PORTLAND, Maine — A Portland firm that has made a business out of navigating the complex natural gas futures market and electricity supply landscape has cut some of its clients’ energy bills in half. Competitive Energy Services will now ply its trade for the city of Portland, where officials hope the company can help save tax dollars in what figures to be another tight budget cycle.
“Portland uses — across the city, airport and schools — 30 million kilowatt-hours of electricity a year,” said Matt Thayer, a business development official for Competitive Energy Services. “If you’re able to manage their costs down even a couple of cents across all those kilowatt-hours, it adds up. The city goes through 100,000 decatherms of natural gas a year. If we’re able to manage that down a couple of dollars a decatherm, that’s a substantial savings as well.”
Ian Houseal, Portland’s sustainability coordinator, said Competitive Energy Services as brokers can get the city access to exclusive energy markets, where suppliers often deal in lower rates.
Competitive Energy Services announced Friday the city picked it from a field of 17 competitors to manage Portland’s energy costs. Thayer said the locally based company will be paid per unit of energy the city consumes — around a penny per therm of natural gas and a tenth of a penny per kilowatt-hour of electricity, with rates to slide down as the units increase — in accordance to any contract the company facilitates.
He said the arrangement is open-ended, with either party capable of breaking it off.
“With this economy, people are really looking for new and creative ways to save money, and the old approach [to buying energy], which may have worked well for a while, may not be what they want to stick with,” Thayer said. “Anyone sole-sourcing their load, wasn’t doing the due diligence they could have to uncover additional savings.”
Houseal said the city is in the process of shifting 85 percent of its energy load from oil to natural gas, and Competitive Energy Services was chosen for the consulting work in part due to its expertise with the latter fuel source.
“Because you’re working with a municipal budget, you don’t want a shock,” Houseal told the Bangor Daily News. “You want a relatively easy change of the impact in fees, at least on the upward side. … You also want to be as aggressive on costs as possible. It’s really about cost management, trying to keep those costs low and not buying at the height of the market.”
Competitive Energy Services has built a reputation on keeping close watch of those markets and learning when to lock in prices for electricity and natural gas. While Central Maine Power Co. delivers energy to southern Maine users through its infrastructure of power lines and meters, customers can choose to shop around among electricity suppliers for better rates on the energy itself.
“We help [commercial and institutional customers] figure out when to buy their electricity and natural gas commodities, who to buy it from and what sources to take,” Thayer said. “Of course, I can’t guarantee this, but for some clients, we’ve cut their bills in half through more competitive procurement of their energy. There is a big difference between doing nothing — you’re then taking the default service — and managing it in the market. We introduce the full competitive bid process, so you’re working the entire supplier landscape.”
The company already works with Manchester, N.H., and St. John, New Brunswick, in similar consulting roles, as well as the University of Maine at Orono and Husson University, Thayer said. He said per-unit prices of both electricity and natural gas are heavily based on the trade of natural gas futures on the New York Mercantile Exchange.
“CES was and is a pioneer in representing customers of all sizes, but obviously primarily larger users which use more energy,” said Anthony Buxton, an attorney with the Portland-based Preti Flaherty with an expertise in energy regulation, and a minority stockholder in CES.
“CES and its competitors fill the gap between the customer and the highly complex world of generators, marketers, [New England Power Pool] and ISO-NewEngland,” Buxton, who said he has no management or working relationship with the company, wrote in an email to the Bangor Daily News. “It is very difficult for customers to do this without full-time, dedicated and expensive employees, and even then one or two employees simply cannot keep up. Energy is a futures market, just like pork bellies.”
In the futures market, buyers purchase month-based contracts locking in certain rates. Some of those buyers are speculators, with no interest in using the energy, just hoping to snatch up low-cost claims to the resources and resell them if or when the value goes up. But Competitive Energy Services clients are buying with an interest in actually using the energy and natural gas.
The company will also help the city analyze and develop contracts with winning bidders for its natural gas and electricity needs.
Houseal said the city has paid as much as 10 cents per kilowatt-hour — just for energy being supplied, not factoring in delivery and other costs subsequently added on — and is soon to pay five cents per kilowatt-hour for city facilities with energy supplier Integrys thanks to an initial deal arranged by CES.
Thayer said that, in the competitive marketplace, his company has seen prices around 4 cents per kilowatt-hour, dipping as low as 2 cents in late 2011.
“We just don’t have access to these markets,” Houseal said. “It would be pretty much impossible to do this without somebody brokering for us.”
Where is the Maine PUC which has the mission of providing Maine with economical rates for electricity and gas ? Are they being outdone by the “Wall Street Salesman ” approach ?
Good luck Portland. Canadian energy companies have turned Maine into a energy colony where they are able to dump their expensive energy on Mainers. Whether oil, natural gas or nuclear produced electricity Maine has been isolated and forced to pay outrageous, inflated energy bills from Canada.
This is great. I would much rather have a private group negotiating the best price –they will only make money if they succeed. Everyone wins. Portland taxpayers save money and a Maine based company makes money. The only people that lose money are the energy companies that rely on people to be ignorant.
Don’t get overly excited about this. CES is hardly objective. They do not shop the entire market for the best prices. They are a renewable energy consultant. Most of their clients are colleges and universities that want to appear to be green at all costs. CES is also a middleman for selling Renewable Energy Credits, those Enron-invented pieces of paper that do nothing but assuage the conscience of the gullible.
Portland has one of the oldest natural gas distribution systems in the U.S.
It also makes a lot of organic waste that could be processed in a bio-gas refinery to make really natural gas on a sustainable basis.
This kind of waste-to-energy conversion is now national policy in a number of European countries, i.e. Ireland and Denmark; and there is a fast growing industry of technical companies who will build a plant, get it operating, and sell it back on terms to a municipality.
Why Portland, with it’s shoddy record of financial mismanagement would go with a broker was expected….I wonder why MAINE POWER OPTIONS in Augusta was rejected. WWW. MAINEPOWEROPTIONS.ORG. or maybe they weren’t even considered? Portland’s leadership really has made some monumental financial blunders, maybe the PUC should step in and review this ‘deal’?
If only Mike Brennan knew a bit more about this major European trend that is now being replicated in Ontario and Vancouver and a few cities in the U.S.
We need more of this, Maine Businesses helping Maine people. Win Win.
CES is a proven industry leader, and a Maine company. It’s a real positive we have them working to provide lower cost energy for Mainers.
Where is the Maine PUC?
It is still more interested in the wind power agenda than it is in reducing Maine’s electric rates.
Gov Baldacci stacked the PUC with his people before leaving office and his appointee’s have had close connections with the wind power crowd. Perhaps you recall the PUC head who was compensated by First Wind while still working for the PUC. He now works for First Wind.