Behind the meter: a frenzied search for creative bundles

April C. Murelio

Associate Editor

In this age of alliances, the recent teaming of Texas Utilities and ServiceMaster demonstrates the frenzied search behind the meter as utilities, affinity groups and ESCOs create a variety of energy and facilities management bundles.

“Looking out into the market, energy isn`t enough. For a customer of any size to save money, they need to do more than buy cheap commodity,” said Ken Breeden, TU Integrated Solutions president. “We`re seeing broader and broader service bundles being offered, and now, we can truly be competitive in that market.”

Earlier this year, TU Integrated Solutions-a subsidiary of Texas Utilities-and ServiceMaster formed a strategic venture to own and operate an energy management service company designed to grant the every wish of its commercial and industrial customers.

The new venture acquired all assets of ServiceMaster Energy Management (SEM), with TU claiming 85 percent and ServiceMaster retaining a 15 percent stake. For now, the venture uses the name TUSEM, but it plans to adopt a name with “more meaning in the marketplace,” Breeden said.

From housekeeping, food preparation and landscaping to construction, materials management and purchasing, ServiceMaster contracts with about 7,750 healthcare, education, and business and industry facilities across the country. Founded in 1976, SEM focuses on energy management services like audits, feasibility studies, engineering, and performance monitoring.

With buying and selling power now part of the facilities management puzzle, ServiceMaster arrived at a “strategic crossroads,” said David Johnson, ServiceMaster`s senior vice president for business development. “We didn`t really want to buy a utility because that`s asset intensive and outside our core business, but we had to be in the energy business.”

TU Integrated Solutions, which started in 1997, offers many of the same energy management services as SEM, and it brings that all-important “commodity spin” to the combined venture, Johnson said.

For example, TUSEM-through its equity partnership with Texas Utilities and TU`s INSEARCH-can buy power for client facilities, manage market risk, and build and operate on-site generation.

Breeden and Johnson said the combined venture hopes to gain from the service reputations and brands of its parent companies. Texas Utilities, with more than $40 billion in assets and eight million customers worldwide, ranks as one of the nation`s largest investor-owned utilities. ServiceMaster, which offers nationally known products like Merry Maids and Terminex, has about $5.5 billion in assets.

In the coming months, Breeden and Johnson said, TUSEM plans to contact all existing customers of TU Integrated Solutions and SEM to present its combined product and service offerings.

Products and services not yet on the list but in the hopper include, consolidated billing and “intelligent” metering capable of profiling a facility`s energy usage, Breeden said.

TUSEM estimates its combined customer base, existing and potential, to be high enough (about 250,000) to make it a major player in the energy and facilities management market.

“We have a great opportunity to satisfy customer needs,” Breeden said. “There is a growing desire in the business community to outsource non-core functions like utility plant operation and landscaping. We want to capitalize on this trend, and show our customers the benefits up and down the line.”

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