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The Competition for Supply & Demand Reduction

In Volume 11 of The ReeSource, I discussed changes that were occurring in the energy industry as a result of deregulation. At that time, electric utilities were in a period of transition from the traditional arrangement where they were each the only supplier of electricity to customers within their specific geographic regions to one where they would have to compete with other utility companies. The transition period has now passed, and open competition for the supply of electricity is a reality. Meanwhile, the growing interest in energy efficiency his driven the passage of new laws in a number of states that now require electric utility companies to reduce energy consumption on their systems by a prescribed amount within a specified period of time. These two developments have created new opportunities for consumers to both reduce energy costs and upgrade their facilities.

COMPETITION – Though all states handle this issue somewhat differently, most have made certain that customers now have a choice of who supplies their electricity. In some states not all customers are eligible, the choice of suppliers is limited, and there are requirements that the suppliers have to meet; but most customers can now select from a number of suppliers that offer better rates or other desirable attributes (sustainable practices, for example). Additionally, the deregulation laws require utility companies to furnish customers with information on how to shop for different suppliers. So, the best way to begin exploring your options is to visit your current utility company’s website.

REDUCTION OF DEMAND – Because many utility companies have been mandated by law to reduce energy usage on their systems, they have created incentive plans to encourage customers to upgrade/retrofit their facilities with more energy-efficient equipment. These programs range from rebates for replacing lighting or mechanical equipment with more efficient equipment all the way to plans that offer items such as LED exit signs and compact fluorescent lamps to customers for free. Many programs also include a custom incentive program that allows customers to, within certain parameters, design their own approach to improving the efficiency of their facilities and apply for reimbursement of some of the upgrade expenses.

The effectiveness of these incentive plans can best be demonstrated by reviewing the example of a recent lighting retrofit project on which Reese Engineering acted as the electrical engineer. The project involved the replacement of the following lighting and control equipment at a central Pennsylvania middle school:

  • All existing T12 fluorescent lamps and ballasts with T8 lamps and more efficient electronic ballasts.
  • Metal halide light fixtures in the gymnasium with T5 fluorescent light fixtures with integral occupancy sensors.
  • Standard light switches with occupancy sensors in select locations.

“Because each utility company has a different plan, check with them directly before proceeding with any projects.”

The low bid for the project was approximately $150,000. Through the “prescriptive” and “custom” rebate plans offered by the serving utility, the school district applied for and was awarded just under $50,000 in rebates. Although this project was only completed in August of 2010 and the results are preliminary, based on a comparison of electric bills for the school in the fall of 2010 to the same period of time in 2009, the lighting changes have reduced the energy costs for this building by approximately 15%.

Because each utility company has a different plan, check with them directly before proceeding with any projects. Also keep in mind that many of the laws requiring reductions in energy usage have deadlines, so most incentive programs will expire within the next few years. Moving quickly in the short run may ensure significant energy savings for your facility in the long run.

– Michael J. Lee, PE, LEED AP

Michael is a Senior Project Manager, Licensed Electrical Engineer, Lighting Designer, and LEED Accredited Professional. Please feel free to contact Michael for further details regarding the above information.