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Overpowering the Energy Crisis

April/May 06
It's no secret that energy prices have spiked sharply over the last year, and they could go even higher thanks to rising demand, the failure of utility deregulation, and global political turmoil. But that doesn't mean companies are powerless to protect their budgets from ravenous energy bills. There are myriad ways to insulate businesses from the major financial impact associated with skyrocketing utility rates this year and beyond.

The key: When building new facilities or improving existing ones, focus on lifecycle cost - not lowest first cost - when selecting lighting, HVAC, and other energy-consuming equipment. Each year hundreds of utility and government programs dole out more than $1.5 billion in rebates and incentives to help reduce energy demand and mitigate the effect of energy price increases on ratepayers. This "free money" can help companies take the longer view when selecting equipment.

Done right, these sensible steps can maximize eligibility for energy rebates and incentives, lower the cost to operate and maintain energy-consuming equipment, and help insulate a business from energy price fluctuations and market shocks:

• The less energy you use, the less a price spike will hurt. Consider how many kilowatt hours new equipment will use annually and shop for the most efficient devices. Devices from two different vendors might perform the same function, but one might use 30 percent less energy. As energy prices rise, that 30 percent savings becomes more and more valuable, especially in energy-intensive, highly competitive industries.

• Ensure equipment is operating according to design intent. For new buildings, this is known as "commissioning." It means checking every energy-consuming component and making sure it's the right equipment, and on the right setting, to maximize energy efficiency. "Retro-commissioning" applies the same approach to existing buildings. More and more utilities are offering to help pay for commissioning. For example, a business might qualify for $5,000 in incentives to have engineers fine-tune a building's HVAC systems.

• Formulate a plan, and stick to it. Businesses must be diligent when undertaking new construction, remodeling, energy retrofits, and equipment replacements if they want to maximize rebates and incentives received. If there's a program to replace the 5 percent most inefficient or obsolete HVAC equip-ment annually, make sure the replacement spec is energy-efficient and rebate-eligible, establish a firm protocol for rebate filings, distribute it to all relevant personnel, and enforce it.

These are just some of the ways that a professional can help guide a company in its quest to reduce unnecessary energy costs and capitalize on rebates and incentives. Navigating utility, state, and federal regulations can be a daunting task for even the most experienced energy manager. Many funding sources offer several programs, and finding the one that pays the best incentive for a given project takes skill and experience.

Eventually every manager has to pay attention to supply-side alternatives - such as where to buy less costly power - leaving crucial rebates and other incentives by the wayside. As energy prices continue to rise, one wonders if filing rebate applications is the best use of an energy manager's time. Experience shows that outsourcing this job to a rebate expert is a win-win: It maximizes the amount of "free money" the business collects, and it frees up the energy manager to perform other critical tasks such as making sure energy-efficient building standards are issued and enforced and that electricity and natural gas are being purchased at the best possible prices. These smart energy-related decisions made today will make a difference in the bottom line tomorrow.

Mark Jewell, founder/president of RealWinWin, has spent 22 years in commercial real estate and 12 years in energy efficiency. Prior to RealWinWin's inception, Jewell was founder/president of EEFG, an energy-efficiency consulting firm that helped the U.S. EPA create and promote the Energy Star Buildings Program for Commercial Real Estate.

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