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Friday, June 5, 2009
The Ef Word
Mass. bid process shuns local vendor requirement
By Efrain Viscarolasaga
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For the past two-plus years, state officials, from the governor on down, have been promoting the development of a clean technology cluster here in the Bay State, and have taken strides in making that dream come true, from legislation such as the Green Communities Act to the formation of the New England Clean Energy Council.
But when it came down to choosing a single service provider for the statewide power efficiency and demand-response programs at facilities managed by the state Department of Capital Asset Management, officials missed an opportunity to support one of the burgeoning stars of the local green energy community in favor of a competitor in New York.
Like all such contracts, the demand response project went through a bidding process, with five firms filing proposals: Boston-based EnerNOC Inc., New Jersey-based Comverge Inc., California-based EnergyConnect Inc., New York-based CPower Inc. and the energy marketing division of Hess Corp. CPower won the bid, based primarily on the overall value its proposal brought to the state, according to officials from the Department of Capital Asset Management.
Officials at EnerNOC declined to talk about situation, but the award raises some questions about the state’s dedication to supporting local businesses. Given the current budget woes facing the state, officials can hardly be blamed for putting an emphasis on the bottom line. But by doing so, are they missing opportunities to support broader initiatives?
Nick d’Arbeloff, president of the New England Clean Energy Council, said that while he wasn’t familiar with the precise details of the request for proposals and bidding process for the project, the state should be working to purchase clean energy services and products from within the state, whenever possible.
“(The fact that) the state did not have any criteria in the RFP that the company be local, or that a local company would somehow gain points as part of its bid, is unfortunate,” he said, particularly given that one of the premier demand response companies in the country (EnerNOC) is located in downtown Boston.
The question is not about CPower’s qualifications or ability to execute the exclusive contract. CPower, in fact, has been sharing the duties of managing the demand response program for the Department of Capital Asset Management with EnergyConnect since 2005, and has 35 employees and a network control center in the state. CPower also landed more than $10 million in private funding earlier this year. There is no reason to believe CPower will not succeed at fulfilling its contract.
But the same could be said for EnerNOC, which has more than 2,700 megawatts of power under management worldwide, including a demand response contract with the city of Boston. The company went public in 2005 and reported $106 million in revenue in 2008, so its financial position is secure as well.
With so much being equal, the tenets of capitalism, as well as the traditional rules of competitive bids, dictate that the better price wins, giving the nod to CPower. But if Massachusetts officials want to build a truly world-class clean energy sector, they cannot make such decisions in a vacuum. By going outside of that cluster to fill a need that could be filled by a local player, the state is setting a poor precedent. The selection may provide a cost savings in the immediate future — only the Department of Capital Asset Management knows exactly how much — but time will tell if there are other, less quantifiable ramifications to the reputation of Massachusetts as a clean energy leader.
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