The Columbia Association, a civic group that essentially runs a community of 97,000 people, is examining ways to help Columbia's residents and businesses start buying electricity at discount rates.
The association's board of directors is studying how to form a buying cooperative that, in Maryland's deregulating energy market, would shop for the best deal on electricity. Under state law, city and county governments are forbidden to launch such arrangements. But the odd governance structure in this Howard County planned community provides a rare opportunity.
The discussion comes amid expectations that electric bills for residential customers of Baltimore Gas and Electric Co. will rise 20 percent to 30 percent next year when the state rate cap is lifted July 1, according to the Maryland Public Service Commission.
The rate increase is "expected and alarming. The numbers are significant," said Joshua Feldmark, chairman of Columbia's 10-member board of directors. Forming a buying cooperative "is something worth getting into," he said. "We can provide a value-added benefit for living in Columbia. That's at the core of our mission."
One consultant estimated that a Columbia cooperative could buy electricity at 6 percent to 8 percent below market rates, depending on the deal struck. The risk would be locking into a rate that is too high in a fluctuating market.
Electricity bills in Maryland have risen the past two years as the state has loosened its regulation of the industry and the market has reacted to a volatile combination of forces: shrinking global reserves of fossil fuels, rising demand from developing nations, deepening Middle East turmoil and hurricanes that disrupted energy production.
State law permits a short list of organizations, such as business associations and nonprofit organizations, to form buying groups that purchase electricity in bulk from suppliers that bid competitively for their business. The Columbia Association appears to be the only homeowners group in Maryland considering the idea.
"How often do we hear that CA [the association] is some kind of strange animal?" said Del. Elizabeth Bobo (D-Howard), who recently discussed the cooperative idea with state Public Service Commission officials. "Because it is a homeowners association and because it is so large, it may put CA in a position that we could qualify for lower rates."
Since Columbia was fashioned from farmland in the 1960s, the community has been governed by a distinctive variation of a nonprofit homeowners group. The association collects fees and lien payments from property owners to fund a $51.5 million annual operating budget that provides services and amenities such as swimming pools, fitness centers and golf courses.
The association, headed by an elected board of directors that sometimes meets in closed session, has drawn criticism for a form of government whose operating methods are difficult to understand and less open to public scrutiny than those of city and county governments.
But it possesses more leverage than those governments to form buying cooperatives for its residents. Most residents pay for electricity that's procured from wholesale suppliers by their utility company.
Pepco customers in Maryland have felt the sting of climbing prices, with residential bills that rose an average of 16 percent in 2004, when the Pepco rate cap was lifted, and 4.5 percent this year, according to the Public Service Commission.
Energy consultant Richard Anderson told the Columbia board of directors this month that overall energy costs to homes, businesses and government in the Mid-Atlantic region could rise 30 percent to 50 percent in the next five years. The energy costs to operate the association's facilities alone could nearly double in five years, he said.
Anderson, who has helped create buying groups across Maryland, sounded a cautious note on how much money Columbia residents could save in a cooperative. "People would have to voluntarily sign into the program," he said.
The electricity co-ops that have emerged in the past two years are a scattered assortment that includes public school systems and chambers of commerce, and they have learned that timing is crucial in a fluctuating market.
The Howard and Anne Arundel county school systems joined together two years ago to negotiate a contract providing electricity for their schools and administrative buildings at 5.4 cents per kilowatt hour, which was lower than the 6-cent rate standard at that time, said Doug Pindell, purchasing officer for the Howard schools.
Carroll County schools have joined the Howard-Anne Arundel co-op as the school systems begin shopping for a new contract to start next year, with the current market price around 9 cents per kilowatt hour.
BECO Management Inc., a property management company in Rockville, joined a cooperative last year offered through the Baltimore-Washington Corridor Chamber of Commerce.
The group, which included several dozen businesses, shopped for electricity last summer and held off signing a contract until prices dropped in the fall. The three-year contract price, about 6 cents to 6.5 cents a kilowatt hour, has proved to be a bargain, said Madeleine Abel, a BECO vice president.
"To me this was a no-brainer," Abel said. "We must do this."