When you’re buying power, size matters

By Jason Dailey, Director of Public Works

Two years ago, Cranberry was paying an average of 7.68¢ per kilowatt hour for electric power. Last year it was 8.14¢. And, thanks to Pennsylvania’s slow-motion electric deregulation combined with the limited purchasing options available at the time, that trend seemed likely to continue.

Fractions of a cent make a big difference to Cranberry because, as the operator of a power-hungry wastewater treatment plant, 35 signalized intersections, and a number of good-size buildings, the Township spends hundreds of thousands of dollars a year on electricity. So earlier this year, we took a different path into the power market.

One complicating issue for us had been that Cranberry didn’t have just one electric bill; we had 83 of them. Most of them were tiny – a flashing light at an intersection, for example – and we were charged premium rates for maintaining them. Only a few of accounts were big enough to attract attention from the power company. So we decided to pool our electric purchases, not only within Cranberry’s own operations, but also with various local businesses, the Seneca Valley School District, and some neighboring municipalities as well.

Rather than following the power company’s guidance of locking ourselves into fixed rates from anywhere from one to three years – a risky idea in today’s volatile energy market – we worked through a broker who made strategic purchases for everyone in the pool at intervals throughout the year. Only this time, we had the leverage of a much bigger buyer. The result is that our average rate went down this year – to 6.89¢ – representing a savings of more than $82,000 over 2008. And we look forward to even more savings in the year to come.