Whether or not it’s lived up to the promises, energy deregulation is here to stay – so a company’s strategic ability to buy energy in an ever-changing marketplace can mean the difference in getting the best possible rates and keeping its business competitive. The main thing, said Mary Stewart, manager of business development at Cogenex, an energy services company based in Lowell, Mass., is to stop viewing energy as a fixed cost and see it as any other commodity a business needs to operate.
Stewart spoke to a handful of industrial customers and manufacturers last month during a seminar on how companies can profit from energy deregulation sponsored by the chambers of commerce in Northern and Central Rhode Island.
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In theory at least, energy deregulation promised lower rates and better service through market competition, efficient energy consumption, technical innovation (similar to what happened after telecommunications deregulation) and strategic procurement.
Unfortunately, reality has yet to measure up to promises, Stewart said, a point that’s painfully clear as prices of all forms of energy, from gas and oil to electricity, are spiking as much as 30 percent.
Focusing on electricity generation, Stewart said that full consumer choice will be available in the next one to three years in Rhode Island. The marketers are coming, she promised, even though so far they’ve complained rates here have been set too low for them to enter.
But new markets are emerging, she said, not only power markets that buy capacity and resell to energy users, and technology markets with new hardware and software, but service markets and companies like Cogenex, which the National Association of Energy Services Companies describes as a business that develops, installs, and finances projects designed to improve the energy efficiency and maintenance costs for facilities over a seven- to 10-year time period.
Previously only utilities had to worry about power supply planning, now energy users will have to manage their own energy supply by analyzing load profiles, reshaping loads and communicating strategically with power marketers, Stewart said.
The better one is able to leverage available capacity for the best rates, manage a more constant type of load, and communicate these factors to a power marketer, the better rate you’re going to get, she said.
Where utilities once drove programs and rate restructuring such as demand side management, energy users now have more incentive to manage demand themselves, and shift loads strategically from peak hours. And since marketers will be able to sell on an hourly basis, a company will need to know what and how much energy is being used in real time, Stewart said.
This type of management and control begins at the front panel, the meter, and extends through the enterprise via sub- and end-use metering and the gathering of data to provide accurate load profiles, peak demand, seasonal requirements, load aggregate by facility and transmission distribution losses. This data helps determine a company’s final energy rate, Stewart said.
According to the NAESC, energy service companies generally act as project developers for a wide range of tasks and assume the technical and performance risk associated with the project. Typically these companies develop, design, and finance energy efficiency projects; install and maintain the energy efficient equipment involved; measure, monitor, and verify the project’s energy savings; and assume the risk that the project will save the amount of energy guaranteed. These services are then bundled into the project’s cost and are repaid through the dollar savings generated.
It comes down to strategic energy management, Stewart said, and with deregulation, electricity users face three options – do nothing and hope for the best by paying the basic Standard Offer rate set by the Public Utilities Commission (available through 2010), try to manage their energy use themselves by investing in skills, staff and infrastructure, or bring in an expert like Cogenex, and “there are plenty out there,” Stewart said.
The point is that the time for a company to start getting information about energy and how it uses it is not when the market is fully open, Stewart said. “It’s now.”
