Maryland Department of General Services and University System of Maryland Committee Saves the State of Maryland $13 million Through Innovative Energy Purchasing
BALTIMORE, MD – The Maryland Department of General Services (DGS) and University System of Maryland today announced the USM/DGS Energy Committee has yielded over $13 million in energy savings to the state since 2014, including more than $1.5 million projected to be realized during Fiscal Year 2022.
“This is just a portion of the total savings expected in the coming years through Maryland’s unique market-based purchasing approach,” said DGS Secretary Ellington E. Churchill, Jr.. “DGS continues to serve the citizens of Maryland by identifying and developing more energy efficient plans, projects, and procedures to reduce energy cost and spending.”
In 2006, the DGS and the USM took the initiative to form an Energy Committee whose purpose was to develop strategies to purchase energy for all state government operations by taking advantage of discounted pricing available through a deregulated market. As part of the Energy Committee’s innovative electricity purchasing strategy, the state participates in an auction revenue rights (ARR) process.
“USM is proud to be a part of this important partnership, and looks forward to working with DGS to identify additional opportunities for increased energy savings,” said USM Chancellor Jay Perman. “Addressing energy efficiency to reduce costs for the state is not only fiscally responsible but environmentally friendly.”
Since 2009, the Energy Committee has authorized purchases of wholesale electricity through the PJM wholesale power market for the state’s major accounts, including the Annapolis Capitol Complex, correctional facilities, health care sites and university campuses. In this arrangement, the state hedges a portion of future load at a fixed price, then pays hourly market rates for the remaining requirements. The state continues to serve its smaller accounts through conventional retail fixed price contracts.
All purchasers of wholesale electricity are eligible to secure ARRs, which entitles them to a share of revenue generated through auctions each spring, where private sectors bid for financial rights to various transmission paths. Therefore, ARR revenue is solely determined by market activity. Retail customers are not eligible to participate directly in ARRs.
Over the years, for the state’s major accounts, the Energy Committee has consistently demonstrated the benefit through lower unit prices, of purchasing through the wholesale market, when compared to fixed price contracts. A portion of this benefit is achieved through the committee’s annual participation in the ARR process.
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About DGS: The Department of General Services is responsible for essential services and programs administered on behalf of the state, including procuring goods and services; designing, building, leasing, managing and maintaining facilities; leading energy conservation efforts; administering the state’s Capital Grants Program; and providing essential services such as fuel management, disposition of surplus property and records management. The Department of General Services Maryland Capitol Police maintains safety and security at state buildings.
