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Manufacturers Find Ways To EnergizeTheir Businesses
Integrating new energy technologies to protect against supply shortages and rising prices
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Business New Haven
1/6/2003
By: Karen Singer
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In recent years Connecticut businesses have taken advantage of utility distribution company-sponsored programs as well as other incentives aimed at reducing energy expenses.
Cost-cutting measures have ranged from installing more efficient lighting or motors to production changes and rebates for reducing power use during peak periods.
These efforts, say experts, have made a dent in reducing demand, especially in the overburdened southwestern part of the state, where older transmission lines make it difficult to get energy to where it's needed most.
But much more needs to be done, according to Joel Rinebold, who heads a working group on state energy policy whose recommendations to the legislature are due the first week of January.
“Despite all the conservation work that's going on, our energy use is increasing,” says Rinebold, who also runs the Institute for Sustainable Energy at Eastern Connecticut State University.
In these difficult economic times, manufacturers are hurting badly for many reasons including energy costs, according to Jeff Gaudiosi, an attorney for the Manufacturing Alliance of Connecticut (MAC). The not-for-profit group represents some 300 companies statewide, ranging from mom-and-pop plants to those with several hundred employees.
“I can't think of one of our members who isn't struggling,” Gaudiosi says. “We've seen a lot of our guys laying off employees or going under.”
The energy-cutting programs have helped manufacturers, especially with rebates, low interest loans and other incentives enabling them to upgrade their operations.
“Many of these companies have facilities dating back 40 or 50 years, and don't have the most efficient lighting, heating or cooling systems,” Gaudiosi says.
Although utility companies have been offering energy-conservation programs for years, current programs are the result of state deregulation of the utilities in the late 1990s. This led to the creation of the Energy Conservation Management Board, an 11-member panel including representatives from government agencies, business organizations, residential and environmental groups. The ECMB advises and assists the electric distribution companies and the state's Department of Public Utility Control (DPUC) in developing and implementing conservation and load-management programs, and makes recommendations on proposals for funding.
The programs are funded by a $.003 (3 mills)-per-kilowatt charge on customers' electric bills, which totaled about $86 million last year.
Connecticut Light & Power (CL&P) and United Illuminating (UI) administer the programs. UI serves 17 municipalities in southwest and south–central Connecticut, but CL&P, with around three times as many customers as UI, gets the lion's share of the money.
In 2001, commercial and industrial customers participated in 496 UI energy conservation projects, generating $6,306,447 in incentives and resulting in savings of 55,690,000 kilowatt hours, according to UI spokesperson Tony Marone. Of those, 186 were in the New Haven area, with $1,598,099 in incentives and savings of 12,636,943 kilowatt hours.
UI business programs include Energy Blueprint, which encourages the design and construction of energy-efficient buildings and equipment, and Electric Solutions, which identifies and helps provide energy-efficient technologies throughout the workplace.
UI also administered 316 UI small business program projects in 2001, saving 6,507,000 kilowatt hours. Fifty-two projects were in New Haven area, with $242,986 incentives resulting in savings of 1,549,581 kilowatt hours.
The total annual savings from all 2001 programs (including residential) was 79,462,000 kilowatt hours, or enough energy to provide 11,000 average homes with electricity for a year, Marone says that adding 2002 savings will be similar.
Richard Longhini, president of Longhini Sausage Co. in New Haven, says UI programs have helped him realize energy savings of several hundred dollars a month. In addition to updating lighting and installing motion sensors and timers in a refrigerated storage room, Longhini is especially thrilled with his new ability to harness air outside the building.
“I used to be upset because the air conditioners were running 24 hours on a frigid day,” he says. Now, a computer-controlled ventilation system allows cold air to enter the production room, which needs to maintain a constant temperature below 50 degrees Fahrenheit.
Marlin Firearms in North Haven also has benefited from UI and CL&P energy incentives, according to risk manager Bill Desrosiers. UI has subsidized energy-efficient lighting projects, while both energy distribution companies have expert resources for advice on replacing motors and other equipment. “They help us identify which vendors have the best products for our needs,” Desrosiers says.
CL&P estimates that its conservation incentives, which date back two decades, have reduced peak summer loads by at least 450 megawatts, with an annual savings of nearly 2,000 gigawatt hours, or around $143 million.
The company currently has around a dozen energy-savings initiatives tailored to business customers, including rebate programs involving consultation services resulting in paying the difference for more efficient lighting, motors or heating and air conditioning equipment.
CL&P's Custom Services program, which helps companies upgrade their facilities, for example, enabled Southington-based Johnson & Johnson Medical to transform an inefficient compressed-air system into a state-of-the-art system, resulting in annual savings of $120,000.
Another CL&P program, RD&D (Research, Development & Demonstration), provides funding for new energy-saving ideas and technologies. Since 2000, the program has sponsored 31 projects totaling more than $11.7 million in funding. Grants include $63,000 to a Fairfield homemaker for an air conditioner vent cover device, and more than $1 million to GenCell in Southbury for a fuel-cell manufacturing process.
The state-run conservation and load-management fund also provides money to supplement ISO-New England's load responses programs, which provide rebates for reducing energy use. ISO-NE is the independent entity managing and operating New England's bulk power system and transmission facilities.
In 2002, more than $4.1 million was budgeted for load management and demand response, including supplemental funding for the ISO-NE programs. Most of the effort focused on southwestern Connecticut, which experts estimate consumes about 50 percent of power in the state.
The ISO programs are available to UI and CL&P customers capable of reducing a minimum of 100 kilowatts of demand.
Class 1 customers participate in a mandatory response program requiring them to provide mandatory load reductions, and be able to interrupt load within half an hour after notification from ISO-NE. Class 2 customers take part in a price-response program, requiring a voluntary load reduction within a variable time frame determined by ISO-NE.
Marone says UI has 19 customers representing 10.9 megawatts of load on the program, totaling six megawatts in Class 2 and 4.9 megawatts of Class 1.
Most are large commercial users, whose identities are confidential by contract.
One participant is Pitney Bowes, according to company energy and environment program manager Michael Gilbert. When ISO calls, which happened “only once last year,” Gilbert sends a voice-mail message to all Fairfield County employees, urging them to drop discretionary consumption. “The main benefit we get is to help maintain the integrity of the [electric power] grid,” he says.
Pitney Bowes, whose core business these days is mail and document management, also takes part in many CL&P and UI energy saving programs, using them mainly to update infrastructure such as lighting, motor controls, heating, ventilation and air-conditioning systems.
As useful as these programs have been, however, Gilbert is among those who wish they would provide incentives for energy-reducing alternatives other than electricity. As a founding member of a green power group, he says, Pitney Bowes is hoping to develop a competitive market for more environmentally friendly power.
MAC's Gaudiosi expresses similar sentiments. “Many businesses have taken advantage of energy savings incentives, but other options are limited,” he says. “Some of our members are considering environmentally friendly products, but they cost more. Others want to put in their own generation, but in the current economy their numbers are small. People are looking to save.”
One growing statewide trend, however, is conversion to natural gas, a cleaner alternative. According to a recent Connecticut Business & Industry Association (CBIA) survey, ten percent of member businesses relied on natural gas in 1999. By 2119, CIBA estimates those ranks will swell to 61 percent.
The state's three natural gas utilities - Yankee Gas Services Co., Connecticut Natural Gas Corp. (CNG) and the Southern Connecticut Gas Co. (SCG) - are working hard to spur demand. Last April, for example, they co-sponsored a forum in Berlin on how commercial and industrial businesses can take advantage of natural gas technology for cooling, heating and power.
Manufacturers currently using natural gas already are benefiting from membership in an aggregated gas pool run by MAC, which taps into what Gaudiosi describes as a “more mature” commodity-type market by taking bids on contracts usually lasting around two years. “We're the largest in New England with more than a billion cubic feet,” Gaudiosi says. About 100 manufacturing companies take part in the pool. “Most small manufacturers use gas for heat, but larger companies are saving hundreds of thousands of dollars a month.”
A looming issue for manufacturers - along with other businesses and residential energy users - is what will happen to the so-called standard offer, the amount charged customers who have not chosen an alternate supplier to UI or CL&P.
The state's DPUC sets the rate, which is due to expire on December 31, but the agency takes its cue from the legislature, according to spokesperson Beryl Lyons. “We are waiting to hear from them,” she says.
Skyrocketing electric costs may be the result, but also could provide a powerful incentive for development of energy alternatives.
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