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December 2005 — Vol. 83, No. 10

COVER STORY

How to cut your energy costs

... without crimping your operations

 

No matter what energy source you depend on to run your business, you’re paying more for it than last year — probably a lot more. Prices for natural gas and oil have at least doubled since a year ago. And predictions are that these energy prices will go higher in the coming months. Electricity prices are also expected to soar due to three impending changes: rate increases early in the year necessitated by higher fuel costs and other factors; a new federal pricing system that might take effect late in the year; and expiration of the state’s “transitional standard offer price” on Dec. 31, 2006.

While lawmakers debate what they can do about energy prices, there are things you can do right now, as well as longer-range strategies you can put in place, to minimize your costs without crimping your operations.

“Saving money with energy efficiency cuts costs in a way that’s smart — it’s better than laying off people,” notes Chris Halpin, president of Celtic Energy, a consulting firm in Glastonbury. “Energy efficiency can also dramatically improve a building’s comfort level, which improves productivity,” he says.

What to do right now

Besides taking commonsense steps such as reminding workers to keep doors and windows closed, see if you can make operations and maintenance improvements. Low- or no-cost options such as calibrating thermostats and properly maintaining your building’s heating and air conditioning systems and other equipment can reduce your energy costs by 5% to 10%, Halpin says.

Check thermostat accuracy, advises Philip Fine, vice president of the energy consulting firm PPL SavageAlert Inc. in Rocky Hill. “Walk around the building with a thermometer and take the temperature in several locations. If your thermostat is set at 70 degrees but the actual temperature is 74, you know you can lower the setting below 70,” he says.

Use programmable thermostats to make sure your heating and cooling systems aren’t running longer than necessary, Fine suggests. “Are the systems maintaining the same temperature 24 hours a day, or are they starting too early in the morning? You do need some time for the systems to bring room temperatures to the desired level, and a programmable thermostat will solve this problem. It’s very simple, inexpensive and effective to replace a conventional thermostat with a programmable one. Adjusting the thermostat’s set points to control when the heating or air conditioning stops and starts, relative to building occupancy, is easy to do,” Fine says.

Also, “Be sure equipment is properly maintained — filters are changed; motors are maintained; belts are adjusted; heating equipment is serviced, including an efficiency check. All those little things add up,” he says.

Consider recommissioning (or retrocommissioning) the building to bring the building’s systems back to the way they were designed to be run, Halpin recommends. Changes inside the building over the years, such as adding or taking down walls, may mean that vents are now in the wrong places and consequently the HVAC system might need to be modified, he says. He suggests checking with your electric utility company about possible recommissioning incentives.

Use high-efficiency light bulbs. These cost more than conventional bulbs but use 75% less energy and last 10 times longer, on average. They usually have about a two-year payback, Halpin notes.

Install occupancy sensors to turn lights on and off. New dual-technology sensors detect sound and body heat, not just motion, so they don’t shut off lights when occupants aren’t moving around.

Know what you’re spending on energy, where and for what

Also determine exactly what you’re paying for energy and why costs have risen.

You need to isolate energy costs from other costs, and should have a knowledgeable person review them, Halpin says. He notes that many companies, especially those with multiple locations, don’t have one person managing all of their energy purchases. And “a lot of companies mix in utility costs with operating and maintenance costs. That makes it difficult to manage.”

Halpin recommends that you “get your costs reviewed by someone with a technical background, like a facilities person who understands the implications of your usage patterns.”

He also suggests benchmarking your costs to see how much energy you are using per square foot of building space compared with other companies’ facilities. “For commercial offices, it’s easy to do with EPA’s Energy Star program for buildings [online at www.energystar.gov]. A person enters a year’s worth of utility data and other information, such as how big the building is and how many people use it. The program then runs your data against a database of similar buildings.”

Carefully examine your energy bills, advises Rob Earley, a CBIA assistant counsel who specializes in energy issues. “If you have questions about anything you see, call the number provided on your bill and ask to speak to someone who can explain your energy profile. If you can understand what the numbers on your bill mean in terms of your business’s everyday energy consumption, you can begin to make an effective plan for managing your energy usage,” he says.

Fine suggests looking back over your energy usage history for one or two years to see if there were any unexplained increases. “If you have the same number of people and the same equipment but your usage has gone up, why? Is something wrong with your equipment?”

On your bill, he says, “You should look at your kilowatt hours — the sum of your usage over a period of time — and your kilowatt demand — your maximum usage, or peak demand. They can indicate different problems. For example, if people leave lights on longer, you’ll have the same demand (the same equipment is drawing the same amount of power) but higher kilowatt hours.”

It’s important to know what your peak demand is, Earley notes, because that affects your bill not just for the current month but for the entire year. “Your highest 15 minutes of electricity usage or your highest-demand day for natural gas triggers price consequences on your bill for the rest of the year,” he says.

Reducing demand

Strategies for reducing your peak demand include using timers and controls to stagger start-up times for equipment and lights, and requiring employees to use the “sleep” mode on idle computers, Earley says.

Halpin adds, “There are programs and money available through ISO New England [the regional power grid operator] to install demand-control equipment.” Contact your utility company about these programs, he says, adding, “Besides saving you money, lowering your demand helps prevent blackouts.”

One demand-response strategy for natural gas is an interruptible-supply agreement. “Interruptible customers have an agreement with us that they will receive gas at a lesser price but that we can interrupt their supply during the coldest days of winter, when they’ll switch to an alternative fuel,” says Jim McNally, marketing and sales director for Connecticut Natural Gas and Southern Connecticut Gas. “This allows us to maintain our [supply] portfolio for our noninterruptible customers, which helps us keep their price down. ... A lot of our big customers have dual-fuel capability,” he notes.

If interruptible service is not an option for you, McNally says, “We might be able to offer a more flexible price — for example, a variable rate that floats with the market, or a fixed rate for a short period of time.”

He also suggests using conservation strategies such as changing the timing of shifts so you reduce your gas usage during the coldest days — “our highest-cost time,” he says.

Yankee Gas also is willing to work with its customers on how to use energy efficiently, according to John Ferrantino, director of sales and marketing. They also offer occasional energy efficiency seminars. They have even sent an energy efficiency expert into some of their large customers’ facilities to do an energy efficiency study of their boilers, Ferrantino says.

Bigger changes, bigger savings

Making capital upgrades, for example, in lighting, HVAC systems or windows, can potentially save you more money — 30% to 40% on utility costs, according to Halpin — than you can save with simple operations and maintenance changes.

To help you identify possible capital upgrades, Halpin suggests that you hire someone to do an energy audit. “When an audit is complete, you have a great management document, with an executive summary for your financial people and technical details for the people who will implement the changes,” he says.

Capital upgrades, of course, require spending money in order to save money. But your project might qualify for rebates or incentives from your electric utility (natural-gas incentives will be available next year; see box above). “The utility company will pay for 10% to 30% of the costs of capital upgrades, sometimes 50%,” Halpin notes.

Even without incentives, some projects have short paybacks or bring other benefits besides energy savings.

According to Fine, if your building has old lighting fixtures, lamps and ballasts, it will probably be cost effective to replace them. “That kind of project can be done fairly quickly,” he says.

Similarly, if your heating and air conditioning equipment is more than 15 years old, it’s worth looking into replacements, Fine says. “New equipment is much more efficient,” he notes. This type of project “doesn’t have a short payback, but there are other benefits”: greater comfort, and if the older equipment is breaking down and needing repairs, less maintenance, he says.

According to Halpin, energy efficiency upgrades can also improve worker productivity, sometimes dramatically. The office-furniture manufacturer Herman Miller recently opened a new building that uses a lot of natural light and 100% “green” power, and meets high energy efficiency and environmental standards. They have had a “staggering” 400% increase in productivity, Halpin says. “Herman Miller shows that a thermally comfortable and properly lit facility results in productivity improvements.”

Which brings up another option you might consider: alternative energy sources, such as solar photovoltaic (PV) panels, says Halpin.

The Connecticut Clean Energy Fund offers rebates for solar PV and biomass-fired heating systems (very clean burning systems that use wood chips or construction waste), he says. Another option is combined heat and power, which uses microturbines to produce electricity and heat that can be used to power equipment.

“Even with the incentives, the payback for solar is still high — about 10 years,” Halpin acknowledges. “But Connecticut is actually one of the best places to use photovoltaics, because our electric costs are so high,” he says. “The Clean Energy Fund will pay $5 per watt for PV systems. They work best on hot summer days” — just when they’re most needed to relieve pressure on the electric power grid.

“PV on roofs down in southwestern Connecticut would help eliminate the [area’s] transmission congestion problem. The single biggest culprit creating the congestion problem is air conditioning in the summer,” he notes.

Southwestern Connecticut’s electricity transmission congestion has been one of the factors, along with soaring fuel costs, that have been pushing up wholesale electricity costs in the state.

Pressuring for more progress on infrastructure upgrades

Becoming more energy efficient will help relieve your costs, but only to a degree. Continued progress on upgrading the state’s energy infrastructure will also be critical to keep energy here both affordable and available, without the threat of blackouts or brownouts during peak demand times, says CBIA’s Earley.

You can help make that happen by staying informed about energy issues and contacting legislators or regulatory agencies when they are seeking public input on infrastructure proposals. CBIA will update you on these issues at cbia.com/gov, in our publications and at occasional energy programs.

Meanwhile, do what you can to use energy efficiently, he and others advise. Contact your utility company to see how they can help.

“The utilities just deliver power to your building,” Earley notes. “What’s happening inside your building can have a dramatic effect on your energy usage and costs.”

 

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