Bangor panel deliberates utility contract

"The city has done its homework adequately," Assistant City Manager Robert Farrar told the finance committee Monday, recommending that the city continue using MPO for its energy needs.

"We'll continue to look at other options for the city, but right now it makes sense to stay with MPO," he said.

Those recommendations, as well as cost predictions, will be brought to one of the City Council's budget workshops, Farrar said.

In March 2000, when the electric industry in Maine was being overhauled, the distribution and supply elements for most of the state's electricity users were separated. The result meant that companies such as Bangor Hydro Electric Co. can deliver electricity to clients but they can't generate the energy. Energy supply comes instead from licensed competitive electricity suppliers.

For cities like Bangor or the nearly 700 other governmental and nonprofit organizations that are members of MPO, two electric supply options are available.

The first - known as the standard offer or default service - is available without contract and is negotiated through a bid process conducted by the Maine Public Utilities Commission.

The second option, competitive supply, requires a contract, but city leaders think the potential savings are worth pursuing alternatives to the standard offer.

"The one thing that piqued our interest with this, is we can go out and buy direct," City Manager Edward Barrett said. "We can look at the market value [of energy] basically in real time."

However, because the energy market has become much more volatile in recent years, Barrett said, the length of time the city has to negotiate rates has shrunk.

The city manager said as the city develops a better handle on energy usage through MPO, even more money could be saved by utilizing more electricity during off-peak hours and less during peak hours.

The city averages between 17 million and 18 million kilowatt- hours of electricity annually, generating costs in excess of $2 million.