Utility Deregulation
10 Lessons Learned
(the Hard Way)
George R Owens PE CEM, President
Energy and Engineering Solutions, Inc.
[email protected]
410-964-3513
Lesson #1
Don’t Do Nothing
• I know it is not good english!
• However, with no action – especially in MD
for BGE P customers – your utility budget
is at risk with market pricing.
• As for the rest, every year nothing is done is
one more year that you (and your tenants)
are paying higher utility bills.
Energy and Engineering Solutions, Inc. (EESIenergy.com)
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Lesson #2
Know Your Energy Profile
Typical Monthly Demand
7000
6000
5000
4000
KW
• You Can’t Control
What You Can’t
Measure, and
• Suppliers Can’t Sell
Electricity If They
Don’t Know What
You Use
• Need Monthly Bill
and Interval Data for
one year minimum.
3000
2000
1000
0
1
2
3
4
5
6
7
8
9
10
11
12
Month
Energy and Engineering Solutions, Inc. (EESIenergy.com)
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Lesson #3
Keep Informed
• Utility Deregulation is New and Changes at a Fast
Pace
• Sources of “free” information
–
–
–
–
–
Public Service Commission
Regulated Utilities
Unregulated Suppliers
Other Building Owners and Managers
Consultants
Energy and Engineering Solutions, Inc. (EESIenergy.com)
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Lesson #4
Electricity Prices are Volitale
• Prices are available for one hour, four hours and 24 hours,
each less favorable. Longer times are even more onerous.
• Time is of the Essence, get the T&C’s out of the way
through a good RFP process.
• Find out who has to sign the contract, brief them, make
sure they are in town
• Confirm supplier receipt of the contract
Energy and Engineering Solutions, Inc. (EESIenergy.com)
5
Lesson #5
Price Is Not Everything
• Contract Terms and Conditions – The Fine
Print
– Can take a good price and make it bad
– Can hinder the way you operate your business
•
•
•
•
Usage limit clauses
Assignability if you sell the asset
Lack of nonperformance clauses
Loose Force Majeure clauses
• Get Professional and Legal Help
Energy and Engineering Solutions, Inc. (EESIenergy.com)
6
Lesson #6
Enron
• I had to put that in to get your attention.
• Do your due diligence on suppliers, just like you
would for any big contract, and then some.
• Review
–
–
–
–
Financials
Parent companies/guarentees
Track record
Licensed
Energy and Engineering Solutions, Inc. (EESIenergy.com)
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Lesson #7
Not Done Yet
• At last, a contract is in place, so you can sit back
and enjoy the savings NNNNAAAAA!!
• The Supplier still has to sign you up with the
Utility. Stay on top of this or you can be penalized
if they miss a date.
• And then there is billing!
Energy and Engineering Solutions, Inc. (EESIenergy.com)
8
Lesson #8
The First Bill Will Be Wrong
• It never fails, you get a contract in place, the
juice starts flowing and then the billing
problems occur (it always gets messed up,
plan on it):
– Late bills
– Wrong bills
– Charges for components that were included in
the bid.
Energy and Engineering Solutions, Inc. (EESIenergy.com)
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Lesson #9
It Ain’t Over Til It’s Over
• Whew, you have the Supplier under contract, they got you
signed up with the Utility and you finally got your first
bill.
• Don’t Stop Now
• At Least Monthly (Sometimes More)
– Review billed amount calculations
– Review usage to prevent penalties
– Read the newspapers (no Enron surprises)
• Get Ready for the Next Bid Cycle
Energy and Engineering Solutions, Inc. (EESIenergy.com)
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Lesson #10
Utility Deregulation is Only a Part of the
Solution to Energy Costs
.
Energy Management Offers More Impact
to the Bottom Line
And, Utility Deregulation Combined with
Energy Management Provides the
Biggest Bang for the Buck
Energy and Engineering Solutions, Inc. (EESIenergy.com)
11
The Ten Step Program to
Successful Utility Deregulation
• Step #1-Know Thyself
• Step #2-Keep Informed
• Step #3-Talk to Your
Utilities (all energy types)
• Step #4-Talk to Your
Future Utility(s)
• Step #5-Explore Energy
Services Now (Why Wait
for Deregulation)
• Step #6-Understand the
Risks
• Step #7-Solicit Proposals
• Step #8-Evaluate Options
• Step #9-Negotiate
Contracts
• Step #10-Sit Back and
Reap the Rewards
– See www.eesienergy.com for
the full paper
Energy and Engineering Solutions, Inc. (EESIenergy.com)
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Conclusions
•
•
•
•
•
•
Utilities are a controllable expense
Deregulation is here, now
Energy management pays off
Develop a program and take care of the details first
Understand and manage risks
Get involved in the process or get left behind
Energy and Engineering Solutions, Inc. (EESIenergy.com)
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