The University Record, September 7, 1999 By Julie Peterson
News and Information Services
In its ongoing effort to control costs, the University announced Aug. 19 that it has selected Engage Energy as the future supplier of electrical power for Central Campus and the Hospitals. The University will be one of the first Detroit Edison customers to receive power from an electric supplier other than Edison under the “Experimental Retail Access Service Tariff for Customer-Procured Power.” The University expects to save more than $1.5 million per year.
“The experimental retail access program, based on processes established by the Michigan Public Service Commission (MPSC) and the Federal Energy Regulatory Commission (FERC) with the cooperation of Detroit Edison, provides an opportunity for the University to save a substantial amount of money on our utility costs,” says Henry D. Baier, associate vice president for facilities and operations. “As a public institution, we have a responsibility to the taxpayers and to our students paying tuition to pursue cost savings wherever they are available.”
On April 14, 1998, the MPSC issued an order that, among other things, approved the experimental program. The program, however, is limited to only 90 megawatts of capacity and because of the high interest in participating, the MPSC initiated a lottery for the selection process. The Central Campus account was one of only seven applicants initially selected to participate in the program. Since that time, the U-M Hospitals also have become eligible and have decided to participate.
The University, as part of a competitive bid process, issued a Request for Proposals for the supply of electrical power in mid-June and received three replies.
A rigorous scoring process for evaluation of the proposals was developed, based on a similar experience in the natural gas industry and established procedures within the Purchasing Department and the Office of the General Counsel. Selection was based on such considerations as price, experience in the industry, financial resources, commitment to the state of Michigan electric market and the ability to provide firm capacity.
This process led to the selection of Engage Energy. The University intends to issue a contract subject to satisfactory final negotiations and Engage’s ability to meet all of the requirements of the program, including those of the MPSC, FERC, Detroit Edison and the City of Ann Arbor.
As specified within the city’s Electric Utility Franchise Agreement, at least 1.3 percent of the energy provided to the U-M from Engage will be from renewable energy sources such as solar, wind, hydro-electric or bio-mass energy sources.
“Even beyond our existing commitment to the City of Ann Arbor, we plan to negotiate with Engage for a higher percentage of power generated by cleaner-burning natural gas power plants,” Baier said.
The energy provided by Engage will augment the established partnership between U-M and the Environmental Protection Agency (EPA). The University signed an agreement with the EPA in 1994 supporting energy conservation and pollution prevention programs.
This and similar initiatives have led to several nationally recognized awards for the U-M, including the EPA Green Lights 1995 Large Hospital Partner of the Year Award as the leading hospital in the nation in energy conservation; the U.S. Department of Energy’s National Efficiency and Renewable Energy Award; and the Renew America organization Certificate of Environmental Renewable Energy Achievement for the last three years in a row.
Engage Energy has 400 employees, annual revenues of $4 billion and offers sales, supply, transportation and other services to customers on a national basis, as well as in Canada and Mexico. It has corporate offices in Houston, Texas, and Calgary, Alberta, Canada, and regional marketing offices throughout the country, including one in Southfield. Engage’s parent company is a partnership of The Coastal Corp. and Westcoast Energy Inc., with consolidated assets of $19 billion.
