A nonprofit coalition gains purchasing power.

The Massachusetts Health and Educational Facilities Authority traditionally deals with bond issuance and other financial programs for nonprofits. However, with energy deregulation - which started in New England because we've traditionally had the highest electric bills in the nation - we saw an opportunity to offer a new service. So we put together PowerOptions, a non-profit purchasing consortium, a fairly lengthy process, to buy utility services.

Our original goal was to get 100 non-profits of all sizes involved. But now we have over 500 participants who have the option of reviewing and signing both electric and natural gas contracts, with over 200 having electricity contracts and over 100 natural gas contracts. The gas supplier chosen was Energy Vision, and our electricity provider is PECO Energy. So far we are the largest nonprofit power-purchasing group in New England, and may turn out to be the largest in the country.

The key to getting our nursing homes involved in Power Options was getting the endorsement of the Massachusetts Association of Housing and Services for the Aging, now called MassAging. MassAging also co-sponsored several seminars for providers of services to the elderly. Meanwhile, PECO Energy has an arrangement to bring in an energy services team to advise our members on energy management, such as retrofitting and new heating systems. HEFA can provide tax-exempt financing for this, and we are beginning to market that this summer.

We are now two months underway with the electric supply program offered through PECO Energy, and over 200 members have signed contracts, which represents 100 megawatts of use and a bill of more than $90 million. Collectively, we have saved over $1 million. We expect to see a combined total of at least $10 million in savings during the next five years over the "standard offer" discounts mandated under deregulation. As more institutions sign on and as prices increase, aggregate savings will climb as well.

PowerOptions is offering the best deal in the state. The average electric bill of our members is down 12-15% and we've seen up to 20% savings on natural gas. Over the long haul, energy is expected to get even cheaper as the industry builds smaller and more efficient power plants. The savings now are from the part of the bill that involves the supply component, as we can buy the actual electricity from any provider who puts it into the grid, while the local firms still handle metering, wiring and the billing process. But large buying groups like Power Options will always be able to negotiate good prices.

Janice Hayes is responsible for communications, new business development and marketing of the financial products and other services for the Massachusetts Health and Educational Facilities Authority, Boston, MA.