PFMA REVIEWS THIRD-PARTY ENERGY PROVIDERS

PATRICK SCIACCA

CAMP HILL, Pa. -- With energy deregulation opening the door for retailers to take advantage of savings offered by new entrants in the utility market, the Pennsylvania Food Merchants Association here has taken on the responsibility of finding quality energy providers for its 1,800 members, who operate 5,500 supermarkets and convenience stores in Pennsylvania and surrounding states.

"[Energy deregulation] is very complicated, and there were all kinds of changes [last year]," said Randy St. John, senior vice president of association services for the PFMA. The state's Public Utilities Commission kept making changes in both the energy deregulation rules and the timetables, St. John added.

"It's a significant piece of legislation," he said, noting that most retailers have seen significant savings in their energy costs since deregulation. Some medium-to-large supermarkets have reduced their energy costs by as much as $15,000 to $20,000 annually, St. John told SN. Currently, 300 supermarkets and convenience stores have entered into energy contracts with approved third-party companies.

That number is likely to increase this year. In 1998, only 5% of a Pennsylvania retailer's energy load was covered by deregulation. In 1999, retailers will be able to purchase two-thirds of their total energy load in a deregulated market, according to St. John.

The acceleration of deregulation has brought many more third-party energy companies into the Pennsylvania market, he added. That's one reason the PFMA researches potential providers, recommending selected third-party companies on an annual basis.

One of the companies recommended in 1998, Strategic Energy Limited, Pittsburgh, was also recommended for 1999. The second energy company used in last year's pilot was replaced in 1999 by Exelon Energy, an affiliate of PECO Energy based in Philadelphia. Exelon had "better numbers," said St. John.

For the most part, the energy contracts with third-party companies are easy to understand and usually run no more than one or two pages. "You don't need 25 hours of your attorney's time," St. John said.

A retailer's actual energy savings "depend upon rate class and what utility you use," he added. The charges for the retailer also varies by a store's energy rate class. Some third-party energy providers bundle a transmission charge with the kilowatt-per-hour price, while others keep it as a separate cost.