In a bid to negotiate lower electric rates for Belfast residents, city officials are looking to the competitive wholesale power market; a move, according to officials at Maine Public Utilities Commission, would be the first such venture by a Maine municipality.

The city has taken a similar approach toward electric rates for municipal buildings during the past year, working with broker Glacial Energy, and City Manager Joe Slocum credited the change with saving the city “tens of thousands of dollars” compared to the standard offer rate.

He cited the city’s largest electricity user – the wastewater treatment plant – where the annual electric bill dropped almost 25 percent after the switch to around $100,000. On a smaller scale the police department and City Hall, which had each previously used $16,000 in electricity, saw drops of 18 and 12 percent, respectively.

“It’s a little more bookkeeping on our end, but we’ve saved a lot of money,” Slocum said.

Expanding the city’s role to become an aggregator on behalf of local ratepayers would require the city to form a limited liability corporation and become licensed as an aggregator by MPUC.

The idea is in its formative stages but could also involve a partnership with a company like Manchester, N.H.,-based Freedom Energy Logistics, which recently submitted a proposal to the city. Belfast Economic Development Director Thomas Kittredge said he knew of FEL from his previous work as economic development director for Piscataquis County, but to date, the city has no formal agreement with the company.

Maine deregulated electricity in 2000 in response to increasing energy prices, separating energy suppliers from the state’s three regional transmission companies: Maine Public Service, Central Maine Power and Bangor Hydro. The new legislation allowed consumers at all levels, from residential to large scale commercial, to choose their energy supplier. As a result, scores of brokers – many based outside Maine – have jumped into the new marketplace.

Ten years after deregulation, MPUC Deputy General Counsel Mitch Tannenbaum said large commercial businesses have embraced the competitive marketplace, while the change mostly hasn’t registered with residential customers, who have overwhelmingly stayed with the standard offer.

MPUC negotiates the standard offer annually with suppliers for each of the state’s three regional service territories. And while the collective buying power gives MPUC the ability to negotiate a competitive price, Tannenbaum said the fixed rate is subject to timing and includes a premium that acts as insurance for the supplier against fluctuations in the energy marketplace.

“It’s possible that you could get a better price on the spot market,” he said. “But you have to have an appetite for volatility, because you never know what’s going to happen with the markets.”

Tannenbaum said under current regulations, a municipality like Belfast could not require residents to buy their energy from the city-owned aggregator — officials haven’t indicated any interest in doing so. Instead, the option to buy from the city would appear on residents’ electric bills, alongside other options, including suppliers of green energy — a popular option among the small fraction of residential customers who have strayed from the standard offer.

According to Kittredge, inexpensive alternative energy sources like low impact hydroelectric power could factor in to a final equation, but going green is not the primary goal of the city’s initial inquiry.

“If you want to buy 100-percent wind power, you can do that,” he said. “Our goal is to lower the price. We’d be cutting out the middleman.”

By becoming its own aggregator, Kittredge said the city could potentially offer local ratepayers cheaper electricity, while making a small profit for the city.

The Belfast City Council, which took up the issue briefly at its Jan. 4 meeting, received the idea cautiously.

Councilor Roger Lee said he felt the subject was very complex, possibly involving an amount of research beyond what the Council could do, and asked who among city officials would figure it out. Councilor Eric Sanders expressed a similar concern, saying the city needed a reliable way to compare the current system with the risks and benefits of anything new.

Councilor Marina Delune disagreed with Lee about the ability of the Council to sort out the options, but she said she was unaware of the risks involved.

The issue is slated to come back before the Council at a future meeting. In the meantime, Slocum reiterated that the city is still in the early stages of considering the idea.

“Right now, we’re not saying we’re going to do this, we’re saying let’s take a deeper look at it,” he said.