Reverse Energy Auction Saves Delaware $8.2 million

Governor Ruth Ann Minner continued her commitment to driving down energy costs in state facilities by announcing three-year agreements with Pepco Energy Services, Constellation New Energy, and Amerada Hess to provide retail electricity to selected state, county and local facilities and school districts.

The agreements will provide electricity at an average rate of $0.0815 per kWh a reduction of 11.2 percent from the current year's contract rates. In total, these agreements represent a savings of $8.2 million over three years for the state and its aggregation partners.

“Last year, we successfully enacted legislation that provided both short term and long term solutions for energy costs,” Governor Minner said. “[This] announcement reflects the ongoing success of this legislation as it will result in significant additional savings for taxpayers.”

“Because of the Governor's vision and the General Assembly's support, the state was able to aggregate energy usage and purchase electricity on the open market which resulted in favorable pricing for us and our partners,” said Jennifer Davis, Director of the Office of Management and Budget.

The state's partners for the energy bid included the school districts, volunteer fire companies, the city of Wilmington, Kent County, Sussex County, the University of Delaware, and Delaware Technical & Community College.

The procurement of electricity through the three contracts includes provisions for a portion of this energy to be provided through green sources. The contracts call for an initial set-aside of 5 percent of power to come from green sources for Fiscal Year 2008, increasing to 6 percent by the third year of the contract.

The state worked in conjunction with World Energy Solutions, a leader in the online energy brokerage market, on a reverse energy auction. The reverse energy auction provides a mechanism to achieve attractive commodity prices while maintaining fairness for all interested bidders.