Wednesday, July 21, 2010

EPA Green Power Partnership Program will see changes in 2011

The EPA Green Power Partnership Program which recognizes businesses, corporations schools and institutions for their commitment to the development of renewable technologies will modify their minimum requirements to participate in the program. Consumers of electricity that purchase Green Power through the use of RECs, Renewable Energy Certificates, will have to increase the percentage of their purchase to meet the new levels. The two levels of recognition are the Partnership Club and the Leadership Club. Below is a table outlining the changes come 2011.

If you have any questions about the EPA Green Power Program contact the Good Energy information line at 866-955-2677 x103.

Posted By Javier Barrios at 11:18 AM

Sunday, March 07, 2010

Five Pitfalls a Commercial Energy User Should Avoid when Making an Energy Procurement Decision

Deregulation of electricity supply began in the late 1990's with Pennsylvania and California becoming two of the first states to offer commercial energy consumers the ability to choose an alternate electric supplier. Since then there have been 16 more states added to the mix that provide an "Electric Choice" program that let competitive suppliers offer alternative rates and energy products to rate payers. Competitive offerings have changed dramatically since the early years of deregulation and commercial customers need to be aware of the pitfalls associated with choosing a supplier and signing an electricity supply contract. The two most common products are fixed rate and variable rate contracts. A fixed rate contract includes a locked-in price per kilowatt-hour for a definitive period: usually a 1 to 3 year term. A variable rate contract allows the energy supply rate to float with the sometimes-volatile wholesale spot market. The wholesale market from which the ultimate rate paid by the customer is derived varies by geographic region. In New York for example, the New York System Operator, ("NYISO"), manages markets including the Day Ahead Market and the Real-Time Market, and in Texas the Electric Reliability Council of Texas, ("ERCOT") manages the Market Clearing Price of Energy, "MCPE") market. This article examines five critical pitfalls commercial energy users may face when choosing an electric supplier and offers suggestions of how to avoid them.

Energy Procurement Pitfall Number One: Energy Users May Not be Aware of All Available Product Options: There are several energy supply products available in the market in addition to the fixed rate and index rate products mentioned above. With regard to fixed rates many energy users will naturally look for the cheapest offer. If fixed rates are the only available offers in a marketplace, then this strategy cannot be faulted. But where product types may vary greatly beyond basic fixed rate fixed term contracts, market conditions play a great role in guiding a smart energy procurement decision. For example, in July 2008 energy markets were at a peak. Examining various fixed rate offers at that peak moment, and selecting the lowest price offer would still result in substantially higher energy costs vs. any other comparable energy consumer that opted instead to enter into an index rate product, and then waited for prices to soften before entering into a fixed price contract. A prerequisite to understanding when index rate or hybrid block plus index rate contracts might be better choices than fixed rate contracts is to have basic knowledge of the existence of those other product types. Contract term is another very important metric to consider. Energy users that sagely entered into long term five year fixed rate contracts at market lows ended up paying less than energy users that signed shorter term fixed rate contracts over that same period, even though the five year contract fixed rate was higher than the shorter term offers presented upon signature of the long term contract. Of course it is impossible to predict the market, and these are really hypothetical scenarios, but armed with a historical perspective of where energy markets have been over the past ten years, and armed with a good understanding of how domestic and world dynamics in economics, weather, politics and war can effect energy market prices, energy users will be best equipped to make the smartest decisions regarding which product type and which product term to select.

Also important to know is that quoted energy rates might exclude one or several components that could have a major impact in the final cost of energy supply. For example, some energy suppliers or brokers offer energy rates that exclude rate components including line losses, ancillary services, congestion, capacity and gross receipts taxes, thereby presenting fixed rates that appear on the surface to be low vs. other offered rates that include those components. The customer may sign such an artificially-low priced contract and then be perplexed why the final rate shown on the first bill is higher than expected. The solution is to be aware of all available product types, and when evaluating offers to be sure to have an "apples-to-apples" analysis of the offers. Ultimately reading each contract carefully, and having a firm understanding of which price components are included or excluded in each price offer is the best first step. Ask your supplier, broker or consultant to show you where the price section is in the contract and what components are included or excluded in the stated fixed rate. If the price components are not explained to your satisfaction, find another supplier, broker or consultant to help you.

Energy Procurement Pitfall Number Two: Picking a Supplier You Know Nothing About: Savvy stock market investors will advise their proteges to make buying decisions only after thorough research into the companies of interest. Because a fixed rate contract serves as a sort of insurance policy against future increases in energy supply costs, the value of the contract is only as good as the strength of the energy supplier. If the energy supplier goes out of business, then the energy contract is void, and the energy user must make a buying decision all over again. If the energy market has increased substantially, then the impact to the energy user’s bottom line could be substantial. Over the past ten years we have seen many energy suppliers come and go. Energy suppliers have shut their doors for various reasons, including failure to hedge their positions. Failure to hedge, (defined in this context as a failure to take an offsetting wholesale market position), can be catastrophic for a supplier if a supplier enters into fixed price contracts with energy users at a market low, and upon upward movement of the market the supplier ends up paying more on the spot market to supply its customers than it is collecting at the low fixed contract rates. When cost of goods sold is higher than gross sales, disaster and business failure is sure to follow for an underfunded energy supplier. We've seen this happen again and again due to cost of credit, the expense of making the hedges and possibly plain old hubris and greed. Don't be afraid to ask a supplier if they are hedging all of their positions in the market. Learn as much as you can about your prospective counterparty. Learn about the financial strength of any parents of the supplier you are considering. Find out if they are a public company and how long they have been in business. Visit your state's Public Utility Commission ("PUC") website and check for the number of PUC complaints against that supplier. Some suppliers have hundreds of complaints, while others have none. Take into consideration the number of customers served when evaluating the relative importance of the number of PUC complaints. It will be easier for you to decide whether you will do business with a prospective supplier after you have taken the time to learn as much as you can about them.

Energy Procurement Pitfall Number Three: Not Understanding the Contract Terms: This is a very important pitfall. Mentioned above is the fact that there are several price components that can be excluded from a quoted fixed rate. There are also contractual provisions that can have adverse effects on your contract rate depending on what changes occur at your business. One provision to consider carefully is known as the "Bandwidth" provision. It is a maximum and minimum limit of how much power you can use in a given period compared to your historical averages before triggering market adjustment. If you go over the maximum limit or under the minimum limit you can be penalized. Make sure you have a contract bandwidth that works for your anticipated business needs. A typical percentage is 90% to 110% or 80% to 120% bandwidth. If your business is seasonal you may want a larger bandwidth during those higher or lower demand periods. To avoid a possible surprise on your bill, know your historical usage, and have a good idea of how usage could fluctuate over the contract period. This will give you a good idea of how much bandwidth the contract should permit. A hotel that may have 100% occupancy for an entire year, will certainly use far less energy in the following year if average occupancy falls below 50%. If a supplier hedges a position to supply the hotel with energy based on 100% occupancy, and the market dips the following year when the hotel is using less power than the supplier expected, the supplier will experience losses associated with having to sell the unused power back into the lower wholesale market. The supplier would then trigger a mark to market calculation to be made whole on those losses by the hotel. Another contract provision that is very important to understand is the penalty for early termination. If you sell your business during the contract term, of if you close one or more locations, and you wanted to terminate all or part of an energy contract early you should have a good understanding of the formula the supplier uses to determine any damages. It may be a specific formula easily deciphered or it may be marked to the spot-market conditions at the time of termination. Ask your broker, consultant or supplier representative to help you get it straight so you are aware of the ramifications of early termination.

Energy Procurement Pitfall Number Four: Not Working With a Consultant or Broker: Suppliers are great to work with directly if you can be assured they have the best price and product for your needs. The real question is how do you know? This is where working with a broker or consultant becomes very helpful to making the smartest energy procurement decisions. Good consultants or consultative brokers have the experience and the insight to explain to customers in layman's terms what all these products, provisions and market trends mean, and can offer numerous supplier options, product types and contract term lengths best suited for your business type. It is very common for the low price offer presented by a broker or consultant to be 10% or more lower than the mean offer. Working with a broker or consultant that knows all of the key suppliers maximizes an energy user's chance of identifying and acting on that low price offer. Before venturing on your own call a consultant that will give you some honest advice on the key points explained in this article. Most good consultants have been around for at least 10 years. A good consultant will assess the situation before they say they can help you.

Energy Procurement Pitfall Number Five: Not Understanding Energy Market Trends: Energy markets are very volatile. It is a good idea to familiarize yourself with the movement of the energy markets. Some energy users sign contracts without knowing where the energy markets have been and without understanding where the markets might go based on local, national and global factors. To rely solely on the biased punditry of sales people who are more interested in timing the close of the sale instead of timing the market can lead to poor buying decisions. Websites such as FutureSource: www.futuresource.com, CME Group: www.cmegroup.com or Seeking Alpha: www.seekingalpha.com offer insight on historical trends, market data, information, and news to track whether the market has been going up or down or staying steady, and if market conditions such as backwardation or contango exist. These market conditions play a role in determining how varying contract term lengths are priced vs. a baseline. Also ask your broker or consultant about the markets and request charts and trend lines of the energy markets so you can make a more informed decision of what products is right for you. Consultants should have a few options to recommend to customers when the market is at a low or if the market is running high. There is no cookie cutter solution for every commercial customer and you and your broker or consultant should understand the needs of your business, the available product types, term lengths, contract terms and market conditions and ask the right questions before moving forward with an electricity supply contract. The possible pitfalls mentioned above and others can be avoided by taking the time to do a little due diligence.

By:

javier@goodenergy.com

Javier Barrios

Managing Partner

Good Energy, L.P.

212-792-0222 x103

About the author:

Mr. Barrios is an expert in energy cost management and is a Managing Partner of Good Energy, L.P. a national energy consulting firm headquartered in New York City and Dallas.

Posted By Max Hoover at 11:38 AM

Thursday, October 29, 2009

Con Edisons New Reactive Power Charge

Learn more about power factor here.

Posted By Max Hoover at 5:09 PM

Monday, October 26, 2009

Good Energy Supplies Green Power to Schools

Good Energy is pleased to announce that it has supplied green power to four of the twenty largest K-12 purchasers of renewable energy in the United States, according to EPA. See the list of top twenty green schools here.

Posted By Max Hoover at 5:42 PM

Monday, April 06, 2009

Energy-Related Engineering Studies

Energy Engineering Studies - Customer Benefits: Engineering studies performed at commercial and industrial facilities can yield actionable data that can in turn result in significant energy cost savings.

Sales Tax Elimination: Generally, if energy is used in the manufacture of goods, then all or a portion of that energy may be exempt from sales tax. In order to claim the exemption, local utility companies and third party energy suppliers typically require proof of the exemption in the form of a predominant use study. This is a formal study prepared by a qualified engineer, and armed with this predominant use study, Good Energy is typically able to recoup up to three years of past sales tax payments from the local utility or third party energy supplier.

Demand Reset - Demand Charge or Energy Delivery Cost Reduction:In the event a facility lowers its peak energy consumption due to a lost tenant, reduced factory output, more efficient manufacturing equipment or suspended operations, the local utility will typically continue to bill an energy delivery charge based on the previously-set peak demand for as long as 12 months unless action is taken by the facility owner to prove to the utility that the facility no longer requires as much energy "bandwidth". A demand charge can be thought of as a rental expense on an energy delivery "pipe". If a high peak demand is set, then the utility must ensure that an adequately-large pipe is available to the customer at all times, and the customer in turn must pay for the privilege of having that large pipe available. The high "rent" will continue for a period of time that varies from region to region, but in most cases, the "rental" amount can be reset if the customer can furnish proof to the utility that the demand charge should be reset. Armed with a defensible engineering study, or other documentation, Good Energy is typically able to win substantial cost savings on behalf of facility owners with lowered peak energy demand.

Engineering Services: Good Energy offers energy-related engineering studies nationally. Contact your Good Energy representative today to discuss how an engineering study might benefit your business.

Posted By Max Hoover at 3:32 PM

Friday, June 06, 2008

Demand Charge Reduction - Case Study

We were pleased to have been able to assist a client reduce their energy expense by providing an engineering study.

The study was aimed at providing a manufacturing client with the opportunity to avoid inflated demand (kW) charges that their utility company imposes on facilities that close down but still have electricity service active, as might be required if the customer wants to offer the real estate for sale.

Most utilities have a delivery tariff rider that says that they can bill a customer delivery charges using the greater of their actual peak demand or at a minimum percentage of their greatest peak demand, over the last 12 months. For example, Oncor, (the incumbent utility in north Texas), has a delivery tariff that allows them to use the greater of the customer's actual monthly peak demand or 80% of their highest peak demand (kW) set over the last 12 months.

So what does this mean in English? It means that when a manufacturer closes their doors at a production facility, but still needs electricity service to keep the lights and air conditioning working to show the facility to a prospective buyer of the real estate, they are exposed to paying inflated demand charges for delivery because the utility is billing them at 80% of their highest demand (kW) value, set over the last 12 months, as opposed to using their actual demand for billing. When a 2,000 peak kW manufacturer shuts down a facility but still gets billed delivery charges based on 1,600 kW (80% of 2,000 kW), as opposed to 100 kW, for light air conditioning and to keep the lighting load available at their facility, it's a costly expense.

We were able to get the utility to accept that the customer has dramatically reduced their load, at the closed facility, and we made it possible for the customer to go back to being billed at their "ACTUAL" peak demand (kW) values. This engineering study cost the customer $2,000.00, but it should help this customer save over $10,000.00 a month or roughly $60,000 over the next 6 months. Not a bad ROI.

Posted By Max Hoover at 9:07 AM

Friday, April 04, 2008

Load Factor, Load Profile and Power Factor

So what's the difference between Load Factor, Load Profile and Power Factor? People in our industry will say that a meter has a low, medium or high load factor.....but do you know how to calculate a load factor? If not, it's important to learn how to do this using historical energy usage data.

Load Factor (LF)

This term refers to the the energy load on a system as compared to its maximum or peak load for a given period. Load factor is most typically calculated on a monthly or annual basis. When a customer creates his maximum demand on the system, he will probably not continue to use electricity at that same level for the whole month, but will use it at different levels throughout the month. The extent of his use for the month as compared to his maximum use for that same month is called his "load factor". Load Factor is computed by dividing his kWh usage for the month by the product of the month's "peak" or maximum demand for him times the hours for the same period (730 for a month and 8,760 for a year). Here is the formula: Load Factor = Month's kWh Usage / (Peak Demand or KW x 730)

So what is the difference between load factor and load profile? Load profile is not the same as Load Factor.

Load Profile

Load profile is a graph of the variation in the electrical over time. A load profile will vary according to customer type, (typical examples include residential, commercial and industrial), temperature and holiday seasons.

So......what is power factor? Is it the same as Load Factor? The answer is no. See the definition of power factor, below, and make note of the difference between these two forms of measurement.

Power Factor (PF)

This term is used to express the relationship between "useless current" and "useful power". It can be very confusing to explain and understand. Certain types of electrical devices have a power factor of 100%, such as an electric stove, a light bulb, toaster, etc., which means when the appliance is on, all available power is being used to heat or illuminate and none is being wasted. Some other devices, especially induction motors as commonly used today, are not being used at capacity and result in a demand on the system greater than actually being used or put to good use. The actual work being done by the motor results in a certain kilowatt (kW) demand that is measured by the ordinary meters for measuring such demand. This motor, however, when "partially" loaded, makes an additional demand on the electric system which is not measured by the ordinary meter, but such additional demand requires capacity in the electric system in just the same way as the useful demand requires capacity. When there is no useless current in evidence, the power factor is said to be in "Unity". Power Factor is normally used in calculating kilowatts by the expression wW = kVA x PF. To compute power factor, the expression would be: PF = kW/kVA or (W/(E x I)). If an electric motor requires 100 kilowatts of useful power and is operating at 50% power factor, the above formula would yield as follows: 100 kW = kVA x .50 PF. To solve for kVA, kVA =100 / .5 = 200. In other words, this motor requires 200 kilovolt-amperes (kVA) of capacity in the electric system although it only uses 100 kW of useful power. The electric system is still having to provide 200 units of capacity in transformers, lines, etc. to serve that motor. If power factor for that motor could be increased to "unity", the motor would do no more useful work, it would take no more energy to perform this work, but would make a demand of 100 kw on the electric system, and only 100 kw in capacity in the electric system would be required to serve the motor. If that same 100 kw motor is now working at 70% power factor, the kVA required would be 143, or 100 / .7. An improvement over the 200 previously required. The higher the power factor of a load, the better it is to serve.

Generally, if a customer pays an electricity bill with units of energy measured as kVA, then the customer will benefit from savings by increasing power factor. If the customer pays an electricity bill with units of energy measured as kW, then the utility company will benefit from savings by increasing power factor. Frequently, however, utility companies impose a power factor penalty charge on customers with poor PF, giving the customer an economic incentive to increase power factor, even if the customer is billed based on kW demand.

Contact Good Energy at info@goodenergy.com for more information regarding power factor correction services.

Posted By Max Hoover at 2:49 PM

Wednesday, July 25, 2007

Good Energy BOMA 2007

Good Energy's exhibit at the Building Owners and Managers Association annual Office Building Show was a hit again in 2007. A special thank you this year to the Good Energy team members that made it happen, and to Ideal Industries, Electric Lighting Agencies, and Lamar Lighting for tremendous support.

Posted By Max Hoover at 11:05 AM

Saturday, July 21, 2007

Buy Renewable Energy Certificates Online

New York, NY- Good Energy, a national energy management consultancy providing electricity, natural gas, fuel oil and renewable energy certificate supply consulting services announces the launch of its Renewable Energy Certificates (RECs) online store, located at www.goodenergy.com/store.

Every U.S. business, college, non-profit organization, government agency and individual consumer can purchase RECs, also referred to as green tags, green credits, renewable certificates, renewable credits and Tradable Renewable Certificates (TRCs), to reduce the environmental impact of everyday activities, including automobile use, airplane travel, energy use and waste production.

The purchase of RECs supports renewable electricity generation, which can help offset conventional electricity generation in the region where the renewable generator is located. The ability to acquire RECs independent of electricity means buyers can "green up" even without accessing "green power" or without switching to another electricity provider. Like green power, RECs benefit the environment and clear the air by offsetting emissions from regular fossil-fueled power plants. They also contribute to sustainability, energy security, energy independence and domestic economies.

Max Hoover, president of Good Energy, says "U.S. businesses and institutions can purchase renewable energy certificates and earn recognition from the Environmental Protection Agency and membership in the EPA's Green Power Partnership. When considering the real environmental benefit to a renewable energy certificate purchase in conjunction with the marketing and public relations value of Green Power Partnership status, RECs are as good for business as they are for the environment."

Mr. Hoover is available for press interviews and can discuss:

The reasons why businesses and independent consumers should buy Renewable Energy Certificates

How to evaluate and offset your "carbon footprint"

How businesses can use the Green Power Partnership logo in marketing and other promotional materials and receive information and support, marketing and communications assistance, peer exchange and various forms of public recognition.

All press interviews and queries or for assistance determining exactly how much energy your home or business consumes annually please contact Max Hoover toll free at (866) 955 2677 or via email at max (@) goodenergy.com

Posted By Max Hoover at 1:00 PM

Tuesday, May 01, 2007

Visit Good Energy at the BuildingsNY 2007 Show at the Jacob K .Javits Center

Visit Good Energy at the BuildingsNY 2007 Show at the Jacob K .Javits Center, June 27 and 28, 2007. We'll be showcasing energy efficient lighting products and of course, "a Smarter Way to Buy Energy". Our booth number 346 is located in the Energy and Green Buildings Pavilion.

Posted By Max Hoover at 6:02 PM