns about 50 percent price jumps made the results of Wednesday's reverse auction even more gratifying, Cassel said.

"Hearing '6 percent' is a wonderful thing, compared to that," he said.

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