Fairfax Media this week reported that ERM Power Retail won a $16 million tender to deliver electricity for two years to the government's larger offices and to its hospitals, jails and schools.

It is the first time ActewAGL has lost the government contract, but it won two smaller tenders totaling about $6 million over the same period to continue providing energy to unmetered street and traffic lights and smaller government departments.

Some inside government are astounded that the evaluation panel led by the Territory and Municipal Services Directorate snubbed the local company that is part-owned by the ACT government.

Others, however, said ERM came in at such a good price that it easily beat the local business.

ActewAGL is a major sponsor of local events and organisations and is a principal partner of this year's Canberra centenary celebrations.

A condition of ERM's contract is that it also provides local sponsorship.

But in answer to questions from Fairfax Media, the Queensland company's chief executive of electricity sales, Mitch Anderson, would not put a dollar figure on the sponsorship commitment.

He confirmed that ERM would sponsor community organisations in the ACT as a result of the electricity sales agreement with the government.

"As an electricity retailer which is licensed to operate in every Australian state, the ACT and the Northern Territory, ERM Power is proud to contribute to the communities in which it operates through partnerships and sponsorship programs," Mr Anderson said.

ERM also provides power to some federal government sites in Canberra, but Mr Anderson would not say if the new ACT government contract, which started on January 1, would result in an office being opened here or if jobs would go to local people.

"We already supply more than 450 Australian government sites in the ACT," he said.

"After just five years of operation, we have become the fourth-largest retailer in the national electricity market and are expanding into the small- to medium-enterprise market.

"The quality of our ERM Business Energy service offering was confirmed last year when we were rated the No. 1 electricity retailer for customer service to business."

Meanwhile, ActewAGL insists no local jobs or sponsorship will be jeopardised as a result of it losing the ACT government contract.

Sources said the local power retailer had sought legal advice on what sponsorship deals it could get out of.

But ActewAGL's director of marketing, Paul Walshe, said that was not the case and that all arrangements would stay in place.

"We are very disappointed that we lost that contract,'' Mr Walshe said.

''The energy retail business is a pretty tough business and can be quite cut-throat.

"You win some and you lose some. We have lost comparable and even slightly bigger contracts than this in the past, but this is the first time we have lost the ACT government contract.

"But this is not going to impact on jobs at all and our sponsorship program will stay in place."

ActewAGL employs about 750 people and has an annual sponsorship budget of about $1 million.

In addition to that, the local power retailer has committed $1 million from its shareholder dividend for the Canberra centenary.

"The centenary is not about the ACT government, it is about the people of Canberra celebrating a very special event after 100 years. You only turn 100 once," Mr Walshe said.

More broadly, he said, the Canberra community would be at a disadvantage if the company said it was not going to support this or that because it had lost a contract.

"We want to win the contract back in two years' time, but in the meantime, we have just secured some new contracts locally and interstate which helps offset this loss,'' he said.

"That's the game we're in.''

Mr Walshe said the ACT government contract was a substantial contract to lose, but life went on.