Energy Savings: corporate America fails to plug in

Energy Savings: corporate America fails to plug in

April C. Murelio

Associate Editor

National survey findings recently released by the Energy Cost Savings Council (ECSC) depict a corporate America unaware of its ability to reduce power bills by installing efficient equipment.

Late last August, the Market Research Bureau of Washington, D.C., sent surveys on behalf of ECSC to executives in the manufacturing, wholesale, retail, transportation and communications sectors. Of the 2,000 surveys distributed, 275 were completed and returned, representing a 14 percent response rate.

As ECSC analyzed the data, it found most executives responding felt they exercised little control over electricity costs, and more than half stated they weren`t involved at all in company energy decisions.

“For far too long many executives have believed energy is a fixed cost, which is simply not true,” said Jack Briody, ECSC chairman. “America`s corporate and public sector building owners are missing tremendous opportunity to boost their bottom lines.”

However, as another recent survey shows, this hands-off approach to energy decisions at the corporate level may be changing.

According to a Statoil Energy survey of 201 executives and managers, 48 percent of the energy purchase decisions at large industrial, institutional and commercial organizations are now being made at the corporate level, compared to only 32 percent two years ago. Based in Virginia, Statoil owns and operates power plants throughout the Northeast and Mid-Atlantic and trades wholesale electricity.

According to the ECSC-a coalition of manufacturers, utilities, industry groups and government agencies- energy accounts for about 25 percent of total operational costs for most companies, with energy costs in some industries equal to the cost of labor and raw materials.

By upgrading to more efficient electrical equipment, Briody said companies can reduce energy costs by more than 30 percent to 50 percent annually.

These savings, he said, continue for the life of the efficient equipment installed, which generally averages 10 to 20 years. And, in most cases, building or facility owners recoup their retrofit investments within three to five years.

An electrical retrofit often includes upgrades in lighting fixtures and lamps, controls and sensors, transformers, motors and drives, and HVAC equipment.

As deregulation takes root and consumers realize the benefits, David Dresner, Statoil Energy`s president and CEO, said industrial and commercial energy users will expect those savings and more.

“Savvy executives will demand higher service levels, better information about their usage patterns, innovative new products, and customized energy-use strategies that allow them to achieve greater savings,” Dresner said.

According to the Statoil study-conducted by RLW Analytics-more than two-thirds of the respondents expect to save 10 percent from deregulation, and seven percent expect to save 20 percent in energy purchases alone. And nearly half are considering a switch in their electricity provider.

Formed to promote the benefits of upgrading commercial and industrial buildings, ECSC conducted its survey as part of the government`s re-electrification effort endorsed by the EPA`s Energy Star Building program and the Department of Energy`s Rebuild America.

Other ECSC survey highlights include:

– Financial decision-makers see electricity costs as the least controllable category of business costs.

– About half (43 percent) of the survey respondents claim they aren`t involved in energy decisions. Combined with the first highlight, this suggests that energy decisions aren`t viewed in the realm of financial decisions, Briody said.

– Only 9 percent of the respondents indicated they were familiar with the electrical upgrade process.

– In upgrades, lighting receives the most attention, with 82 percent of the respondents familiar with this type of retrofit, followed by HVAC (63 percent) and controls (54 percent).

– Expectations for return on investment seem reasonable. For a median return, respondents expected 18 percent-annual savings divided by total investment. Only one in 10 anticipated a less than 10 percent return, and 23 percent expected a 25 percent return or more. Decision-makers in smaller companies expected slightly lower returns-on average about 15 percent compared to 20 percent for larger companies.

– Respondents cited electric utilities (46 percent), consultants (42 percent), and electrical equipment manufacturers (41 percent) as the primary sources of information on installing energy efficient equipment.

For a copy of the complete survey, visit ECSC`s web site,

Statoil Energy uses its Energy Management IQ Quiz to help companies determine how well they are positioned to reap the benefits of deregulation and provides a step-by-step guide to developing a comprehensive energy manage- ment program.

Quiz questions address a variety of issues, including risk management products, amount spent on energy, Clean Air Act compliance, the advantages of alternate fuel capabilities, and retrofit products like lighting studies and control devices for usage monitoring.

“Comprehensive energy management is a smart new way to look at a very old budget line item,” said David Bornmann, Statoil Energy`s marketing director. “If a company is failing to address energy from a strategic perspective, it risks ending up with a cost disadvantage against its competitors.”

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