By David Harry

Staff Writer

Buying electrical power through a municipal cooperative was not an easy sell to councilors from Scarborough, South Portland and Cape Elizabeth last week.

Eleven councilors and the town and city managers from South Portland, Cape Elizabeth and Scarborough who attended the joint meeting at Cape Elizabeth Town Hall last Thursday. 

Cape Elizabeth Town Councilor Frank Governali was among those who noted the plan to create a cooperative to sell power might not provide large enough discounts to overcome the risks of setting up the company.

South Portland Assistant City Manager Erik Carson told the group residential, commercial and municipal customers could save 5 to 10 percent through creation of a cooperative. The cost of transmitting the power would not be reduced.

None of the councilors or officials dismissed the cooperative concept, but all said more information is needed about the business model and potential savings for consumers and town governments.

Scarborough businessman Paul Aubrey, who has been working with Carson and South Portland and Scarborough energy and sustainability coordinator Ann Archino Howe on the cooperative idea, said the range of savings presented by Carson could be doubled by buying increments of power on a daily basis through a broker who monitors market conditions.

Aubrey served under former Gov. John Baldacci in the Office of Energy Independence. He owns energy consulting firm Self-Gen and said higher risk will bring higher rewards to consumers and help keep local jobs by lowering energy costs to businesses.

Aubrey has worked on the plan largely as a volunteer and was paid about $1,200 by the city to help draft the plan. Any future role he would have in a cooperative is unknown because structure of the cooperative has not been determined, Carson said.

Aubrey’s favored approach would establish a company to buy wholesale power. Central Maine Power would transmit the power at a rate below the standard offer rate approved by the Maine Public Utilities Commission and typically passed on to residential and small business consumers.

Consumers would be billed in the same manner as now, and receive a CMP bill that separates utility charges for power transmission. Carson noted many customers are unaware CMP no longer generates power for its customers. CMP estimates it has almost 27,000 commercial and residential accounts in the three towns.

The cooperative would achieve savings in part by using a broker who would monitor rates charged by power generation companies on a daily or even hourly basis. The key to the savings is in the timeliness, Aubrey said. 

The risk comes from times throughout the year when power rates increase because of demand. The spikes can be tempered by buying at times of the day when generating companies are producing power and not getting revenue for it, Aubrey said. 

The broker would be paid at a predetermined rate of a few cents per thousands of dollars spent for power, Carson told councilors and officials.

Carson said there were no unanticipated questions from councilors and officials about start-up costs, the cooperative’s business model and whether local governments should be in the power supply business. 

The potential $1 million cost to start a cooperative and the question of whether consumers would join were sticking points for Cape Elizabeth Town Councilor Anne Swift-Kayata. She asked Cape Elizabeth Town Manager Mike McGovern to determine how much the town spends for power at its municipals buildings.

Carson said start-up costs would be replaced by working capital once customers sign on. Growth of the cooperative could be managed by limiting enrollment periods.

The presentation drew three residents. South Portland resident and business owner Gary Crosby said he came to express his deep opposition to the plan.

“Government should not be competing with private industry in any way,” Crosby said after the meeting. 

Crosby, a laundry owner and real estate investor, said he was not convinced the cooperative would save consumers money, especially with costs of hiring the cooperative’s staff and broker fees.

Crosby also objected to using tax money to start the cooperative because of the risk involved and because “paying taxes is certainly not discretionary,” he said.

An interlocal agreement and a PUC permit will be needed to create the cooperative if councilors from the three towns approve the plan, Carson said.

The proposed cooperative also would need to be part of ISO New England, a regional transmission organization that oversees the retail power generation market and transmission of power, according to the company website.

Crosby said the plan is another way South Portland officials are getting involved in the private sector unnecessarily.

Crosby cited the city’s loan fund for businesses and discussion of buying a building at 148 Ocean St. for possible use and rental, and said he wonders where councilors and officials will draw the line with potential business ventures.

“It seems like a very, very low margin, I personally would not invest in the company,” Governali said.