BY DONNA KLEIN, nyarm
On Wednesday, November 18, the New York Association of Realty Managers (NYARM) held its last membership meeting of 1998. The dinner meeting at Frank's attracted nearly 90 NYARM members and friends who gathered to hear special guest speaker Peter L. DiCapua, chairman of the Electric Power Procurement Alliance (EPPA).
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| P. Leonard Jones, NYARM President; Peter DiCapua, EPPA President and Donna Klein, NYARM Executive Director | Hastings Williams, Time Equities; Angel Velazquez, Lockman Security Systems; Michael Wegielski, Clearview Gardens; Deborah Morrell, Columbia University; Stephen Elbaz, Esquire Management and Ken Schwartz, Lockman. |
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| Richard Berger, NY Boiler; Bob Welch, Castle Oil; Mindy Krause, Taranto & Associates; Jerry Ragano, Castle Oil; Gina Goldenberg, Walter & Samuels; Ben Jacobson, Benjamin Jacobson Painting; Joan Saberito and Arthur Leudesdorf, Richter Properties. | Kumar Shingwani, Spectrum Realty; Don Levy, Lawrence Properties; Jordan and Joshua Goldman, Bargold Storage Systems. |
Mr. DiCapua began his remarks by graciously congratulating NYARM on its 40th anniversary. The EPPA is little more than one year old and has eight association members: ABO, BOMA of NY, BOMA of Westchester, Hotel Association of NY, IREM, Owners Committee on Electric Rates, REBNY and RSA. The purpose of the alliance is to represent the energy interests of their more than 35,000 members consuming more than 40% of Con Edison's electric load. "So when we talked to the various ESCO's that wanted to compete in the deregulation Phase One we were the biggest gorilla in town. We commanded a lot of respect and we were able to negotiate a very favorable deal which we then passed on to members of those organizations," stated Peter.
Nationally there have been a tremendous number of bills introduced in both the Senate and House of Representatives regarding electric deregulation. None of them have come to fruition, nor are they expected to. This means that the country is looking to the individual states to create their own legislation or their own regulatory actions to promote deregulation.
Con Edison filed with New York State Public Service Commission in early 1997 a plan that was approved, then challenged for six months, and eventually ratified in September 1997.
PHASE ONE, PILOT PROGRAM
In September 1997, when Phase One was ratified and the Alliance was born, New York State was number eight (8) in a list of eight states that had gone into electric deregulation in any meaningful manner. The first phase underneath that plan called for 500 megawatts to begin in June, 1998 with a sign up period in April, 1998. In response to so many New Yorkers (members of the Alliance) looking to sign up that April, the program was expanded to 1000 megawatts.
"To put that in context, the entire Con Edison load is 10,000 megawatts. So 1,000 is 10%. That is a very meaningful Phase One pilot program, it's the largest in the nation," boasted Mr. DiCapua.
WHAT IS DEREGULATION?
"Deregulation, as all the other states will tell you, is a very, very simple concept and a very, very complicated issue." Deregulation is the purchasing of the commodity separate from the transmission and distribution. Deregulation is the unbundling of the service we're used to receiving from Con Edison and being billed separately for each part (75% of the bill is for transmission and distribution, 25% is what is being deregulated).
What EPPA insisted upon from Con Edison and any other ESCO they negotiate with is a guaranteed savings off the total bill, not just the 25% commodity, but the bottom line on a fully bundled basis with taxes. EPPA also insisted on no sign up fees, favored nations clause and a guaranteed 30 day out with no penalties. This was unheard of in the nation's deregulated market. But because EPPA represents such a large percentage of the Con Edison load those ESCOs looking to do business in New York had to agree.
ENDORSEMENTS
EPPA ended up endorsing two ESCOs, Con Edison Solutions and New Energy Ventures. These two companies had very similar guaranteed savings and a series of other options that benefited different areas of the Alliance. According to Mr. DiCapua the Alliance was put together purposefully to include a broad basis of energy users: small residential and commercial users, large residential and commercial users as well as the hotel and industrial industries.
"The Alliance was only effective not because of any one individual organization or any one individual person, but because the industry came together. There were eight large organizations representing 40% of the load. We said this is what we want, this is how we're going to do it. The ESCOs listened, Public Service listened, Con Edison listened and we were able to accomplish a lot. We are now leading the nation in electric deregulation and people are receiving meaningful discounts. If you are a large commercial user you are guaranteed 6.1% from one of our ESCO service classification guaranteed contracts," stated Mr. DiCapua.
He went on to inform the audience that members of the Alliance have received up to 10% reductions in their electric bills and that is a significant decrease in operating costs.
PHASE TWO
Phase Two which begins in April, 1999, is scheduled for an additional 1000 megawatts. Mr. DiCapua predicts that too, because of the efforts of EPPA, will be expanded to 1250 megawatts which will yield a total program of 2250 megawatts
There were some demand billed customers, representing 550 megawatts, that were not accepted because of the lottery situation in Phase One. They will be on a preference list leaving approximately 600 megawatts available in Phase Two for new registrants. The enrollment period starts January 4th through the 25th for the priority customers to ensure that they are still interested in deregulation. February 2nd through the 26th for new customers and January 4th through the 26th will be for small, residential customers. The difference in Phase Two is that it will be first come, first served, there will be no lottery and there will be no monetary incentives for small, residential customers. Individual owners or companies cannot join EPPA. You can only access the benefits of an EPPA contract by belonging to a member organization.
PLAIN LANGUAGE CONTRACTS
With the help of counsel EPPA crafted two specific contracts with Con Edison Solutions and New Energy Ventures. These four page contracts boiled down a very complicated issue into plain, simple language informing both the consumer and the ESCO "what the deal was."
EPPA is in the process
of interviewing five ESCOs (including the current two) anxious
to deal with the membership. They are expected to make their endorsement
soon.
