Mr. Kiesner

Eco-Friendly Practices

Put the Chill on Energy Bills This Winter

By Steve Kiesner, Director of National Accounts, Edison Electric Institute

Even if your company has locked in lower prices through long-term fuel contracts, you still should be making sure you are doing everything you can to get the most value from your energy dollar. The lodging industry spends over $5.5 billion per year on energy. That is a lot room for potential savings. And greater profitability.

The EIA says that its energy price estimates are somewhat sensitive to how fast the oil and natural gas infrastructure in the Gulf of Mexico recovers from the recent hurricanes. As of October 31, a little more than half of the daily natural gas production in the Gulf remained offline. By the end of the year, EIA estimates that about 20 percent of natural gas production in the Gulf will still be offline. Production should return to pre-hurricane levels by March 2006.

It is important to note that the hurricanes did not cause the higher prices. They did, however, aggravate an already tight supply and demand situation. The wholesale price for natural gas is now trading at around $13 per thousand cubic feet ($1.30/therm). Last year, the price was around $6.

The answers to our nation's energy challenges are neither quick nor easy. Increasing the supply and diversity of our available energy resources is vital, but this involves long-term solutions. Key among them is that Congress should work with the Administration and the states to increase access to oil and natural gas supplies from our country's vast onshore and offshore resources.

In the short term, greater energy efficiency is essential. As you may know, your electric utility is a good source for information and assistance to help you get started. Your account representative will likely have historical data about your energy use. The local electric can also help you with answers about electric utility incentive programs, discount electricity rates, energy-efficient equipment, or any other energy-related question.

The nation's comprehensive new energy law, the Energy Policy Act of 2005, can help you as well. The legislation includes a range of measures to improve energy efficiency, including a tax deduction of $1.80 per square foot for new commercial buildings that meet a 50 percent energy reduction standard.

Qualifying buildings must save 50 percent or more in energy costs compared to a reference building defined by ASHRAE 90.1-2001 standards. This tax deduction applies only to interior lighting, heating and cooling equipment, water heating and the building envelope on a per building basis. If the building does not qualify for envelope savings that are 50 percent over the ASHRAE standard, it might still qualify for interior lighting savings, but at a reduced maximum tax deduction-$0.60 cents per square foot.

There are also a number of quick and easy steps your company can take right now to step up its control over energy use. These are probably already second nature to you, but here is a short refresher course:

For the longer term, it is a good idea to renew your commitment to energy management. If you have not done it already, start by building a team within the company or within each hotel. Generally, you will need representatives from management or administration. Top-level commitment is paramount. Pull the team together for a planning session and start laying the groundwork. The team will need to define success with goals that are realistic.

Is saying you want to save 20 percent over two years possible? What is the base you will measure against? How and when will you measure progress?

Before you begin making energy-saving improvements, understand which appliances are your big energy users. Water heating alone, for example, can account for almost 40 percent of a hotel's total energy cost-and up to two thirds of its natural gas use. Listed below are the areas and the appliances that will affect your energy bills this winter. A small improvement in these places will make a large impact on the bottom line.

Next, create an action plan for the top priority energy-saving measures. Assign tasks to do by when and within what budget. Assign plan components to those who are capable of accomplishing the task. Then celebrate your successes. Don't wait until the end of a two-year program to announce results. Create regular milestones and incentives to meet them. Make people feel a part of the program's success and it will take on a life of its own.

Once the team is together and you know what areas to concentrate on, the best way to determine exactly how to cut your energy costs is to conduct an audit of your hotel's energy use. There are two types of energy audits-a walk through audit and a computerized analysis audit.

This winter's energy prices will be a challenge for everyone. And although there are no quick and easy answers to our energy situation, you can do much in the short term to soften the impact of the expected higher energy prices. Now is the time to get started.

Steve Kiesner is Director of the Edison Electric Institute’s National Accounts Program. Based in Washington, D.C., Edison Electric Institute (EEI) is the association of United States shareholder-owned electric companies, international affiliates and industry associates worldwide. Our U.S. members serve approximately 90 percent of the ultimate customers in the shareholder-owned segment of the industry, and nearly 70 percent of all electric utility ultimate customers in the nation. They generated almost 70 percent of the electricity generated by U.S. electric utilities. Mr. Kiesner can be contacted at 202-508-5000 or skiesner@eei.org Extended Bio...

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