Turning Up the Heat on Utility Management

Not every energy management strategy has to be complicated—sometimes it’s as simple as turning off the lights. And thousands of dollars can be saved at the store level when an effective, and clearly communicated, energy conservation plan is in place. Senior editor Katherine Field talked with Rick Sievertsen, VP client solutions for Spokane, Wash.-based energy expense management firm Advantage IQ, about specific ways retailers can dial up utility savings.

How has the downturn affected retailers’ actions with regard to utility bill management? 

Retailers have gotten very interested in utility expense management because, very simply, it will help the bottom line. But retailers are also looking at opportunities for redeploying personnel, which is opening up opportunities for outsourcing utility bill management.

How does a retailer justify outsourcing utility bill management? 

It is critical that a retailer look very carefully at the value proposition. Billing corrections save money, eliminating late payments saves money, making sure each meter is on the proper utility rate reduces expense. The data can be used to prioritize where the high-cost, high-consumption opportunities reside.

Where do you find most high-cost, high-consumption opportunities? 

That, of course, varies by store and by location. We use the data to pinpoint where we should put our efforts. Where the price is high, we look for ways to improve the supply contract or the load factor at the site to qualify for better pricing. Where the consumption is high, we look for opportunities for improved efficiencies.

What are some simple ways that retailers can find efficiencies? 

There is a lot of opportunity in low-cost, no-cost energy conservation. Turn lights off when a space isn’t occupied. Turn off office equipment when it’s not in use. Let your building automation systems do their job. Don’t override thermostat settings. Educate your employees on what they can do to help improve energy efficiency—provide them with information, show them where their facility stands among the portfolio, and show what the results can be when they help their facility perform better.

How do you create a specific plan for managing utility expense? 

We start with the data. We use utility bills because every site has a utility bill, but not every site has a building automation system or a fancy meter. We first confirm the accuracy of the bill, and we then separate the cost components from the consumption components. Too many times people make the mistake, when the cost is high at a facility, to start making corrections without knowing whether it’s the price or the consumption that is high. Measure price and consumption separately, then benchmark facilities on both price and consumption from high to low. Spend your time on the ones that are high, because that’s where you’ll get the biggest bang for your buck.

On the supply side, we make sure that if the retailer is in a deregulated market, it is buying from the best supply source. We also make sure it uses the right risk management techniques to manage the volatility of its energy price, and that it’s contracted under the best possible terms and has an ongoing program in place to continually monitor that cost of energy.

On the consumption side, we reach out to high-consumption sites to find out what’s going on. What type of equipment is being used? How old is it? How big is the store? Is there anything unique about it that would lead to higher energy consumption? And then we let our certified energy managers work with those store managers to try and identify what is causing the problem.

What can a typical retailer expect to save on a per-square-foot basis if utilities are properly managed? 

Retailers are all over the board. On average, they spend from $1 to $3 a square foot on energy. We see savings of 5% to 15% easily, so it could be anywhere from 5 cents to 50 cents a square foot depending on where they are today.