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Cape Cod gets greenlight to bid on electricity supply contract

6 May 2004 – State regulators have given Cape Light Compact the go-ahead to bid for the electricity to supply virtually all of Cape Cod and Martha’s Vineyard.

From businesses to residences to municipalities, the winning bidder could provide electricity for as many as 195 000 customers.

The 27-page decision released yesterday by the state Department of Telecommunications and Energy represents a first for the state’s restructured electricity market.

And while the savings probably won’t be extraordinary for residential customers, the Cape as a whole could save millions of dollars from less-expensive electricity, according to compact officials.

The compact, a coalition of 21 towns, currently negotiates electricity contracts for 52 000 residential, commercial and industrial accounts that are not customers of NStar. Those “default customers” comprise more than a quarter of Cape Cod and Martha’s Vineyard.

In its decision, the DTE allows the compact to negotiate on behalf of the area’s “standard offer” customers, as well. The compact expects to receive bids from three energy suppliers in late May.

The companies include Consolidated Edison, Solutions Inc.; FPL Energy Power Marketing Inc.; and Strategic Energy LLC. To win the bid, the supplier would have to beat NStar’s “standard offer” rate, the one most Cape customers pay.

In an effort to ease consumers into a competitive electricity market, the state’s 1997 Electric Restructuring Act created two groups of customers.

On Cape Cod, long-standing customers were placed on NStar’s standard-offer plan, which has maintained relatively stable rates. Under the restructuring act, however, standard offer is scheduled to expire next year.

“It would only be in place until the market matured,” said DTE executive director Tim Shevlin. “That end date is March 1, 2005. After that, it’s the brave new world of competition, theoretically.”

But few suppliers have entered the residential market. The compact switched virtually all local default customers from NStar to Mirant Energy in 2002.

By December, the Mirant contract will have saved the Cape and Martha’s Vineyard $4.3 million over NStar rates, the compact estimates.

However, the Mirant contract is set to expire at the end of the year. Those 52 000 default customers will be moved to the compact’s new contract Jan. 1.

Standard-offer customers, who represent between 130 000 and 140 000 accounts, probably could be switched to the winning bidder even earlier in September.