How co-ops are created

Oct. 5, 2006
By JOSEPH M. DELEON News-Post Staff
jdeleon@fredericknewspost.com

FREDERICK -- Frederick business owners who are weighing the merits of joining the Frederick County Chamber of Commerce Electricity Cooperative turn to Bonnie Grady for guidance.

She works for Columbia-based energy management consulting firm CQI Associates LLC, and explained how co-ops works.

Chamber members pay a non-refundable $250 fee for each business location to cover the cost of negotiating a contract with an electricity supplier.

Members fill out an authorization form, provide a copy of the latest bill for each electrical account and agree to stay in the co-op through the authorization process.

The form gives about a dozen licensed and bonded electricity suppliers permission to request a credit check and an account history from the businesses' current provider. That information helps the supplier offer prices, which are based on market conditions and volume used by the co-op.

"While a single large business may use 10 megawatts of electricity, a co-op could use 40 or more," Ms. Grady said. "They really listen to you when you come to the table with that much power."

While all suppliers are invited to bid, only a handful, such as Constellation New Energy, Suez Energy Services and ConEd Energy Solutions, make offers.

Business owners must agree to decide once the electricity supplier makes a proposal. Ms. Grady said she brings an offer to co-op members when the market price is best. If a member rejects the offer, he or she will need to make other arrangements for electricity or stay with the current provider at the default rate.

Many co-ops have a 96 percent acceptance rate, she said. The main reason about 4 percent of applicants don't take the offer is because they did not respond in time or could not be reached.

The deadline for businesses to join the co-op now being formed in Frederick is Oct. 27.

Ms. Grady expects to be able to negotiate contracts as early as the second week in November, but said fluctuating electricity rates, election day and the holiday season could mean applicants might have to wait until March.

Chambers have no limit on the number of co-ops they may have. A chamber often starts organizing the next co-op once they reach the end of an enrollment date -- that could mean two or more chamber co-ops a year.

Negotiations on a renewal program begin before the original contract expires.

Ms. Grady recalled the lengths she went to as a former chamber executive when bids were offered to a co-op.

"I have been known to jump on a Gator with a pen in one hand and a contract in the other looking for one of our farmer friends," she said. "I want our members to focus on what they do best -- we'll handle the energy."