The primary goal of DGS’ energy purchasing program is to minimize both the cost to taxpayers and the environmental impact of the State’s energy consumption. As the State’s primary procurement authority for commodity contracts, the agency’s Office of Energy Performance and Conservation secures and manages several agreements for de-regulated energy commodities for state agencies. Agreements include contracts for wholesale and retail electricity and natural gas, renewable power and demand response services. DGS also coordinates statewide purchasing strategies and portfolio management activities with the University System of Maryland (USM).
Electricity Purchasing Overview
DGS purchases electricity in de-regulated power markets on behalf of all state agencies. Through an innovative electricity purchasing strategy for larger accounts, DGS hedges for a portion of the future power requirements of state facilities. By locking in rates for a portion of future power needs and purchasing the balance at real-time rates, favorable trends in power prices are exploited to the State's benefit. This strategy is referred to as “Block and Index.”
Avoided Cost of Block & Index account purchases compared with Reverse Auction Fixed Rate accounts (FY2015): $4,447,132
For the State's several thousand smaller accounts, DGS purchases electricity through periodic online reverse auctions. The first such auction was conducted in 2004, and the most recent auction was conducted June 2014.
FY2015 Electricity Purchasing Summary*
Since 2004, the DGS State Center Complex has been participating in the Emergency Load Curtailment program managed by PJM, the regional transmission grid operator. In the PJM Emergency Load Curtailment program, customers commit to shed a certain amount of load (i.e., go “off the grid”) when called upon to do so by PJM. This action reduces the load on the electric grid during “emergency events.” Emergency events are usually triggered by severe summer weather that puts increased demand on the grid. In return for helping keep demand at safe levels, program participants earn monthly payments. DGS has received monthly payments from PJM since it started participating in the program.
During summer 2015, the Complex dispatched on-site generators to lower usage during PJM peak load hours, thereby ensuring lower capacity charges for the 12-month period to begin June 1, 2016.
In addition, the Complex voluntarily dispatched on-site generators whenever it proved more economical to generate power on-site (based on natural gas prices) than to purchase from the grid at higher real time hourly rates.
FY2015 PJM Emergency Load Curtailment Program Payments: $32,230
Voluntary Generator Operations Results (Summer 2015):
Any questions about Energy Purchasing or Demand Response can be directed to:
301 West Preston Street, Baltimore, MD 21201