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Virginia Energy Purchasing Governmental Association (VEPGA): A Model of Effective Governance

The Virginia Energy Purchasing Governmental Association (VEPGA) exemplifies good governance in managing taxpayer dollars through effective electricity rate negotiations. Established in 2002, VEPGA enables local governments to purchase electricity cooperatively, resulting in significant cost savings. With nearly 175 members, VEPGA has successfully negotiated lower rates and favorable terms for energy services, leveraging its collective buying power. The organization provides legal, administrative, and educational support, ensuring localities remain informed about regulatory changes and energy laws.

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Virginia Energy Purchasing Governmental Association (VEPGA): A Model of Effective Governance

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  1. Virginia Energy Purchasing Governmental Association (VEPGA) – A Model Example of Good Governance of Taxpayer Dollars Steve Sinclair, Fairfax County Chairman VEPGA

  2. What is VEPGA? • History and Purpose • Profile • Functions • Benefits

  3. Local Government History in Negotiating Rates for Electricity Services • VA Code allows for negotiation of elec. rates • In 1950’s and 60’s electric contracts were roll-over penny kWh • Energy Crisis hit in 1972-73 • Electricity costs increased 100% to 200% • Local governments in Dominion’s (Virginia Power) service territory formed rate negotiating committee (Steering Committee) through VML/VACO • APCO Steering Committee

  4. VML/VACo Virginia Power Steering Committee,1972 to 2002 • Negotiated rates on basis of cost of service • Assessments (pro-rata) to raise funds to hire legal counsel and consultants • Generally 3 year contracts • Able to develop rates and terms and conditions of service that were lower cost and better met local government’s needs than SCC tariffs

  5. VA Passed Electric Deregulation in 1999 • Rationale: competition would lead to lower rates • Transition period from 2002 to 2007 before competition emerged • Rates could be capped as long as 2007 • In anticipation of retail competition, VML/VACo steering committee formed into a joint purchasing association in 2002 • Able to purchase electricity cooperatively to obtain a better price • Local governments would have to delegate their buying authority to joint purchasing association • Virtually every county, city and town are members

  6. Virginia Energy Purchasing Governmental Association - VEPGA • Established in 2002 as legal entity due to electric competition • Ability to sign contracts for electricity services on behalf of all local government members • Counties, cities, towns, schools, and other local government entities • Board governs decisions • 15 Board members elected from the membership • Board members serve staggered 3 year terms • Four meetings per year • Regional Coordination, Cooperation and Understanding

  7. VEPGA Profile • Approx. 175 counties, cities, towns and authorities • Energy Load – 4,689 GWH • Dominion System – 81,144 GWH • 5.8% of total Dominion System

  8. VEPGA Electricity Usage – 5 year history

  9. VEPGA Annual Electricity Costs • 2013 approximately $400 million per year • Depending on fuel costs • 2011 contract with Dominion – 3.5 year length • $1.4 billion contract

  10. VEPGA Annual Expenses • Legal and consultant services varies from $220,000 per year to $440,000 per year • Depending on if in contract negotiation mode • 1/1000 of a dollar per dollar expenditure on electricity services

  11. VEPGA Legal and Admin. functions • Legal – Christian and Barton • Contract negotiations and interpretation • Legislative/Regul. Monitoring/Education • Advice • Rate analysis • Meetings • Admin. Services - VML • Member services/dues assessment/billing • Auditing

  12. VEPGA Consultant functions – Technical Assoc. • Fuel and rider audit • Develop projections of costs • Rate and schedule analysis • Cost of service analysis • Contract negotiations • Meetings and advice • Educational information

  13. VEPGA Benefits – Lower Rates • VEPGA rates are on average approx. 4% lower than rates set by the State Corporation Commission • Savings of $16 million per year • Current 3.5 year contract - $56 million in savings

  14. VEPGA Benefits, cont. • Provides updates during the General Assembly on energy bills • Educates localities on impacts of energy laws and regulatory changes • Develop favorable Terms and Conditions that reflects locality concerns

  15. VEPGA Committees • Joint Action Committee • Meets quarterly with Dominion • Addresses street lighting, construction, relocation, maintenance issues that are not able to be worked out locally • LED streetlights • Energy Efficiency Committee • Serves as an educational and technical resource to local governments

  16. VEPGA Annual Meeting • April/May each year • Legislative/Regulatory/Contract updates • Discussion with members of emerging issues: • Energy Efficiency 2007 • LED streetlights, GHG emissions inventories, Portfolio Manager, power quality, future energy issues, etc. • May 8, 2014 in Virginia Beach

  17. Questions?

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