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1 Utility Deregulation and Energy Management George R Owens PE CEM, President Energy and Engineering Solutions, Inc. 410-964-3513.

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Presentation on theme: "1 Utility Deregulation and Energy Management George R Owens PE CEM, President Energy and Engineering Solutions, Inc. 410-964-3513."— Presentation transcript:

1 1 Utility Deregulation and Energy Management George R Owens PE CEM, President Energy and Engineering Solutions, Inc

2 2 Energy Management Roadmap Utility Deregulation Energy Management Renewable/Future Energy Resources New Construction Energy Security

3 3 Alternative Titles Considered The Good, the Bad and the Ugly of Utility Deregulation You Need to Be Careful What You Wish For Opportunities Still Exist for Building Owners Utility Deregulation - Whats Next?

4 4 Utilities – a Buildings Second Greatest Expense Typical Master Metered Building Expenses

5 5 Utility Deregulation

6 6 The Utility Deregulation Roadmap Deregulation Background State Activities – each one is different The Process of Taking Advantage of Deregulation Risk Management Utility Deregulation for Landlords Development Issues

7 7 Energy Management in Changing Times – The Current Energy Crisis Rolling blackouts in California PGE and Enron declares bankruptcy Rates are up over 50% in California Deregulated power available for less in some states Texas and Ohio start in 2002 Energy rebates and incentives are back for existing operations and new construction

8 8 What is Electric Deregulation 1&2 Generation –Being Deregulated 3 Transmission –Regulated by FERC 4&5 Distribution –Regulated by State Public Service Comm. –Responsible for getting power to the customer, reliability, billing (may be partial) and restoring power

9 9 Electricity State Status

10 10 Whats Happening in California that has Everyone Running for Cover? California was the first state to implement full deregulation. This past few years saw: –Wholesale power prices skyrocketed –Outages and rolling blackouts –Customer rates increasing by 50% –SoCalEd & PGE amassing over $11 billion in debt and PGE declares bankruptcy California rescinds deregulation

11 11 What went wrong in California? California has a shortage of generation due to limited new sources amidst a growing demand. It was a dry, hot summer. During that time period, many generators were down for maintenance. The utilities bought most if not all on the spot market.

12 12 California – Can it happen here? The short answer is yes, however there are some differences in the Mid Atlantic region (PJM): –We now have a wakeup call and can try to forestall the same thing from happening. –The CA power exchange is operated differently than most others, especially the PJM. –CA has a larger shortfall of generation than this area. –New Generation is scheduled to be built in this area

13 13 Choosing Your Supplier Track Record Knowledge of your business, priorities and risk tolerance Size Financial backing Access to cheap and reliable power Customer service and reporting

14 14 What Are the Risks? What if the supplier goes out of business? What if the supplier cannot get power? What happens if you sell the property? What is the impact of your load changing? Schedule changes, expansions, closings, etc. What happens if you do nothing and prices go up?

15 15 Utility Deregulation - The Tough Questions for Landlords What is the impact of deregulation decisions on the Tenants? Is your utility lease language up-to-date? How do you answer? –Why havent you participated? –I can get power cheaper than you. –Who will benefit from cheaper rates? How should new buildings be built for deregulation? –To master meter or not.

16 16 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 for the full

17 17 Energy Management

18 18 Develop an Energy Management Program Always need a champion Become educated Pay attention to the details Enlist resources, In-house vs. Outhouse Develop Energy Master Plan –Goals and Objectives –Operating Procedures Measure and report results

19 19 Energy Information – The Starting Point Before starting any energy or deregulation program: –Understand your load profile Annually Monthly Daily

20 20 Data Examples

21 21 Sources of Energy Information Internal Accounting Department Electric Utility –Monthly –Interval Energy Management Systems New Utility Metering Hardware/Software

22 22 Energy Reduction Measures that Work: Management Programs Energy Task Force employee awareness program Preventive maintenance Operator Training Metering Commissioning

23 23 Energy Reduction Measures that Work: Lighting t8 lamps Electronic ballasts LED exit signs Reflectors Occupancy sensors Daylighting control

24 24 Energy Reduction Measures that Work: HVAC Economizers HVAC controls start/stop optimum start temperature reset night setback HVAC unit changeouts

25 25 Energy Reduction Measures that Work: Controls Energy Management Systems Time clocks Direct digital controls Demand controls Electric deregulation monitoring and control HVAC and lighting controls Management information tool

26 26 Energy Deregulation and Energy Efficiency - A Winning Team Expected savings due to electric deregulation - 10% to +5-8% Achievable savings due to energy efficiency projects - 10% to over 50% The best results are when you do both

27 27 Should Utility Purchasing be Combined with Energy Services? First of all, you should do both However, unless they are separated, you never know the value of either Could be by the same supplier but with separate descriptions and prices for the two components

28 28 Outsourcing Vs. In-house When do the economics make sense Core competencies and concerns Consultants Gas brokers and marketers Energy service contracts

29 29 Renewable/Future Energy Resources

30 30 Electricity Generation By Source Renewables –Hydro –Solar –Wind –Biomass Fuel Cells

31 31 Distributed Generation Peak Shaving – Get Paid By the Utility to Run Your Generator/Reduce Load Technologies –Emergency Generators –Microturbines –Fuel Cells –Solar

32 32 Solar Photovoltaic Stand alone utility connected Supplemental building systems Integrated building technologies – roofs Very expensive Prices expected to come down with more production Incentives are available Can be attractive if far from the utility grid

33 33 Wind Energy Large Scale Wind Energy Projects Small Scale Projects –Similar constraints as solar

34 34 Renewable Incentive Programs Financial Incentives – Corporate Tax Credit –Clean Energy Incentive ActClean Energy Incentive Act Income Tax Credit for Green Buildings Personal Tax Credit Clean Energy Incentive Act Income Tax Credit for Green Buildings – Property Tax Exemption Local Option Property Tax Exclusion for Renewable – Sales Tax Exemption Clean Energy Incentive Act - EV and Hybrid Exemption Clean Energy Incentive Act - Fuel Cell Exemption Wood Heating Fuel Exemption State Loan Program Community Energy Loan Assistance Program State Energy Loan Program

35 35 New Construction

36 36 Development Taking Advantage of Deregulation Utilities are more interested in negotiating to keep the new load. On the other hand, utilities are more interested in laying off costs to developers to be able to report a cheaper rate. Innovative rates are available from both deregulated and regulated utilities

37 37 Innovative Rate Options – Long term contracts at a discount Economic development rates Interruptible rates Financial hedges against rising prices Primary vs. Secondary Master metered vs. Individual tenant bills

38 38 The Development Process Energy Management Review Charge the design team with developing properties with high energy efficiency as a goal Use life cycle costing for determining options Make energy decisions early in the project Commission energy systems prior to opening Consider energy plan review

39 39 Energy Security

40 40 Ten Items You Can Do to Improve Energy Security Recognize that Energy Security is an issue and develop a plan Identify a command center and insure that critical components have emergency power Identify all sources of energy and the location of shut off devices Develop communications plans for customers, tenants and employees Identify the source of off-site energy sources and a list of utility contacts

41 41 Ten Items You Can Do to Improve Energy Security Identify who will be responsible for turning off energy sources during an emergency Maintain and routinely test any onsite emergency generator(s). Identify a source of temporary emergency generators in case the power will be out for an extended amount of time Identify all sources of outside air and develop protection measures For cold weather centers, develop contingency plans for an extended loss of heating.

42 42 Conclusion

43 43 Energy Management Conclusions Utilities are a controllable expense Energy management pays off Develop a program and take care of the details first Deregulation is here, now Understand and manage risks Landlords have unique issues Get involved in the process or get left behind

44 44 The Best Energy Management Program Will Have: –An Energy Master Plan –Well trained and motivated owners, staff and contractors –A dedication to preventive maintenance –An energy procurement strategy –Optimized equipment based upon life cycle costing. I.e. Lighting, HVAC and Building –Up-to-date, functional Controls and Information Systems

45 45 Internet Resources for Utility Deregulation 10 Step paper - State activities - State regulatory commissions Utilities - Maillist - AESP Energy Futures Pricing -

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