150 Commercial Gas Users Form Buying Cooperative
by Brian Meyer - Buffalo News Business Reporter
© Buffalo News - January 3, 1998  

  It takes plenty of heat to serve tons of chicken wings at the Anchor Bar & Restaurant each year, and we don't mean hot sauce.

    Facing annual gas bills of up to $40,000, the restaurant managers were intrigued when they heard about the formation of a natural gas buying cooperative that promised to save businesses anywhere from 5 percent to 15 percent on energy bills.

    The Anchor Bar is one of the newest members of a buying group that has attracted more than 150 commercial property owners since its inception two months ago.  The membership roster includes small manufacturing operations, apartment buildings, nursing homes and office complexes in Buffalo, Amherst, Cheektowaga and a dozen other communities. 

    Leveraged Energy Purchasing Corp. (LepCorp) of Buffalo has been retained to provide technical assistance to the Energy Cooperative of Western New York. Inc., which buys natural gas at wholesale rates, then distributes the supplies to members on a non-profit basis.

    Ivano Toscani, general manager of the Anchor Bar, said he was told about the buying cooperative by Buffalo Common Council member Alfred Coppola.  "We asked plenty of questions, and the answers made a lot of sense.  We figured if we could save $3,000 or $4,000 a year, why not do it?"  Toscani said.

    Many large energy users have been involved in buying groups since the mid 1980s.  A growing number of municipalities, including the city of Buffalo, recently have turned to non-traditional purchasing arrangements to reduce energy costs.

    A ruling by the state Public Service Commission last year permitted smaller users to purchase energy on the open market from independent firms.  Even residential users have the ability to buy gas on the open market, although cost efficiencies typically occur only after buying groups with at least 40 members are formed.

    Utilities have nothing to lose from the new buying arrangements, according to Julie Coppola, director of public relations at National Fuel.

    "Utilities do not make money on the actual sale of gas supplies," Ms. Coppola said.  "Our profits come from the use of our system, so these buying cooperatives have had a neutral effect on our bottom line."    

    Dennis M. Frank, vice president of LepCorp, said buying cooperatives help to empower smaller energy users.  "By bundling together many users and giving them wholesale prices, it allows the little guy to get the same prices that large industrial users are getting," Frank said.

    One of the biggest concerns expressed by businesses that have been approached  about the buying cooperative involves servicing.  Toscani said the Anchor Bar didn't want to save money of fuel bills if it caused any problems in getting crews to deal with emergency repairs or other trouble calls.

    "Right now, our service has been great,"  he said.  "Whenever we have a problem, National Fuel is usually here within minutes."

    Utility officials stress that members of buying cooperatives experience no changes in service; National Fuel is still responsible for maintaining the pipes.

    Frank is pleased with the initial response from the local business community.  He said between 15 and 30 new members are joining the buying group each month.  Interested parties can call the Energy Cooperative of Western New York Inc. at 842-1697.