Schools in Sandusky, Ohio, stand to reap an estimated $50,000 in savings on electricity costs this year after joining forces with about 50 other Ohio school districts to buy cheaper electricity. SchoolPool, a new electricity-buying coalition of schools across Ohio, is taking advantage of the state’s deregulated electric power market, which went into effect Jan. 1.
The pool will be joined with a similar coalition of 125 school districts in western Pennsylvania, creating the biggest education-related buying pool of electricity in the country, its backers say.
“We have more school customers than anybody,” said Trevor Lauer, vice president of sales and marketing for Pittsburgh-based Strategic Energy Ltd., an energy supply management company that will sell energy to Ohio schools through SchoolPool.
Sandusky’s savings could pay for two teachers, part of a set of elementary textbooks, or as many as 20 computers, treasurer Troy Bouts said Dec. 27.
“Depending on where you want to use that money, there are some significant educational benefits to saving that kind of money,” Bouts said.
Cincinnati city schools, the largest of the 47 Ohio school districts in SchoolPool, spends about $3.6 million annually on electricity. The district will save about $70,000 the first year, said school treasurer Mike Geoghegan.
The savings weren’t as important to the district as the option of locking in consistent rates for five years, he said.
SchoolPool is the brain child of three Ohio education associations representing school boards, treasurers, and superintendents.
The groups liked the business plan of Strategic Energy, which touts its ability to shop for electricity 24 hours a day and then guarantee a maximum price districts will pay over a contract’s life, said Rick Lewis, spokesman for the Ohio School Boards Association.
“Schools are a perfect partner in this program,” Lewis said. “The demands are known; they’re pretty static throughout the year in terms of peaks and valleys.”
Strategic Energy also contracts with a 125-school coalition known as the Western Pennsylvania Schools Energy Management Consortium. Those schools saw savings of $1.5 million in 1999 and received an additional $790,000 after Strategic Energy resold power the schools didn’t need in the summer months.
The company will merge the accounts of SchoolPool and the western Pennsylvania group to take advantage of volume buying, Lauer said.
Ohio lawmakers voted last year to deregulate Ohio’s $11 billion electric power industry. One effect was to allow municipalities, community groups, or even individuals to form buying pools such as SchoolPool.
SchoolPool supporters expect the coalition to grow. Some districts are taking a wait-and-see attitude, others signed long-term contracts with energy companies before deregulation, said John Fernbaugh of the Ohio Association of School Business Officials.
Akron-based FirstEnergy offered several school districts 10-year contracts in exchange for 10 percent rate reductions.
“We’ve contacted the schools to let them know they do have an agreement with us, and if they choose an alternate supplier, it would be the end of that agreement and there could be some kind of early termination fee for breaking the contract,” said Ellen Raines, a FirstEnergy spokeswoman.
Ohio residents are hoping the state’s deregulation of energy will reap better results than in California, where many people consider the state’s utility crisis to be a direct result of attempts to deregulate the industry over the past few years.
A rate freeze, part of California’s 1996 deregulation law, was established at what was then a generous level to assure utilities a steady stream of revenue as they sold off power plants and made the transition to deregulation. But earlier this year, the price of wholesale electricity skyrocketed.
As a result, California electric companies have been selling their power to other states with less severe regulations, resulting in a lack of affordable power throughout the state.
Strategic Energy Ltd.
Ohio School Boards Association
Ohio Association of School Business Officials