'A Deep Sense of Outrage' Sends Customers to Co-Ops

Even though electricity prices are spiking, there are ways to avoid emptying out the pockets and draining the checkbooks.

That's the pitch from one Maryland community and about a dozen chambers of commerce as they try to rally electricity users to pool together and buy power in bulk.

In Howard County, the Columbia Association -- a nonprofit group representing Columbia's more than 97,000 residents -- is looking for a consultant to help it create a cooperative to buy electricity.

In general, it's difficult for residential groups to form such co-ops. While Maryland law permits business associations, nonprofit groups and a few others to do so, it forbids city and county governments from creating co-ops on behalf of their residents.

The Columbia Association -- the largest of its kind in Maryland -- is hoping a buying group could obtain discounts of 10 to 15 percent below market rate, though the risk would be locking into a rate that eventually proves high in a fluctuating market.

Organizations pursuing a similar strategy confront many as-yet-unanswered questions, including those of optimum size and volume of use -- the Columbia Association not only represents residences, it also runs electricity-consuming community centers and swimming pools.

"I'm a firm believer that we're going to be able to do this for residential customers," said Richard Anderson, a principal of energy management consulting firm CQI Associates LLC in Columbia. "It may take a year for everyone to figure it out, but it will be developed."

Residential co-ops date to the New Deal, when they were created to provide electricity to rural America. The Southern Maryland Electric Cooperative, operating in Calvert, Charles and St. Mary's counties, is the country's seventh-largest, with 130,000 members. The Northern Virginia Electric Cooperative has nearly 124,000 members in Stafford and Clarke counties and western Fairfax.

Members attend annual meetings and vote for board members who run the co-op, buying electricity for all the members. Those co-ops own their own distribution lines, unlike the groups forming today.

Soon after Maryland enacted electricity deregulation in 1999, about nine trade associations formed the Mid-Atlantic Aggregation Group Independent Consortium. The trade groups represent roughly 7,000 businesses, from pharmacies to nursing homes. For the most part, savings range from 3 to 8 percent.

The co-ops, which typically charge a fee for membership, usually hire brokers to bargain with the companies that sell electricity in their areas on behalf of all members. Then the electricity is distributed by the local utility -- Pepco, for example -- which sends out the bill.

Although individuals and businesses now are free to look elsewhere than their traditional utility company for a lower price, it would be difficult for them to negotiate significant discounts unless they used large volumes.

As of January, only 10.8 percent of Pepco's small business customers and 14.4 percent of its mid-size business customers had purchased electricity from an alternate supplier, according to the Maryland Public Service Commission.

But interest may grow, said Sherrie Becker, executive director of the Pikesville Chamber of Commerce, which launched one cooperative and may soon create another. "We're finding that people now have a deeper sense of outrage" as their electricity costs keep rising, she said.