Newspapers Seek Energy Cost Savings

By: Jim Rosenberg Enron Corp. may have been blamed for the money -- some would say the mess -- it made in California, but the energy giant stood to save much of the cost of keeping its headquarters in Houston.

"Texas got it right," Walter Moore said at Nexpo 2002 here last month. Unlike other states, where utilities and their regulators "politically negotiated" maximum rates "just low enough" to allow them to claim deregulation without fostering competition, Texas set standard rates high enough, and had enough capacity, to create a competitive market at the outset of deregulation on Jan. 1.

Moore is president of Affiliated Power Purchasers International LLC (APPI), the Salisbury, Md., consultant retained by the Newspaper Association of America (NAA) to help members get the best electricity and natural-gas rates by shopping for prices and negotiating based on participating members' aggregated demand. It also aids in reducing peak-period consumption and offers analyses, advice, and risk-management tools. APPI works with 104 trade associations in "104 industries that all use electricity differently," Moore said.

After Moore summarized the pains of a 10-year phased deregulation of a $250-billion-plus industry, another NAA consultant, Craig DiLouie, principal at New York-based Zing Communications, quantified that pain, citing Northeastern states' energy costs rising 5% to 15% and California's soaring 65%, accompanied by blackouts.

Of the price of energy, only the part paid for generation, not delivery, is deregulated. "Your local utility remains regulated," Moore said. "We're only looking at how to negotiate the energy part of that bill." As the two functions are separated, deregulated generators are denied regulated deliverers' customer information, making all competitors equal in starting from scratch.

Moore recommended that newspapers analyze electricity use of their operations and leverage efficiencies for better bids, perhaps locking in rates. But with prices generally offered for only 48 hours, he warned of a need for very fast decision-making -- requiring that information be available at all times.

As it already has in New York, the lower maximum rate set when deregulation begins "eventually ... is going to disappear," he said. When it does, newspapers will want to exploit opportunities in the market.

DiLouie -- who has prepared an energy-management report for newspapers, which, like hospitals, as well as police and fire units, are priority customers in the event of power shortages -- said, "Information is the first step to winning in a deregulated environment." He called efficiency, not conservation, part of the new thinking about reliable energy supplies. It requires measuring and monitoring power use, keeping records, regular audits to develop energy-use profiles, and adopting submetering and energy-management systems for single processes or global operations.

Information can be used to negotiate low rates, set budgets, find savings opportunities, and justify investments -- ranging from programmable lighting to reflective roofing for an existing building.

In between, "extraordinary" savings can accrue from an adjustable-speed motor matching an application's need at a given time. It might power a pump according to changing flow/pressure requirements rather than continuously at top speed with a valve controlling downstream delivery, which DiLouie likened to "driving with one foot on the gas and the other on the brake."

Already, DiLouie said, "more than 40% of newspapers are planning a capital project to improve energy efficiency." Energy-conscious Cox Enterprises Inc.'s flagship, The Atlanta Journal-Constitution, "cut their energy costs in half" solely through lighting and HVAC improvements, he said.

Energy-management options, he said, can produce returns on investment that clear a typical corporate hurdle of 33%. Initial costs ideally are paid back in three years, with savings thereafter falling to the bottom line. Alternatively, a newspaper may hire an energy service company for an entire retrofit, savings from which go to the service company until the cost of the project is paid, after which they are split with the paper.

DiLouie predicts "deregulation over time is going to work itself out." But while the country adds capacity and improves its grid, another route to savings is on-site power generation. With backup generators upgraded for regular use, "peak-shaving" can trim costs by generating electricity during high-demand periods. And in "peak-sharing," utilities offer incentives to users that supply their own power.

The U.S. Department of Energy forecasts that on-site generation, which can include cogeneration capabilities, will jump about 56% over the next 20 years.