Public Power: America's Public Power Utilities-Maximizing Efficiency | Good for the Bottom Line

Keeping a tight rein on business costs has probably never been more important than it is right now, with the global economy in tatters and practically every news story including some variation of the ominous words "the worst since the Great Depression." A lot of companies are discovering that their very survival depends upon controlling expenses and finding the most efficient and effective ways to get the job done.

There's no need to face such challenges alone. To build a brighter tomorrow, businesses need to do more than just commiserate - they need to build partnerships, and the most fortunate ones are finding valuable partners on the other end of the electric line.

Public power utilities have long been in the business of helping business, so they're already well-equipped with business assistance programs and services. Because they're owned not by investors but by the communities that they serve, they have a clear and unambiguous mission of serving their customers, improving the quality of life and the health of the economy.

They're committed to keeping overall rates low, but, beyond that, they're also committed to helping customers reduce their consumption to further boost their profitability. They do this in many ways, from energy audits that uncover opportunities for efficiency, to rebates and financing options that make efficiency projects more affordable, to technical assistance programs that venture beyond energy issues to help participants squeeze out savings in their manufacturing processes.

"We do it as a public power entity to better serve our customers," says Kevin Martin, key accounts manager for Danville Utilities in Virginia. "It's a service motive - if we can bring resources that help them, it's wonderful. We want our businesses to remain healthy and viable businesses. We want our businesses to grow and flourish."

"We believe that it is important to help our customers use our product, electricity, as efficiently as possible," says Mary Medeiros McEnroe of Silicon Valley Power in California. "It's good for the environment and it's good for the customer's bottom line. If we can help the customer be as profitable as possible, we can keep that customer in business here."

The motivations of City Water, Light & Power in Springfield, Illinois, are similar. As William Mills, manager of the energy services office, explains, helping customers be more efficient is good not only for the businesses themselves, but also for the utility and the environment. "As a municipal utility, the energy efficiency aspect of our mission is to save the utility's customer/owners on their energy bill, save on the amount of energy we need to service our native load, and to reduce the carbon footprint of our native load," he says. "The most effective technology toward all three of those goals is energy efficiency. Avoiding the generation of energy beats any other form of conservation."

That link between the efficiency of the power provider and the bottom line of the customer is evident in Nebraska, too. "The Nebraska Public Power District understands that every dollar it spends, its customers have to pay," says Dennis Hall, Nebraska Public Power District's (NPPD) economic development manager. "For this reason, NPPD as a publicly owned utility focuses on ways to improve the bottom line - not only its own, but its customers', too."

It Starts with Lower Rates
As the name implies, public power utilities are owned by the public, the communities they serve. They're a part of municipal government, operated locally by local officials who answer to the public. They exist for one reason, and it's not to make money - it's to serve customers, provide for the needs of the community, and help the local economy thrive.

Little surprise, then, that public power rates tend to be low. According to the most recent statistics from the American Public Power Association (APPA), residential customers of public power utilities pay an average of 9.2 cents per kilowatt-hour. Those writing checks to investor-owned utilities pay an average of 10.5 cents per kilowatt-hour. Commercial rates are lower as well, 8.5 cents versus 9.3 cents.

Public power utilities also support the mission of local governments, and they frequently do so with in-lieu-of-tax payments. In fact, those payments average 15 percent more than the state and local taxes that private power companies pay. That support helps keep taxes as low as possible in public power communities.

Uncovering Efficiencies
They may sell power, but America's public power utilities go to a lot of trouble helping their customers buy less of it. "One of the most important ways we can help customers keep their utility bills down is with aggressive energy efficiency and conservation programs," says Jake Oelke, assistant vice president of energy services for WPPI Energy in Wisconsin.

Mills offers an example from Springfield. He says City Water, Light & Power's (CWLP) commercial technical assistance program offers walkthrough reviews of buildings, combined with studies of a facility's electrical usage data and interviews with the facility manager regarding building operation practices. Services might also include metering of appliances and consultations with the facility manager recommending changes in appliance and building operations.

For especially complex operations, services may include an engineering review of major systems, including load analysis for individual, high-energy circuits. CWLP will typically deliver a written report recommending energy-efficiency options and the projected paybacks. Lighting audits are another way businesses of all sizes can cut energy costs, with the help of utilities such as CWLP.

Danville Utilities connects business customers with a Best Practices program that pulls in expertise from North Carolina State University. "They bring a professor as well as a team of graduate engineering students and run a free energy assessment of the facility," says Martin. The result is a 50- to 100-page report full of recommendations and return-on-investment projections. "It's very useful to industries." Industrial and commercial customers most often will adopt recommendations that promise to pay for themselves through savings in two years or less. Some recommendations, he says, have payback estimates as short as a month, and many ideas will save more than they cost within six months.

Existing facilities offer all kinds of opportunities for energy-efficiency upgrades, but the most ideal situation is to have a facility designed to maximize efficiencies from the start. The New Construction Design Assistance Program from WPPI Energy has that in mind.

"Some of the best opportunities for energy efficiency and other high-performance strategies exist during the design of a new building," says Oelke. "Typically, energy cost savings of up to 40 percent can be achieved with minimal incremental investment. Our program works with design teams to identify these opportunities." The program provides financial incentives for boosting energy efficiency, improving systems performance, and reducing peak loads. Its incentives can trim costs from the construction project and ultimately reduce operating costs for the long haul.

WPPI Energy has a long list of other programs and services for helping businesses customers minimize energy use and maximize profits. Examples include backup generation service, cogeneration evaluation service, efficiency improvement incentives, energy management services, interruptible load credits, market-based pricing and other initiatives.

Technical assistance may begin with energy-related issues, but it doesn't always stop there. Martin says his Virginia utility connects industrial users with manufacturing extension partnership services that help improve the efficiency and profitability of operations. "They focus more in-depth on lean, Six Sigma, and the manufacturing processes," Martin says. One local manufacturer had such good results that its parent company has sent representatives in from other locations to have a look at the new practices.

Letting the world know about best practices is the goal of Silicon Valley Power's Energy Innovator Awards, which single out businesses that have found creative ways to conserve. Five businesses were honored last summer for ideas that collectively saved 500,000 kilowatt-hours of power and prevented the release of more than 6,700 tons of carbon dioxide into the atmosphere.

Santa Clara University, for example, built a 338-panel solar energy system. Echelon Corp. replaced old fluorescent fixtures and antiquated plant heating equipment. Sierra Meat Co. boosted its bottom line with state-of-the-art refrigeration controls and monitoring systems that cut energy costs by $15,000. PDM Steel Services Center is now saving about 90,000 kilowatt-hours a year with better lighting equipment. And Applied Materials was honored for its purchase of green power, which has prevented the annual release of nearly 3,300 tons of carbon dioxide.

The future is filled with innovative ideas for saving energy and boosting profits, and public power utilities are preparing to bring them to customers. Already, many customers are offered rate credits in exchange for giving their utilities the ability to remotely control certain power-hogging equipment such as air-conditioning compressors. The idea is that during peak load times, the power company switches off the outside unit for short periods of time, long enough to collectively make a difference in the overall system load, but short enough that the customer doesn't even notice the difference.

It's the beginning of what is sometimes called the "smart grid," a sophisticated network of controls through which utilities will assert more control over their peak loads - thus improving system reliability and reducing the need to add costly new generation capacity. One recent Seattle-area test had a small group of subjects try out appliances, such as water heaters and clothes dryers, that could automatically change their settings in response to signals sent over the power grid by the utility. For example, the smart grid would intermittently power down the heat in electric dryers at times when the overall power grid was experiencing peak use. The end result: Customers saved as much as 10 percent without much noticeable impact, while strain on the power grid was eased.

Paying It Forward
Sometimes technical expertise and cutting-edge innovation are what's needed. Other times, the most helpful thing is money, and public power utilities provide plenty of that as well, through generous rebate programs rewarding customers who implement energy-saving projects.

Austin Energy in Texas is just one example. The utility provides rebates of up to $200,000 per business site to help businesses pay for efficiency upgrades ranging from lighting improvements and window treatments to more efficient motors and air-conditioning systems, according to general manager Roger Duncan. During the most recent fiscal year, more than 600 businesses took part in the program, reducing their peak consumption by more than 14 megawatts. That's enough to power 10,000 homes.

Like many public power utilities, Silicon Valley Power has a menu full of rebate programs. There are new construction incentives, LEED rebates for energy-efficient building design, rebates for installing solar equipment, and rebates for optimizing data centers. The utility has incentives aimed at encouraging the installation of more efficient commercial washers, better chillers, greener HVAC equipment, and more energy-conscious food service equipment. And there are deals that promote use of improved lighting, a popular area through which many utilities boost efficiency.

Incentives and rebate programs save money not only for the users but for the utility, says Duncan. If it became necessary to build a new power plant to generate the kind of electricity that efficiency projects save, it would cost a lot more than what the utility spends on incentives. "Energy efficiency is the most cost-effective way to meet new load growth," he says. "Our program costs us about $350 per kilowatt of avoided peak demand, which is less than half the cost per kilowatt to build an efficient natural gas-fueled power plant."

That's the philosophy in Seattle, as well, according to strategic advisor Scott Thomsen of Seattle City Light. "Seattle City Light has found that its incentive programs can save energy for about a third of what it would cost to go out and acquire new energy resources," he says. "By keeping costs down, Seattle City Light is able to keep its rates low."

With that idea in mind, Seattle City Light in 2009 is expanding its assistance programs aimed at helping commercial, industrial, and residential customers achieve greater energy efficiency. As part of its five-year Conservation Action Plan, the utility is investing $185 million to double the community's energy savings. "Once all of the initiatives are in place, Seattle City Light will be investing seven times the national per-capita average on conservation," says Thomsen. "Conservation has been the first resource of choice for Seattle City Light for more than 30 years. Every kilowatt-hour of electricity that we avoid using through energy-efficient technologies reduces our impact on the environment while saving customers money."