Unwatched Energy - The Invisible Thief

July 2014

New England set a record in January - we hit a 10 year high in energy costs.  Electricity in New England is nearly 100% more expensive than just one year ago.  The price of natural gas (from which most of our electricity is generated) has risen almost 130% over the same period.  According to ISO New England's projections, we can't expect much relief from rising energy costs over the next couple of years.

In Connecticut, energy costs are one of several competitive disadvantages that businesses have to contend with.  Depending on the industry, energy can be the 3rd or 4th biggest expense in their operating budgets.  Besides making it harder for existing businesses to grow and create jobs, high energy costs inhibit economic development by making it difficult to attract new business into the state.

Businesses have three principal opportunities to keep energy costs from robbing them of profitability:

  1. pay no more for energy than necessary
  2. buy less of it
  3. manage how you use the energy that you buy

Sounds simple enough, but there is plenty of evidence to be found that says businesses are having a lot of trouble with this.  My goal here is to provide you with a few insights which will help you to begin to reduce your energy costs the same day that you read this.

First off, there is no reason why anyone should be paying more for energy than what their utility charges for it.  Deregulation has blessed us with a lot of energy suppliers, each of which has different products, pricing, contract terms and, unfortunately, ethics.  Be absolutely certain that you understand what you are buying.  Compare the supplier's energy price against what your utility offers (go to " www.CTENERGYINFO.COM ").  Make sure that you purchase an "all-in", fixed contract. "All-in" refers to all costs being included in the advertised price except transmission-related costs which are billed by the utility.  If you do decide on a variable contract for some reason, make sure to keep track of the termination date and have a new contract in place before it expires.

Secondly, use less energy.  Take a walk through your building and look around for opportunities.  Do you have old inefficient lighting, HVAC equipment, boilers, or motors that should be replaced or upgraded?  Is your air compressor more than 10 years old or does it run almost constantly?   Do you have any broken windows, bad weather seals, or leaky roofs?  Are doors or windows being left open unnecessarily?   Is your building properly insulated?  Make a list of the various opportunities and determine how much you can save by addressing them.

Sure there will be some up-front expenses associated with upgrades or replacements, but there are many programs and funding opportunities available to help offset some of the costs.  Along with incentives and rebates, there is zero-interest financing from your utility, low-interest loans, and tax credits that you can take advantage of.  Check out  " EnergizeCT.com " or your utility's web site to learn about some of the programs that can help you. 

Lastly, but most importantly, understand where and how you use energy and implement a strategy to manage it.  Frankly, it truly is as easy as just making sure that you turn off lights and equipment that do not need to be on - the trick is figuring out the what, where, and when part.  Fortunately, we now have some new technologies which allow us to actually see how we use energy in real time.

Along with helping you monitor where and when energy is being consumed, these systems come with powerful analytical capabilities to help you pinpoint cost saving opportunities to reduce energy use.  Even better, they facilitate the use of continuous improvement techniques to further drive down your energy costs.  As the technology is wireless, you can easily implement such systems in your facility (although you will need an electrician to perform some of the work).  Companies typically capture enough energy cost savings to realize a pay- back on the $3K to $10K installation costs in under 12 months.  After that, you get to enjoy the extra cash every year thereafter.

If you would like to learn more about making energy visible and driving down costs through continuous improvement, I would be happy to help you - just contact me at you convenience.  

If you are an economic development professional and would like to arrange an energy presentation for businesses in your community, please contact CEDAS' Resource Committee for details.

- Tom Burmeister, CEDAS Board member, Profit Miners, Inc. www.profitminersinc.com

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