A Girl by Any Other Name

Published on the Association of Energy Engineers
A Girl by Any Other Name
By Catherine Luthin, Luthin Associates

According to an article in the Wall Street Journal, when Mattel, the makers of Barbie, asked the public to vote on the next “career” Barbie last fall, the winner was the Computer Engineer. It was a somewhat surprising choice given that that the votes were entered on the Barbie website and the choices were architect, anchorwoman, computer engineer, environmentalist and surgeon. The early favorite was anchorwoman until a concerted Internet campaign by so called, “geek-girls,” led to the winning choice. Give Barbie credit for coming a long way. An early 1990s talking Barbie included the phrase, “Math is hard” in her repertoire.

The article goes on to provide details of how computer science, engineering and other math and science related jobs have come full cycle. Those male dominated industries began to attract women in the 80s and 90s but now we are seeing a fallback in participation from women with careers requiring science or mathematical backgrounds. While there are many theories posed by smart people, I decided to do some of my own research.

I asked one of my employees, Natale DiDonato, no, not Natalie, to give me some insight.  Nat, as we call him to keep things straight, is a modern day, “boy named Sue”. While no one would mistake him for a woman, he has spent most of his life being characterized as such. Whether it was the contest that sent him a Shirley Temple Doll instead of the T Rex model he wanted; or, the scholarship fund that told him it was only open to boys (we are talking about the 60s here), Nat has been a male who has had ample opportunity to observe gender bias up close and personal.  To this day, there are calls to our office asking for Natalie.

During his career in Economic Development in the 90’s, Nat was on all the hot lists, Donna Hanover’s breakfast club; Hilary Clinton’s speakers’ circuit and, a host of women’s business groups. He claims he always noticed a hesitation when the first meeting or voice contact was made. “Were they expecting me or Natalie?” he wondered. Yet he was always welcome.  What he noticed when he talked to all those women, is that they had one thing in common. Someone was a significant mentor to them.

That was my personal experience. Early in my career, Lindsay Audin (another he) who at the time was the energy manger at Columbia University choose to mentor me.  I was lucky. Lindsay had won several national energy manager of the year awards from the Association of Energy Engineers and he had a lot of knowledge to impart.

Most experts believe that groups of mixed gender, regardless of the industry will come up with more comprehensive solutions when all genders have input. Common sense tells us that this makes sense. Also, as this article points out, we may be facing shortages in filling these positions in the near future.

So what is the answer, better mentoring; more detailed targeting by educational institutions and industry; more organizations like WICE? Yes, we need all of these but we have had many such programs in the past. Apparently, they are not working as well as we had hoped. Perhaps we are just not working hard enough at turning this around.  I believe that is important for all of us to seek opportunities to personally mentor young women in these fields. This is something I practice in seeking candidates for employment for my firm or for clients.  You can encourage a young women to seek a degree in a field she may not have considered or you can choose to personally mentor someone.

If Lindsay had not made that choice, I would not have had the successful career that I have had. Hopefully, I have encouraged some of you to make that choice in the future.


Catherine Luthin is Chair of the Association of Energy Engineers’ Council on Women in Energy and Environmental Leadership’s Energy Policy Committee.

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Power factor rising as utilities look to boost efficiency, lower costs

Written by by Catherine Luthin, Richard A. Angerame

Published on Real Estate Weekly , October 27, 2010

As of October 2010, Con Edison began charging for power factor penalties.

A low power factor forces utilities to deliver more power to accomplish a given amount of work Utilities spend more serving customers with a low power factor. This decreases energy efficiency and increases greenhouse gases, which motivated policymakers to institute the requirement.

Most class “A” high-rise buildings are affected. The initial change affects accounts consuming at least 1 MW of demand with power factors below 95%. For customers using more than 500 kW, charges start a year later.

Only users with power factor meters can be billed for power factor. Those without these meters are exempt until installation, which will occur over three years.

Power factor correction is becoming more popular as utilities seek to boost efficiency and lower costs. The issue arises when systems utilizing AC power experience current flows into and back out of the load without delivering useful work.

Based on analyses by utiliVisor, power factor effects were measured on three Class A, multi-tenant buildings ranging from 1-1.8 million square feet with annual electric bills averaging $3.2 million. Their operational characteristics reflect most large properties in the city. Luthin Associates assisted utiliVisor by modeling the data with Luthin Associate’s rate engine to identify the new penalty’s cost.

Business Services Industry

Bibliography for: “Power factor rising as utilities look to boost efficiency, lower costs”

Catherine Luthin “Power factor rising as utilities look to boost efficiency, lower costs“. Real Estate Weekly. FindArticles.com. 18 Jul, 2012.

COPYRIGHT 2010 Hagedorn Publication
COPYRIGHT 2010 Gale, Cengage Learning

Natural Gas: The Butterfly Effect on Electricity Prices

Published to LA Confidential, Summer 2012

Several members of the Luthin Associates staff have been purchasing deregulated energy products since the early 1990’s, and during this period we often noted a fairly strong correlation between natural gas and oil prices. It was also a common occurrence when meeting with a CFO for him or her to correlate the rising cost of electricity with the current price of oil.  While this correlation may have once been valid, changes in the market and the evolution of the nation’s energy production infrastructure have diminished the importance of oil in the electricity markets and simultaneously enhanced the significance of natural gas as a price indicator.

Oil used to be an integral power plant fuel, but it has become less important over time. Emissions requirements and other environmental and economic concerns have yielded an increasingly gas-fired energy production mix.  According to the Energy Information Agency (EIA), the share of electricity produced from oil has fallen from a high of 22% in 1978 to less than 1% in 2011. For the last 30 years, coal and natural gas have been the major fossil fuels utilized in power plants. Critically, natural gas has continued to replace many coal plants. Coal fell from 78% of generation in the mid-1980’s to 64% in 2010, while natural gas complemented this shift by rising from 15% to 35% during the same period (EIA). As a result, the direct influence of crude oil prices in the electricity market has abated and been superseded by the prominence of natural gas.

As such, in most U.S. power markets, natural gas has become the price driver for electricity. The EIA further projects electricity  generation from coal to decline by 5% in 2012 as generation from natural gas increases by 9%. The dual advantage of lower fuel prices and better greenhouse emission performance signify the staying power of this trend.

The continuing decline in natural gas prices is a direct result of expanding gas production from thousands of new wells in the U.S., driven by the use of hydraulic fracturing and horizontal drilling technologies in shale formations (a combination colloquially known as “fracking”). Lawmakers have routinely introduced new emissions requirements to assist in sustaining the progression towards natural gas power. As trends in the supply and regulatory areas continue in this fashion, the expanding influence of natural gas is solidified.

Further contributing to the overall situation, it was discovered that many of the new shale wells are “wet”, meaning they also produce natural gas liquids (NGL) that include propane, ethane, butane, and natural gasoline. As oil prices rise, NGL recovered from shale may become worth more than its gas. In addition, the aforementioned gas drilling technologies are also being used to extract oil in places previously considered inaccessible. Hydraulically fractured oil wells, in turn, produce large quantities of natural gas as a byproduct, which further increases supply and lowers gas costs.

New gas production and lower prices resulting from abundance of shale gas and the impact of the recession have placed the weak correlation between oil and power pricing in sharp relief. As the world’s demand for oil continues to rise, and speculators thrive on geopolitical tensions, crude oil prices continue to rise while natural gas prices ease. The August 2012 crude oil contract traded above $98 per barrel from January through April. The same contract for natural gas decreased from $3.28 per mmBTU to $2.46, a drop of 25%.  Market analysis demonstrates that as natural gas prices drop, so do electricity prices. Since 2008, electric commodity pricing (the bill portion without utility delivery charges) has dropped by more than 50%, largely due to the ~65% nosedive in natural gas supply pricing during that period.

The net effect is that higher oil prices have stimulated the NGL market, bringing prices up. As a result, hydraulic fracturing of oil and gas wells have increased, both of which increase the supply of gas and depress natural gas prices. Because gas is the price leader for electricity, these various phenomena drive down the price of power – and this directly contradicts the old oil/electricity price correlation.

Ultimately, such low gas pricing is great for consumers, but not sustainable. As prices drop, wells become too costly to drill relative to the value of the gas and halt production accordingly.  Indicative of this, Baker Hughes (an oilfield service company) has reported that natural gas rig counts are at the lowest level in ten years. As such, the reduction in drilling may tip the supply-demand curve and result in an upward trend in natural gas prices. This shift may be exacerbated by increasing gas demand if the economy recovers, and if new EPA rules force coal-fired utilities to switch to gas. These developments would ultimately impact electricity prices in the future, as markets adjust to the new reality.

Until such things occur, enjoy the ride.


The butterfly effect and chaos theory can apply to the energy market too! Learn more by clicking the link to the full issue: Summer 2012 LA Confidential

Warranties for energy investments

Real Estate Weekly – Energy & Green Building

Natale DiDonato

September 28, 2011

Luthin Associates Project Manager, Nat DiDonato discusses what you should look for when reviewing warranties on energy equipment.

I built my first deck 30 years ago. At the time, Wolmanized wood was the high-tech product of the day. Your deck would last at least 30 year — guaranteed!

Fifteen years later, my deck was still strong as ever, with no sign of rot. But it looked awful. I found the warranty document and it clearly states, “Guaranteed not to rot for 30 years.” They never guaranteed it would look good 30 years later.

Understanding warranties can be overwhelming. For example, warranties for photovoltaic systems (PV) get complicated because the two main components, solar panels and inverts, often have separate warranties.

Many manufacturers offer long-term warranties on solar panels. Such warranties typically only cover “output” and are intended to ensure that panels produce as much electricity as the manufacturer claims. Coverage normally normally extends to 80 percent of the promised output over a 20-25-year period, or over 90 percent over a 10-12-year period. Once your warranty expires, even if some of your panels are lemons, you will pay to replace them.

Power inverter warranties generally run two to 15 years. If the inverter is not sized correctly, it will wear out sooner, and the sizing error will probably void any warranty.

Note when warranties begin. If you hire an Energy Service Company (ESCO) to install a number of energy conservation measures at your facility, the installation period may be as long as a year. It is possible that a chiller could be installed in December and tested in January. Does the warranty clock start running in January, or during the summer when you start using it? Does the ESCO have any liability for the warranty period?

There are many components to an HVAC system, and these components may have multiple manufacturers and terms.

In addition to the start date and warranty period, you may be able to negotiate a start date. Also, if a third-party vendor stands between you and the manufacturer, you will want a copy of the manufacturer’s warranty agreement.

Understand who holds a warranty. Will that company be viable if you need to exercise a claim? If the manufacturer is situated overseas, how do you collect on a product bought years ago? We all agree on the value of installation contractors who have experienced a good reputation. We would expect them to verify warranties. However, in the emerging energy product markets, installers may represent niche companies that are new to the marketplace and have shorter track records. These new providers would probably be just as happy if customers didn’t read warranties too closely.

Many energy industries police themselves and provide standards to measure performance. The Illuminating Engineering Society, for example, has procedural standards to measure LEDs. Additionally, organizations like NYSERDA and Con Edison require products that qualify for rebates to meet the industry standards.

While standards can be manipulated by manufacturers or even applied fraudulently, they still provide a good starting point for your research.

Here’s some recommendations:

Always purchase equipment and energy installation project competitively. Have a demonstration installation where feasible. Identify professional organizations that certify the type of equipment you intend to purchase.

Ask utility or energy efficiency experts if they can provide information about a product or technology.

If end-users generally purchase extended warranties, there is probably a good reason for it. So consider such a purchase as well.

And finally, understanding the equipment’s operating requirements.

Don’t take the gamble: Learn how to win at energy roulette

Real Estate Weekly

BY Catherine Luthin
President, Luthin Associates
December 15, 2010

Smart executives don’t tend to gamble. But when owners or managers spend their company’s energy money on unproven technologies, or make investments based on questionable information, they are taking a big chance.

There are many factors to consider when evaluating risky, “cost cutting” energy-related investments – and the wrong decision could potentially wipe out a firm’s energy budget.

Energy price projections are often used to promote expensive, energy-efficiency projects. Price escalators are used to develop savings like compound interest, an assumption that a 5% annual rise yields a high price after 10 or 20 years.

But it’s most important to see the whole picture: these projections involve trends in the energy futures markets Geo-political uncertainties, weather forecasts, utility rate cases, and imminent regulatory changes.

On the wholesale supply side, US DOE’s Energy Information Administration’s (EIA) forecasts are frequently used. Many claim to be unbiased (true) and the best available source for wholesale-related data (not always true). The record shows that the EIA has sometimes grossly underestimated future pricing. Yet it has also erred in the opposite direction.

Even is accurate, such projections only show trends in the base of pricing energy. A more accurate forecast for a particular project would take into account local competitive retail energy prices secured via requests for indicative pricing or for a long-term period. These requests made at the start of the project will accurately reflect pricing for the first 3 to 5 years, after which an adjusted consumer price index (CPI) escalation factor should be used.

In recent years, many local utilities have seen consistently increased delivery rates of double digit percentages, even as the supply prices dropped. Therefore, it is important to conduct a sensitivity analysis (develop a base, along with best-case and worst-case scenarios) across certain variables that may make or break a decision to move forward on a given project.

Some energy options depend on the continuity of government incentives. Funds specifically collected for ongoing energy efficiency programs have been cut in certain areas for budgetary reasons. Unless a government benefit – such as high price paid for solar generated power – is maintained under a contractual agreement, it’s only good for as long as it lasts.

Assumption: the miraculous gizmo you brought isn’t dependent on escalating pricing or ongoing government benefits. It just sits there and cuts energy use. Are you sure? Is it separately metered? Has your overall energy consumption actually dropped?

It’s surprising how little measurement and verification (M&V) is done on expensive hardware. Millions are spent on upgrades while little or nothing is spent on actually monitoring the system. Web sites set up to do so are seldom checked, while they could be alerting personnel to potential device or circuit breaker failures.

When a claim is repeated often enough, it can be mistaken as fact, even if not verified.

A good example is the oft-heard notion that LED lamps will last for 100,000 hours or more. While LED technology is fully expected to yield amazing results as it develops, no one has yet seen a commercial LED light fixture – other than LED exit signs – run for 100,000 hours. Some LED products have been found to lose more than 30% of their lumen output in less than 3,000 hours of operation. Yes, they were still lit. But that’s not a solid basis for claiming a long, useful life.

The recommended rule for projecting the life of LED fixtures is that the claim should not exceed six times the length of an actual test. A claim of a 100,000-hour lifetime requires a test for at least two full years with no significant reduction in output. Ask vendors for an independent report showing such a lengthy test. If they can’t produce one or use fuzzy, arcane technical terminology, don’t bet on this claim. As many have learned with power factor correction devices, many claims are based on specious statements that distort meaning.

It’s great to be optimistic about opportunities. But taking unnecessary risks – with company funds or with your own job – is not a wise gamble.

So play it safe – and let the other guy be the guinea pig.

Biodiesel: Making Heating Oil Cleaner

Biodiesel: Making Heating Oil Cleaner
April 26, 2011 | By Catherine Luthin

Catherine is the President of Luthin Associates, an energy management consulting firm that proactively manages energy procurement and sustainability services for their clients.

With the passage of Local Law 43 by the City Council last year, a minimum of 2% biodiesel must be blended into all grades of heating oil – #2, #4, and #6 beginning in October 2012. Local Law 43 also requires that the sulfur content in #4 heating oil be reduced from 3,000 parts per million (ppm) to 1,500 ppm (a NYS law also passed last year requires that sulfur in #2 heating oil be reduced to 15 ppm by July 2012).

This came about because of New York City’s poor air quality – the Fed gives the city a failing grade. The NYC Department of Health and Mental Hygiene has concluded that buildings using the dirtiest heating oils—#4 and #6—are a major cause of the city’s high air-pollution levels. Further, the hospitalization rate of New York City children with asthma (which is aggravated by pollution) is twice the national average. This caused the city to look into cleaner alternative fuels for heating. One solution? A bit of biodiesel in the heating oil mix.

Biodiesel is a 100% renewable fuel that is made from domestic soy oil, recycled restaurant grease and numerous other sustainable “feedstocks.” Biodiesel contains zero sulfur and greatly reduces air emissions when blended with traditional heating oil.

Here are some of the most common questions on biofuels, and answers to them:

Where do I purchase these fuels?
By the 2012 heating season, when the legislation kicks in, all of these products are expected to be widely available. However, biodiesel is competitively priced and readily available today. All bioheat oil sold in New York must meet ASTM biodiesel spec D6751 and heating oil spec D396.

Are there different grades of biodiesel fuel?
Yes. Biodiesel fuel comes in a variety of blends of biofuel/petroleum oil. Common blends include B2 which is 2% biodiesel, B5 which is 5% biodiesel, B20 which is 20% biodiesel, up to B100 which is 100% biodiesel. Under Local Law 43 B2 is the minimum biodiesel heating oil blend that is required.

Will I need to purchase new equipment?
No, a biodiesel blend does not require any new equipment. All of these blends, from B2 to B20 grade replace traditional heating oil. It is advised to perform a complete tank cleaning prior to the use of biofuels and to replace the oil furnace filter. It is also recommended to check with the boiler manufacturer to ensure the warranty will not be violated by the use of biofuels.

Will I pay more for biofuel?
Yes, you will pay more, but these heating fuels burn cleaner, which means they will require less maintenance and less product burned, potentially offsetting some additional costs per gallon. Though B2 is competitively priced, there is an escape clause which states that if the price of minimum 2% biodiesel is at least 15% more than the price of comparable 100% petroleum heating oil, 100% petroleum heating
oil can be used. In addition, for B2 and all blends of biodiesel up to B20, New York State offered residential customers a penny per gallon tax credit which has amounted to big savings for customers this past heating season.

Are there incentives for those who purchase biofuels?
There currently exists a tax credit for the purchase of biofuels used for space heating or hot water production for residential purposes within New York State. The tax credit is equal to $0.01 per each percent of biodiesel per gallon of biofuel purchased. For example, B2 (2% biodiesel blend) is eligible for a $0.02 per gallon tax credit. The maximum eligible credit is $0.20 per gallon for B20 (20% biodiesel blend). At present, this incentive is set to expire December 31, 2011.

Photo credit: John Barrie
Author: CATHERINE LUTHIN
Catherine Luthin – who has written 1 posts on Urban Green Blog.
Catherine is the President of Luthin Associates, an energy management consulting firm that proactively manages energy procurement and sustainability services for their clients.

Managing Facility Energy Needs in a Competitive World

Source: Energy User News
Publication Date: 01-JAN-99

Catherine Luthin serves as principal of Luthin Associates, an energy management consulting firm specializing in deregulated energy markets, and is also executive director of the New York Energy Buyers Forum, an end-user and supplier coalition representing pro-competitive interests in the New York area. Sheila Sweeney joined Luthin in 1995 and specializes in energy procurement, database design, and program development for competitive energy markets. Previously she was director of the Energy Conservation Loan Program for the City of New York and an independent contractor for the Commonwealth of Massachusetts, managing over $18 million in third-party and ESCO efficiency investments.

Nine steps allow energy managers to leverage historical billing data into a competitive tool.

The energy industry has undergone a fundamental change. Despite the fact that only a few states presently allow it, some marketers are selling retail electricity and offering new options to take advantage of natural gas deregulation and demand-side management (DSM).

Although many building owners and energy managers might be happy with their present energy prices and supply, such opportunities have many wondering if they can do better-and if they feel comfortable doing so.

PROFITING FROM DEREGULATION
Before looking for that new power deal, energy managers must think carefully about their own internal energy capabilities and what they really mean to the bottom line. Who makes decisions about energy? Should the energy manager or facilities manager act alone or with support from other divisions of their company? Is the organization ready to talk with vendors and suppliers about current and future energy needs? Or does the organization find itself educating potential new suppliers unfamiliar with local tariffs and its industry? Also, does the organization or firm have sites in many states? Do new suppliers understand that the impacts of deregulation vary from state to state, regardless of where the company is headquartered?

The answers are different for every type of end-user and could change the way an energy manager looks at an offering. The energy business is not likely to simplify itself any time soon–particularly for a corporation operating in multiple states. Sometimes having an experienced eye on such matters can add the clarity needed to make a decision. The best energy consulting firms focus on creating a specific business strategy that addresses a client’s internal energy-management capabilities and provides a blueprint for action. Assessing organizational needs and capabilities helps energy managers determine which capabilities are desired in a consultant and which functions should be kept in-house. Now, however, is an opportune time to make sure any organization or business is prepared for the current and future changes.

PLANNING FOR MANAGEMENT NEEDS
Most facilities have three immediate concerns with any energy-supply contract:

  • Supply reliability
  • Price control
  • Supplier financial stability

All these components need to be addressed, either in-house or by an outside consultant, before an energy deal is finalized. There are real–but manageable–risks to building operations, to energy budgets, and ultimately to the bottom line. Well-run facilities take close care to avoid undue risk in any major financial transaction.

Suppose a facility has resolved the major questions about risks and benefits with a vendor and has developed a contract that the owner confidently believes will work in the facility’s best interest. Yet there may still be unresolved questions about the work required from the customer during the contract term. For example:

  • How much time is needed to devote to monitoring the contract every month?
  • Will fuel-switching require adding staff to the plant?
  • How will savings be measured over time?
  • Will billing questions be resolved easily or will the owner need to spend hours on the phone finding a sales representative to solve every problem?
  • Does the data-management capacity meet accounting or reporting requirements?
  • Will facility staff need retraining or will new personnel be needed to meet these management needs?

Time spent on energy issues usually depends on each company’s level of energy dependence. Still, even small companies entering the arena of competitive supply options often find themselves overwhelmed with the volume of work involved, even with organizing a fact-finding effort. Some costs, such as hiring an attorney to draw up the final contract, are quantifiable. There are also “soft” transaction costs, such as staff time drawn away from more cost-effective projects while an acceptable request for proposal (REP) is developed and issued. Both types of management and transaction costs need to be determined–before incurring them.

IN-HOUSE OR CONTRACT?
Energy managers should begin by asking this question: How much in-house time did my company devote to managing energy last year? Time spent on energy management is a significant, but usually hidden, cost with any major energy project. Energy managers can try ranking energy-management costs as a separate item alongside other operating costs, e.g., the water bill or building security. If the management cost can’t be easily quantified, the building owner or facility manager needs to find a way to do so.

A useful record of management needs may be extracted from a company’s most recent energy contract or project. Think about effectiveness: Was the company able to move as quickly as needed on the necessary tasks? Were other departments responsive to questions and did they respond in a timely fashion? This is where the value of the facility manager’s time comes in: Did they experience a rapidly ascending learning curve in the last project? Could the facility benefit in the future from new skills learned in that venture? If, on the other hand, the energy learning curve is still on a slow ascent, time delays or a “lack of corporate agility” could compromise the next project. If, for instance, a competitive natural-gas purchase agreement is in use, lack of effective communication could cause the customer to miss favorable price signals. What would it cost to upgrade internal communications ability (such as by subscribing to an on-line gas pricing service)? Such productivity gains can be considered a bargaining point within a company’s own upper management or with their next energy-services company (ESCO) supplier.

When evaluating these items, it is important to rank energy in the total operating picture for each facility. When staff costs for energy management are out of  proportion to the overall bill for energy, the cause of the imbalance should be identifiable. Even with knowledge of in-house costs, continuous updates on direct energy billings are needed to determine an accurate cost-benefit ratio for those expenses. Most energy-management issues are similar across state and national borders, so once needs are clearly defined and documented through a management plan, a corporate-wide facility planning division can also benefit from this information.

THE IMPORTANCE OF LOAD PROFILES
A load profile indicates how energy is used over a period of time. Such an understanding is the most critical component of effective energy planning and outside contracting. It is either graphical, paper, or raw data showing minimum, average, and peak energy needs over time. This data is sometimes available from local electric utilities and should be correlated with operations (e.g., production) and weather data to discern their impacts.

Developing a load profile will allow a building owner or manager to model usage and costs going forward and also to evaluate energy-management needs over time. For those organizations that are not equipped to gather this information quickly and effectively, outsourcing this function to a consultant or energy services firm should be seriously considered.

NINE STEPS TO LOAD PROFILES
The steps outlined here will allow most facilities to develop load profiles for both electric and fossil fuel usage. If a history of energy use has been maintained with one of the major accounting software programs, such as FASER or Metrix, the facility will have a good benchmark for comparison with the information gained from this process. If not, the building ownership or management should consider investing in such a program to help evaluate results and options. It is strongly recommended that staff time be tracked closely throughout the following procedures.

  1. Collect all energy bills for at least three years. Include bills from DSM projects and all the invoices between the facility and ESCO for those projects. If the company manages multiple properties for which tenants pay bills, those bills should be obtained as well.
  2. Organize billing by energy type, by source, by project, by vendor, by account number, by month, and by shorter time intervals (e.g., sample time-of-use data where available). Group the bills by fiscal (not calendar) years if that is how the firm develops its energy budget.
  3. Break down bill components by charge: demand, transmission and distribution, interstate and local transportation, energy (commodity), fuel adjustment, taxes, customer charges, ancillary services, and ‘competitive-transition” (known in some regions as “stranded-cost”) charges. Enter data on both cost and usage for each component. If the utility was the sole supplier, note any tariff changes during each year. Ask the utility to explain any charges not clearly shown on individual bills (e.g., hidden taxes).
  4. Obtain daily weather data for at least one year (the National Climatic Data Center, part of the National Oceanic and Atmospheric Administration in Asheville, N.C., can supply this data.
  5. Data gathered in steps three and four should be organized by using standard computer spreadsheets, database options, or energy accounting software programs.
  6. Document typical usage patterns by end-use. Production will follow dominant operating schedules, while HVAC will be impacted by weather-related operating changes and seasonal variations. Use printouts from building-management systems where available to chart changes in operations.
  7. Find peak-usage conditions for all energy sources. Profile one peak day for each season using interval data obtained from the local utility, in-house data management/controls hardware, or balancing data compiled by a non-utility supplier.
  8. Compare data by month for each year to determine base-load usage. Explain deviations from the norm either by using peak-usage data from step 7 or find alternative explanations.
  9. Quantify staff and management costs as precisely as possible. Interview plant management, maintenance, engineering firms on retainer to your corporation, facility accounting, and capital planning personnel about time and resources they have spent during a typical year on energy issues (such as billing and engineering analysis), as described in steps 1-8. Request copies of time sheets whenever possible to affirm such recollections.

THE TOTAL ENERGY PROFILE
After following these nine steps, building owners and managers are able to employ the energy-use data. Peakand base-load energy data can then be internally reviewed or turned over to a service firm for review. Either way, a standard reporting format should be adopted that both the owner and outside firms can use consistently. An effective review can identify new opportunities for DSM, fuel-switching, and competitive suppliers.

The next step is to examine the management involved with developing the load profile. Did billing information come from the accounting office or was it available directly from the operations or facilities office? If both offices manage cost data via a software program, do the facilities and accounting functions share a database format, or do the two divisions duplicate work unnecessarily? It is useful to consider ways that such costs could be reduced, while realizing that doing so may require capital investment to upgrade data-handling capabilities. If there is already a competitive supply program in place, the facility managers may have received energy-usage information on request from your supplier. That supplier might also offer data-management capacity, such as new software, to enhance the monitoring and controls input into the billing and information systems. If, however, most of the information was received from the utility on paper–and not computerized in-house– resources will be needed to develop such capability to handle future bills and usage data.

The data collection process associated with the load profile provides valuable information in itself. Those building owners that have good data capability–but have not been maintaining it accurately and at regular intervals–will find the cost to reconstruct it can be prohibitive. Before implementing a comprehensive data-management plan, in-house options should be examined before requesting pricing for the same functions from ESCOs or energy consultants. If new metering is involved, managers should specify compliance with local metering rules and assurances against obsolescence due to regulatory changes. Some facilities may be sophisticated enough to embark on real-time power scheduling for future energy contracts. If this function is outsourced, backup information from building-management systems is very beneficial for verifying the progress of the contract. Experience from the load-profiling exercise can be used to decide whether the time spent on this process was cost-effective. Perhaps a database expert from another corporate division helped to develop a customized data format, and that data turned out to be useful in comparing competitive price offers. Whatever the outcome, managers should never discard this information just because the service firm offers a new and unproven data-management service.

For those who are unable to obtain all the load-profile information needed in-house, but can confirm the data with the local utility or supplier, their organizations are on the road to full in-house energy management capability.

ENERGY PROFILES As A BARGAINING CHIP
The final task after evaluating an energy profile is to use the information effectively over time. All costs of managing critical data points in the profile development should be identified and built into the next year’s budget. They should be compared with the overall energy budget and compared in proportion to the firm costs of energy discovered in making the load profile. At this point, the company is prepared to add these requirements to the next contract, RFP, or solicitation, and compare their cost to the service charges proposed by suppliers to handle them. To ensure confidentiality throughout this process, potential suppliers must be informed that sharing the company’s load profile with any competitors is prohibited.

Finally, it is vital that building owners and managers maintain a reasonable expectation of what selected supply or service firms can do over the term of a deal. The supplier should be allowed to prove its capability by providing value-added services which help the end-user cost-effectively make the best use of time. Time is valuable, and the customer and the supplier will benefit together as they learn how best to serve the firm’s energy-management needs.