Water Utilities Eye Power Market Changes

In case you’ve missed the news, things are changing in the electric power industry. Deregulation of the industry is a major force that in the next few years will transform the way electricity is bought and sold. And the change could be good for the municipal water/wastewater industry.

In case you’ve missed the news, things are changing in the electric power industry. Deregulation of the industry is a major force that in the next few years will transform the way electricity is bought and sold. And the change could be good for the municipal water/wastewater industry.

In case you’ve missed the news, things are changing in the electric power industry. Deregulation of the industry is a major force that in the next few years will transform the way electricity is bought and sold. And the change could be good for the municipal water/wastewater industry.

This month in California, electricity customers will, for the first time, be able to choose their electricity provider.

Competition among electricity providers is expected to give consumers there significantly lower electricity bills than possible under the former regulated monopoly system.

Electric utility deregulation and competition is also being explored in Rhode Island, Pennsylvania, New York and Massachusetts. There has also been talk of a federal mandate to require competition in all states in the near future.

In a competitive electric market, large-scale users, like water and wastewater utilities, can negotiate special rates from their local utility, or go out into the marketplace and buy from someone else.

California Water Service Co. and the Association of California Water Agencies’ Utility Service Agency (ACWA-USA) have both signed up with a company called New Energy Ventures, which is building a “buyers group” that may become the largest energy purchaser in California’s electricity market.

ACWA-USA is a joint powers agency formed by the ACWA and is the first and largest coalition of water agencies to join together for the purpose of purchasing and selling electricity. Under the terms of the one-year agreement approved by the ACWA-USA Commission, member utilities could save from $5 million to tens of millions of dollars annually on energy costs, depending on how many members sign on.

Water agencies are major consumers of electricity, and are often one of the largest customers in a given area. In California, they represent about 5 percent of the state’s peak demand for electricity and use about 7 percent of the total electricity used by the state.

The current 116 members of ACWA-USA represent an electricity load of at least 250 megawatts and about 1 billion kilowatt-hours of usage – roughly equal to the load of an industrialized city with a population of 100,000. That load is expected to increase as more agencies join in the coming months.

As part of the deal, the water agencies can also serve as “community aggregators.” Under legislation enacted in 1996, a local public agency in California can aggregate the electricity load of users in their areas and purchase electricity for those users at reduced rates.

Water utilities that can interrupt or curtail their energy usage during peak demand periods can also save big under the program by taking advantage of attractive off-peak rates.

As you will read elsewhere in this issue of WaterWorld, energy efficiency and savings can be achieved by conducting energy audits at your treatment plant and replacing or modifying inefficient equipment. New automated control systems available on the market also give the municipal water and wastewater industry important tools that will allow utilities to take advantage of the changing electricity market.

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