Energy switch to save PSU $330,000

For the first six months of this year, Portland State has shifted 98 percent of its electricity business away from Portland General Electric to save at least $330,000 in a budget that has been overspent by $2 million over the last two years.

An arrangement for the cheaper electricity was made with Sempra Energy Solutions of San Diego for the six-month period, according to John MacLean, assistant director of facilities. There could be even more in savings if a rate hike proposed by PGE is fully approved by the Public Utility Commission.

PSU consumes about 27 million kilowatt hours of power per year, roughly equal to the usage of 4,700 homes.

When the two companies bid for the six-month period last fall, Sempra’s rate was 6.32 cents per kilowatt hour, significantly lower than PGE’s at 6.6 cents per kilowatt hour. Surcharges are tacked on to the price during each bidding period, reflecting the supply and demand of the energy market and how much power each company thinks it can sell. Those surcharges vary wildly, and can determine who gets PSU’s business.

The U.S. Senate passed deregulation legislation in 1999, which went into effect in 2002, allowing large-scale users like universities, hospitals, and school districts more choice in utility providers.

Sempra was the first of these alternative companies to be available to PSU for electricity, and the university used $168,552 of its power during the second half of 2006, charging a rate of 7.62 cents per kilowatt hour after adjustments, credits, and a transition fee. During the same period, $1.45 million went to PGE for its power, at a rate of 7.84 cents per kilowatt hour after adjustments.

“Power companies are allowed to charge various surcharges,” MacLean said. “That’s where having an alternate can really make a difference.”

This time, even though PSU received a transmission charge that PGE collects to use its power lines to get power to campus, Sempra still came out less expensive. The transmission charge is usually about 13 percent of the cost of the power used.

Oregon law allows for changes in suppliers to be made only every six months, and PSU has hired an outside expert to help navigate this new, often confusing process. A decision will be made next month for the period between July and December of this year, after the first bill comes in for the current contract with Sempra.

“This is very much a learning exercise for PSU, figuring out how this market works,” MacLean said. “It’s really worth hiring a consultant for $3,000 when we have a budget of $3-4 million. The losses could just be too costly.”

PGE said it is not concerned about lost revenues when a client as large as PSU chooses to go with another company.

“We still make money through our pipeline,” said Mark Fryburg, PGE spokesman. “We’re always pleased to see our customers make the decision that is right for them. If a customer goes to a direct provider, that just frees up the energy to go elsewhere.”

“The challenge in the past is that PGE was the only game in town, but now we have two other options that are authorized by the state,” said Robyn Pierce, interim director of facilities. The other option is Coral Energy of Houston, Texas.

“We are looking to save money and make progress toward the governor’s directive for 2010, when all of Oregon’s power is to come from clean and renewable sources,” Pierce said.

Twenty percent of the power Sempra is selling PSU is what it calls “green label,” derived from renewable resources such as wind and water. The remainder comes from traditional gas- and coal-fueled generators.

“Currently, we couldn’t source 100 percent green label for PSU,” said Sempra’s Teresa Acosta, who is PSU’s account representative. “At this point it’s just not available. It would have to be a mix. I don’t think any supplier could do that at this point.”