'U' joins new program to help lower electricity costs

In an attempt to keep at the forefront of cost efficiency, the University has involved itself in a new program that allows competition in the utilities market and lower costs.

In June 1997, the Michigan Power Services Commission announced its intentions to deregulate the utilities market gradually until 2002.

Although the Michigan Legislature failed to pass a bill to draw competitors to the energy market in December 1998, MPSC has still begun pilot programs to explore the benefits and problems with a competitive utilities market.

The University is attempting to get involved in a pilot program using a new electricity provider on North Campus - Nordic Electric. Nordic's application for franchisement was passed recently by the Ann Arbor City Council.

"Another one is interested - DTE Co., but they're not ready yet," said Council member Tobi Hanna-Davies (D-Ward I), adding that Detroit Edison is the current provider.

Potential suppliers would have to comply with the current Ann Arbor ordinance, which states that suppliers must have a renewable energy requirement, pollution restrictions and contributions to the assistance fund.

"There is a direct correlation between not being able to pay utility bills and being homeless," Council member Heidi Herrel (D-Ward III) said.

She added that Ann Arbor has these provisions, but MPSC does not require all utilities competitors to comply to these standards. "Individuals could end up paying more for power that's dirtier," Herrel said. "This could be a very bad thing for the environment and individual."

Hanna-Davies said while the council was debating the new power source, its concerns were that the energy be as clean as possible and that the franchise would contribute to Ann Arbor's assistance fund for people who can't pay their utility bills.

University Director of Community Relations Jim Kosteva said "the City Council is like a gate keeper," explaining that they can authorize new competitors in the utilities market.

"The University as a major energy consumer is very interested in reducing our costs," Kosteva said. The University's involvement will help experiment and gather information about how deregulation will work, Kosteva said.

The pilot program tentatively effects only North Campus. The new power provider is expected to service as many units as possible on North Campus, but will not serve the residence halls or off-campus residents, he said. No new power lines will be constructed, Kosteva said, because Nordic will share lines with Detroit Edison.

"We are hopeful it could bring in savings within 5 to 10 percent," Kosteva said. "If successful, the University could lower its operating costs. The lower operating costs would help keep tuition pressure down."

The implementation of the program would begin after MPSC approves the potential contract between Nordic and the University.

Kosteva said he expects the decision in about two months.

Herrel said another small section of Ann Arbor may open up to this program, which could include private residences.

02-24-99