From the November 22, 2002 print edition

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Make energy efficiency a budget priority as winter nears

Utilities and environmental groups spend a lot of time teaching homeowners how to lower their heating bills, which are often residential customers' biggest utility costs.

Companies can also trim their heating costs this winter by taking simple steps. And businesses have some advantages that homeowners don't, such as the option to buy natural gas on the open market.

Although saving money, especially given today's tight times, seems like the smart thing to do, experts said businesses often don't spend a lot of time analyzing their heating costs.

"I have not heard that the cost of heating raises a big issue for most businesses," said Janet Besser, senior vice president at Lexecon Inc. in Cambridge and former chairwoman of the state's Department of Telecommunications and Energy.

The need for additional fuel usually means bigger bills. Grocery stores, for example, generally spend more on refrigeration than heating, even in the winter. As a result, executives and facility managers pay more attention to reducing their biggest bills so they can see bigger savings quicker.

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Plus, many companies have already taken the basic steps, such as adding insulation, that can bring savings on heating bills. In addition, businesses that might consider investing in the newest energy-efficient technologies often balk at returns on investments that could be years in the future.

"There's no end to what businesses can do to make their facilities more airtight and less consuming of fuel, but they're not necessarily cost-effective," said Robert Knickerbocker, a partner with Day, Berry & Howard LLP who has served for many years as principal outside regulatory counsel for Northeast Utilities and has participated in the development of strategies to achieve targeted reductions in energy costs.

Still, experts said, businesses shouldn't overlook opportunities to save on heating bills. After all, it's not just good for the bottom line, it's good for the environment.

The right choice

A company's first step should be to assess its choice of fuel — more specifically, any company that uses electricity for heat should convert to another fuel, some industry advocates maintain.

Electricity is about "triple what you ought to be paying," said Larry Chretien, executive director of the nonprofit Massachusetts Energy Consumer Alliance, an energy advocacy that also runs a membership-driven heating-fuel cooperative.

"Electricity is seldom used for large entities. It's just not cost-effective," Knickerbocker said.

Gas and oil are the fuels of choice.

"And interestingly, those two fuels tend to track each other most of the time, with oil generally enjoying a slight cost advantage," Knickerbocker said.

Some smaller companies, particularly those in less urban areas, might decide to go with propane. Some companies can harness byproducts, such as steam from a manufacturing process, to heat their facilities. "Then, of course, there's the possibility of on-site generation," Knickerbocker said. These choices have the possibility of lower fuel bills in certain circumstances.

Access to other alternative fuels is limited, and most executives would see the upfront investment costs of switching to other fuels as outweighing any long-term savings.

For example, new technologies, such as fuel cells, might provide long-term cost savings, but they're not available off the shelf just yet.

Besser pointed out that companies in some Boston neighborhoods, as well as other urban areas and industrial districts, might have access to district heating plants, where steam travels through tunnels and gets piped into buildings. There are serious limits, though: These districts are limited, and even companies that operate within districts might have to put up significant capital costs in order to take advantage of the energy.

For companies using oil or gas, experts said it pays to shop around. Even homeowners know that oil prices — and services — vary from company to company; businesses should be as savvy. Larger companies can also buy gas competitively. One of Knickerbocker's Maine-based clients solicited bids for natural gas for this winter as a way to reduce its fuel costs.

But David O'Connor, commissioner of the Mass. Department of Energy Resources, said that strategy has its limits, too: "It's pretty hard to find competitive suppliers for natural gas for a small business."

Let's talk tech

Companies can also take advantage of simple technology to cut costs.

Time-of-use meters, for example, can help companies using gas to lower bills by calculating gas use based on how much was used, and when usage occurred; it's a particularly effective step if companies aren't using lots of gas at peak times, when it's most expensive, Knickerbocker said.

Experts also recommend that companies, like homeowners, should make sure their heating equipment is as efficient as possible and their buildings are sufficiently insulated.

"Tune up and tighten up the building," said Alan Mulak, program manager for the building-operator certification program at Northeast Energy Efficiency Partnerships Inc. in Lexington.

Check weather stripping on doors, loading docks and windows, Mulak said. Check the equipment — filters, belts, and the like.

Mulak also advised companies to use properly trained facilities managers. NEEP has found that certified staff members can trim energy bills for a 100,000-square-foot building by about $5,000 a year.

Commissioner O'Connor also recommended the simple step of watching the thermostat. Some people mistakenly believe that turning the temperature way down overnight conserves energy and lowers bills. In reality, though, it takes a lot of energy to bring a building's temperature back to comfortable levels in the morning.

Companies might also find that having multiple thermostats can help keep costs down; companies can shut off seldom-used areas, lowering temperatures down "so you don't have to heat a space that's not used," O'Connor said.

Energy audits arranged through the utilities, as well as professional consultants, can also be good investments — especially this year, as experts anticipate higher fuel costs.

"People are going to feel a little bite in their bills this winter," O'Connor said.

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