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Senate budget revives plan for state agency to buy power in bulk

Officials contend program may save millions for Mass.

By Erin Ailworth
Globe Staff / May 20, 2010

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A plan from Governor Deval Patrick to create an agency to buy power in bulk has been resurrected in the state Senate’s proposed budget for 2011.

State energy officials have been lobbying to get the $255.5 million Commonwealth Energy Solutions program onto the Senate budget for some months.

Several weeks ago, a budget amendment containing the proposal was rejected in the House.

Ian Bowles, secretary of the state’s Executive Office of Energy and Environmental Affairs, said the proposed agency, included in the $27.88 billion Senate budget plan released yesterday, is designed to save money by negotiating better electricity prices for state agencies. “We think we can save at least $6 million in the operating budget for the next fiscal year,’’ he added.

Together, the executive branch and its three largest quasi-public agencies — the Massachusetts Bay Transportation Authority, the Massachusetts Port Authority, and the Massachusetts Water Resources Authority — spend about $440 million a year on utility bills, according to the state.

Individual state agencies currently buy their own electricity, natural gas, and heating oil, though some do so under a statewide contract. Commonwealth Energy Solutions would consolidate that responsibility under a new agency.

There has been some speculation that the effort by the state to create such an agency is a step toward buying power directly from Cape Wind, a controversial offshore wind farm that recently received federal approval. But Bowles discounted the idea yesterday.

“We’re the largest public power user in New England, so maximizing savings, given the difficult fiscal times, is our objective,’’ he said. “We don’t have any plans to be involved in contracting with individual power generators . . . no plans to contract with Cape Wind or any other individual power plant.’’

The inclusion of Commonwealth Energy Solutions in the Senate budget comes as a report from the region’s power operator, ISO New England, revealed that the cost of electricity in New England dropped from $10.6 billion in 2008 to $5.3 billion last year.

The cost of all major fuel types fell as well: natural gas by 54 percent, fuel oil by 43 percent, and coal by 46 percent, according to the report.

“Fuel costs fell about 50 percent last year, and electric energy prices followed suit,’’ said David LaPlante, vice president of market monitoring at ISO New England.

Noting the decline in energy prices, Angela O’Connor, president of the trade group New England Power Generators Association Inc., said her organization plans to fight the creation of the proposed state agency.

“It undermines competition like you can’t believe,’’ she said of the proposed bulk purchasing program. “When you have [natural] gas at $4 or $5, and you have a plethora of gas, it just doesn’t make sense.’’

Erin Ailworth can be reached at eailworth@globe.com.