Business
    Next Score View the next score

    Mass. energy broker looks to expand to R.I., Conn.

    That may give PowerOptions more clout in negotiations with utilities

    A major energy-buying consortium for nonprofits and government agencies in Massachusetts is planning to expand into Connecticut and Rhode Island.

    PowerOptions, founded after the deregulation of utilities in the late 1990s, currently helps about 500 institutions use their combined buying power to negotiate long-term electricity, natural gas, and solar power contracts with competitive energy suppliers.

    The bulk contracts often lead to prices that are considerably lower than what other large commercial and industrial utility customers pay for energy, according to industry officials. Now PowerOptions, itself a nonprofit, wants to bring its energy-buying model to nonprofits in Connecticut and Rhode Island.

    Advertisement

    PowerOptions, based in Boston, has not yet signed up members in either state. But Cynthia Arcate, its chief executive, said PowerOptions has been in contact with unnamed nonprofts about how the group could help them with their energy bills.

    Get Talking Points in your inbox:
    An afternoon recap of the day’s most important business news, delivered weekdays.
    Thank you for signing up! Sign up for more newsletters here

    PowerOptions hopes to sign up its first Connecticut or Rhode Island member by the end of June. “We’re not naive enough to think it’s going to be easy, but we’re confident,” Arcate said.

    PowerOptions has two main reasons for pushing beyond Massachusetts:

    First, it wants to help fellow nonprofits buy energy in New England, a region notorious for its high electricity and natural gas prices. Second, and perhaps more important, signing up additional nonprofit members will give PowerOptions more clout when negotiating contracts with suppliers, Arcate said.

    Connecticut and Rhode Island have similar regulatory environments, which makes it easier for PowerOptions to operate, Arcate added. The consortium’s current 500 members buy a combined $200 million in energy per year.

    Advertisement

    Barbara Kates-Garnick, a member of PowerOptions’s board of directors and a onetime undersecretary of energy in the administration of former governor Deval Patrick, said expanding outside Massachusetts is a “natural evolution” for PowerOptions.

    “We’re in a very powerful position and could be even more powerful,” said Kates-Garnick, a professor who teaches international energy policy and global climate change at Tufts University’s Fletcher School of Law and Diplomacy.

    PowerOptions’s expansion plan follows its announcement last week that it is starting a program to make it easier for its smaller members, such as private schools, to negotiate with developers to install on-site solar systems.

    Currently, the group negotiates terms and prices for solar developers to build large solar systems, generating 300 kilowatts or more of electricity, for major members such as hospitals and universities. Those solar panel systems are often installed on vacant lots or on canopies above parking lots. The new program would establish similar terms for smaller projects of 25 to 300 kilowatts; they would be mostly installed on rooftops.

    PowerOptions bills itself as the largest energy-buying consortium in Massachusetts. Each year, its 500 members buy about 90 billion kilowatt hours of electricity, or roughly twice the amount of power purchased annually by all private and public customers in Worcester.

    Advertisement

    PowerOptions’s college members range from the University of Massachusetts system to Beverly’s Endicott College; in health care, members include many of the major institutions in Boston’s Longwood Medical Area. Government members include dozens of public housing authorities.

    Power-Options says that it is the largest energy-buying consortium in Mass. Each year, its 500 members buy about 90 billion kilowatt hours of electricity.

    Thanks to long-term contracts running through 2019, Arcate said, members were paying about half the price for electricity this winter that other large institutional customers paid to buy power directly from utilities. PowerOptions’s current supplier is Houston-based Direct Energy, owned by Centrica PLC, a British multinational.

    Jay Fitzgerald can be reached at jayfitzmedia@gmail.com.