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Boston Edison Hits Pay Dirt with Call Options

Fortnightly Magazine - September 15 1995

Boston Edison Co. (BE), the first investor-owned electric utility in the nation to issue a request for proposals to secure options for buying wholesale electricity, now has received bids for more than 4,300 megawatts, with some offers for 1998 priced between three and four cents per kilowatt-hour. According to BE, those prices fall well below the forecasted 1998 prices of many existing long-term power contracts in New England.The process calls for BE to pay an options fee when a contract is accepted, giving BE the right, but not the obligation, to purchase power in the future. Power call options give BE the choice of purchasing power elsewhere if it is available at cheaper prices, or not purchasing if no power need exists.

BE has received over 20 bids from power brokers, utilities, independent power producers, and one municipality, said Ellen Angley, BE's manager of supply planning. All bids varied in amount of power and contract duration, but required delivery starting between 1998 and 2004. Angley added that the response indicated an abundant supply of power available at good prices for BE customers. BE expects to complete its bid analysis sometime in the fall.

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