Hogan Administration Announces $4.7 Million in Savings Through Smart Energy Purchases
Strategic Energy Purchases Save Taxpayer Dollars, Protect Environment
ANNAPOLIS, MD—Governor Larry Hogan today announced that through the Maryland Department of General Services’ Office of Energy and Sustainability, the state saved more than $4.7 million in Fiscal Year 2019 through ongoing strategic large-scale purchases of electricity.
“Maryland continues to be a leader in setting a path for bolder, smarter energy-saving strategies,” said Governor Hogan. “By utilizing our established practices to conserve electricity and natural gas costs, we continue to save taxpayer dollars and help to protect our environment.”
The Office of Energy and Sustainability purchases electricity using two separate hedging strategies. The first strategy is a block and index strategy, which is used for about 80% of the electricity purchased. The second strategy used is reverse auction. Maryland is the only state to use a combined block and index and reverse auction strategy for its statewide purchasing, affecting more than 14,800 utility meter accounts. The block and index purchasing strategy yielded savings to the state of $4.7 million in FY19, compared to a fixed-price purchasing arrangement most commonly used by public sector entities. The state realizes savings when comparing block and index purchases to reverse auction purchases.
The demand for energy varies year to year, but between FY12 and FY19, more than $57 million of cost avoidance to the General Fund of the state has been realized. The savings between FY15 and FY19 are $37,782,281 for electricity alone, with combined electricity and natural gas savings of $50,563,382.
General Services partners with the University System of Maryland to purchase all electricity and natural gas used by state agencies and university campuses. In FY19, energy expenditures totaled approximately $136 million to purchase more than 1.5 billion kWhs of electricity and nearly $30 million to purchase approximately 49 million therms of natural gas. Through this long-standing partnership, savings to the state of approximately $5.7 million in electricity and natural gas expenditures were realized in FY19.
“General Services is proud to be a part of this innovative partnership and looks forward to working with the University System to determine future opportunities for energy savings,” said General Services Secretary Ellington E. Churchill Jr., “Our agency continues to serve the citizens of Maryland by identifying and developing more opportunities to reduce energy cost and spending.”
In addition, General Services partners with the University System to purchase natural gas for all State agencies. About 90% of the state’s natural gas is secured under a similar block and index purchasing structure, through a contract managed by University of Maryland, College Park. In FY19, the state saved $953,000 with block and index gas purchases, relative to the fixed price rates.
About DGS: The Department of General Services is responsible for essential services and programs administered on behalf of the state, including procuring goods and services; designing, building, leasing, managing and maintaining facilities; leading energy conservation efforts; and providing essential services such as fuel management, disposition of surplus property and records management. The Department of General Services Maryland Capitol Police maintains safety and security at state buildings.