State Energy Consumption

How much energy does the State use and what does it cost?

The State of Connecticut uses energy for heating, cooling, lighting, and the operation of equipment including motor vehicles. It routinely purchases:

• electricity;
• natural gas;
• several types of heating oil;
• propane gas; and
• gasoline.

A few agencies also use alternative fuel sources (e.g., solar panels, fuel cells), a number of facilities in the Hartford area participate in a district heating and cooling system. A couple of agencies have on-site generating capabilities.

There is no single source of information on the total amount of energy consumed by the State and the total dollars spent annually on energy.

Several entities compile information about State energy consumption levels and expenditures, but each collects the data differently. The major information sources are:

Based on program review committee staff analysis of data available from these sources, it appears the State of Connecticut spent approximately $100 million on energy-related expenses in state FY 00. This represented less than 1 percent of all State expenditures that year.

Converting all types of energy to a common measurement, in recent years State facilities have used approximately 6 trillion Btu annually. According to the U.S. Department of Energy, in 1999, the combined consumption of all customer sectors in Connecticut was 839 trillion Btu.

Statutory Roles

Who is responsible for the State's energy-related efforts?

Existing energy-related statutes range from broad policy statements to general program descriptions to detailed directives concerning building operations. The statutes specifying agency functions can be grouped into four general categories:

• establish standards (e.g., energy performance) and regulations;
• incorporate energy considerations into the purchase of goods and the leasing and acquisition of property;
• prepare annual and periodic energy-related plans and reports; and
• operate or oversee energy conservation and efficiency programs.

More than a dozen governmental entities have statutory responsibilities that affect State energy-related efforts. A variety of private companies, including electric utilities and energy-related product and service businesses, also perform energy-related functions for the State.

Individual state agencies carry out many day-to-day energy-related tasks. Primary responsibility for energy policies and programs is assigned to OPM and the Department of Public Works (DPW). DAS also plays an important role in fuel procurement activities.

Energy-Related Procurement Programs

What group-purchasing opportunities has the State set up?

Connecticut state agencies can use procurement contracts negotiated by the Department of Administrative Services to obtain energy-related commodities including:

• natural gas;
• fuel oil -- No. 1, No. 2, No. 4, and No. 6;
• propane gas;
• gasoline;
• diesel and bio-diesel fuel; and
• aviation gasoline and jet fuel.

Efforts are underway to establish a state electric purchasing pool.

Natural Gas Procurement Assistance

Currently, 19 state agencies purchase natural gas supplies under a competitively bid, state procurement services contract. Based on data collected by OPM as part of its consumption monitoring program, it appears these agencies consumed one-third of all of the natural gas purchased by the State in FY 00.

The NYMEX portion of the price is based on the New York Mercantile Exchange futures market for natural gas. Prices move up and down in response to anticipated supply and demand for immediate and long-range time periods. Under the state contract, OPM analyzes the marketplace to target natural gas prices for specific time periods. When the NYMEX price reaches the target level, the price is locked-in.

The MARKUP rate covers the supplier's handling costs. The specific price is agreed upon when the contract is awarded, and it applies for the duration of the contract. The local distribution company (LDC) rate covers the utility's cost of delivering the fuel to an agency.

New locations can be added onto the contract at any time. Agencies already included under the contract on the starting date can add accounts and meters for the same price the parent agency pays. New agencies receive a price based on market conditions at the time they join.

Savings. OPM estimates the State has saved at least $4.2 million since the start of the natural gas procurement program in 1997. Annual savings ranged from 12 to 22 percent of the dollars the State would have spent for participating accounts, if there were no contract. Individual agency savings vary, with some actually paying more.

Participating agencies also attained other benefits from the program, including:

• experience working with suppliers of a less traditional commodity;
• a more efficient bill paying system; and
• some agencies were prompted to consolidate the meters in their facilities, thereby reducing monthly fees for equipment.

Electric Procurement Program

Under C.G.S. Sec. 16a-14e, OPM is required to operate a purchasing pool for the purchase of electricity for state operations. In 1998, OPM hired a consultant to conduct an aggregation study to identify, quantify, and profile the aggregated State electric load (including historical usage and peak demand).

In December 1999, OPM, working through DAS, issued a Request for Proposals (RFP) for an electric procurement contract. Bids were due in February 2000.

Two bids were received, but both were disqualified. One arrived late. The other failed to fulfill the bid requirements because its proposed price was valid for only a portion of the time frame the bid was to cover. Also, some state agencies specified in the RFP were excluded by the bidder from eligibility to make purchases at the bid price.

OPM subsequently reviewed the program concept to find out which elements of the bid specifications had created problems and to better understand how changes in the marketplace would affect the state's efforts to successfully establish a combined electricity purchasing pool. OPM identified several problems that may have an effect on efforts to re-bid the contract:

• the Connecticut standard offer -- potential bidders said the "default" price charged by utilities under the mandated standard offer through 2003 is so low it is difficult to offer a lower price through the competitive bid process;
• supplies -- an infusion of new capacity expected in 2002 should increase competition and decrease prices, but until then, the closeness between anticipated demand and existing supply keeps prices within a narrow range; and
• the requirement allowing participation by households receiving means-tested assistance -- clarification is needed regarding the benefits to be provided, rates to be charged, eligibility standards, likely participation levels, responsibility for unpaid bills, and how to handle the possibility participation might cost more.

OPM is currently assessing market conditions to determine a favorable time to issue a new RFP for the electric purchasing pool.

Return to Year 2001 studies