Utility Deregulation 10 Lessons Learned (the Hard Way) George R Owens PE CEM, President Energy and Engineering Solutions, Inc. [email protected] 410-964-3513

Utility Deregulation10 Lessons Learned

(the Hard Way)

George R Owens PE CEM, PresidentEnergy and Engineering Solutions, Inc.

[email protected] 410-964-3513

Energy and Engineering Solutions, Inc. (EESIenergy.com)

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Lesson #1Don’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.


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Lesson #2Know Your Energy Profile

• 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.

Typical Monthly Demand

0

1000

2000

3000

4000

5000

6000

7000

1 2 3 4 5 6 7 8 9 10 11 12

Month

KW

Typical Daily usage profiles

1000

1100

1200

1300

1400

1500

1600

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

HOUR


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Lesson #3Keep 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


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Lesson #4Electricity 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


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Lesson #5Price 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


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Lesson #6Enron

• 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


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Lesson #7Not 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!


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Lesson #8The 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.


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Lesson #9It 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


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Lesson #10Utility 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


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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


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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

Documents

Utility Deregulation 10 Lessons Learned (the Hard Way) George R Owens PE CEM, President Energy and Engineering Solutions, Inc. [email protected] 410-964-3513