1998 Finalist
Winners:
Commonwealth of Massachusetts
1998
Publication:
Innovations in American Government Award
Sponsored By:
Innovations in American Government Awards
Jurisdiction:
Massachusetts

Between 1996 and 1997, energy deregulation was a prominent topic of debate in the Massachusetts Legislature. Energy deregulation allows consumers to choose between power suppliers, which creates a competitive energy market. As deregulation began to appear inevitable, the Massachusetts Health and Educational Facilities Authority (HEFA) took an interest in assuring the nonprofit sector's ability to take advantage of the new market.

Previously, HEFA had been charged with issuing tax-exempt bonds for hospitals, colleges, and nonprofits. HEFA had been self-described as "an obscure independent authority," and was looking to revitalize its relationships with the smaller organizations of the nonprofit sector. The result was PowerOptions, the Massachusetts Nonprofit Energy Consortium.

Under the PowerOptions program, HEFA banded its nonprofit client institutions together to negotiate supply contracts on their behalf. Under this consortium, smaller nonprofits were able to reap the benefits of competitive pricing that might ordinarily go only to large business customers.

HEFA initially held a goal of educating and initiating 100 nonprofits in PowerOptions. Two years later, PowerOptions was composed of more than 500 organizations of all sizes. HEFA then implemented a rigorous competitive process to solicit proposals from energy firms. By the end of this process, PowerOptions had received contracts from two separate energy firms for natural gas and electricity that would collectively save its members $20 million in the first year alone. These energy contracts have been verified as offering the best prices in the state.

Prior to the creation of PowerOptions, HEFA was a lethargic state agency of little ambition. This removed role actually helped the agency to mobilize the PowerOptions consortium by advancing in a single-minded fashion with no outside perception of political motivation. These attributes allowed the consortium to be one of the first, and largest, purchasing groups on the New England market. HEFA's true innovation was in reinvigorating its role while efficiently meeting the needs of its client institutions.