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Department Of General Services Earns National Award For Innovative Purchase of Energy
The Department of General Services has earned national honors for developing innovative and cost-saving strategies to purchase the energy that powers state government, receiving a George Cronin Silver Award from the National Association of State Procurement Officials, or NASPO.

"At Gov. Rendell's direction, Pennsylvania continues to lead the nation in its groundbreaking energy initiatives, and we are honored to be recognized for our comprehensive energy procurement strategy that has saved taxpayers almost $25 million," said DGS Secretary James P. Creedon.

Since January 2004, the commonwealth saved nearly $25 million by strategically purchasing various forms of energy, including natural gas, electricity and coal.

DGS' award-winning energy strategy addresses an energy market shift, from demand driven to supply driven, and the projected price increases resulting from the removal of rate caps on electricity due to deregulation.

"Pennsylvania's energy strategy significantly contributes to the commonwealth's goal of managing and reducing energy costs by implementing cutting-edge programs for all energy markets, creating strategies tailored to the specific dynamics of each commodity, and creating a flexible and efficient procurement process," Secretary Creedon added.

As a result, the DGS procurement team implemented innovative new methods that counter the drastic price increases associated with the volatile energy markets and the impending deregulation, while reducing the risks associated with supply and demand.

The DGS energy strategy includes:
-- Increasing the purchase of green energy. As the green power market expands and creates more competition in the open market, green power costs are expected to decline while conventional power rates are expected to increase;
-- Electronic online bidding in both fixed and variable price formats with varying term lengths, enabling the state to lock in pricing as well as to capitalize on market downturns;
-- Contracting with non-utility entities, which promotes competition among suppliers and provides up to a ten percent reduction in prices; and
-- Awarding multiple suppliers, a process which promotes competition and provides a diversified portfolio while mitigating the risk associated with price increases.

The annual NASPO Awards for Procurement Excellence recognize top state procurement initiatives based on innovation, transferability, service improvements and cost reductions. Pennsylvania was only one of three states recognized by NASPO for its innovative procurement initiatives.

9/28/2009

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