This week, the PUCO filed a settlement agreement in the long disputed and very contentious FirstEnergy Power Purchase Agreement case. In short, this arrangement proposes an income guarantee paid by all consumers to FirstEnergy for uncompetitive aging power plants. AEP Ohio has made a similar request to the PUCO and a settlement filing on that request is imminent.
There is little doubt these arrangements, if approved by the PUCO commissioners, will increase delivery costs significantly from FirstEnergy and AEP Ohio. There is no way to avoid this new increase which means more emphasis and attention will be put on energy programs that can reduce your energy costs.
To that end, I have identified the top initiatives that can reduce your electricity spend in an effort to help offset this new PPA rider charge. However, all manufacturers, regardless of utility, should consider these top-rated cost-reducing strategies.
1. Now is the time to shop for supply
The wholesale electricity market is at all-time lows going all the way out until 2020. Look now to renew your current agreements and your supply rate will likely go down. Also, if your current contract does not expire for a year or so and you consume at least 8,000 MWh, some suppliers will consider a “blend and extend” arrangement. This will allow you to immediately receive a lower rate by extending the term of your agreement.
2. Enroll in demand response
Enrollment season has begun for Curtailment Service Providers signing up customers for participation into the PJM program. This program will pay your facility for reducing consumption when the grid is stressed to meet demand. Generally speaking the payments are around $30,000 per MW reduced and would be available for customers with a reduction of least 200 kW. The money gained from this program can be a great way to fund your next energy efficiency project.
3. Did someone say energy efficiency?
I recently went to an energy conference where a panel of manufacturers was discussing the adoption of energy efficiency projects in their plants. One company that has been very successful with this initiative said that many of their energy efficiency projects were rejected ten times before finally gaining traction with their leadership team. Projects are out there and the economics can be enhanced through utility rebates. Keep looking, be tenacious with your leadership, and keep talking with experts who can help you quantify the benefits to “sell” the project internally.
4. Load profiling
They say “seeing is believing” and it couldn’t be more true than in your electricity consumption profile. How much you use and when you use it is a huge driver in your electricity rate from your supplier and the delivery cost from the utility. Is your equipment operating when and how you think? You will not know unless you look for anomalies in the data. This can be a great way to discover operational inefficiencies that you did not know exist.
5. Manage your peaks
Demand charges that are required to be paid all year based on a few peak hours can be very costly. These charges can be in the form of a ratchet in utility tariffs or capacity charges from your supplier based on your Peak Load Contribution. Quantify how much these peak hours are costing your company and brainstorm ways to reduce them without sacrificing production. This cost awareness can go a long way in making positive changes to reduce peak demand which will in turn reduce your total energy spend.