Mr. Poad

Eco-Friendly Practices

Energy Management for the Little Guy

By Jim Poad, Director of Client Solutions, Advantage IQ

Imagine you're a PGA golf professional. You're not well-known, but you finish high enough on the leader board in enough tournaments to make a decent living.

You have the same expenses as the tour's household names-travel, meals, hotel stays, caddie fees, and family support. But you probably can't afford all of the top-notch services the best players can, such as full-service travel packages for your tour stops.

Small hotel franchisees and independent hotel operators find themselves in a similar situation. Their concerns are the same as larger chains, in that they must pay employees, stock inventory, buy furnishings, and deal with heads-to-beds issues.

Also like larger hotels, smaller operators have little time to manage the costs of the one thing hotels couldn't be without: utilities. But unlike larger establishments, they often don't have the capital to spend on full-service solutions that manage utility expenditures.

That's about to change. Some energy management companies are providing a solution that gets smaller operators in on the ground floor of energy management. In fact it's so easy to use, all they need is a fax machine or a scanner.

The best part: It offers all the auditing benefits of a full-service solution, but keeps bill paying services in the customer's hands, possibly allowing for dramatic cost cutting.

Attending to Essentials

We all know hotels use a lot of water and electricity, so ensuring accurate utility billing should be top of mind. But operators with less than 40 sites must prioritize. Their first order of business: employing facility and maintenance personnel to keep HVAC systems operating, elevators running, and pools heated and cleaned.

Clearly, finding hidden savings on utilities ranks low on the to-do list.

Instead, operators might manage utility costs in other ways, such as installing high efficiency equipment and making capital improvements that allegedly make business operations more cost-effective. Temperature controls, for instance, keep air conditioning and heat levels low in unoccupied rooms.

And installing lighting systems that dim during off-peak hours in non-essential areas help lower electricity usage. Still, measuring the impact of these improvements is difficult without a usage analysis that verifies the 20 to 30 percent savings estimate the vendor gave you.

To illustrate, one of our customers tried reducing water usage by placing water-control gadgets in toilet tanks. But the devices actually kept the toilets running, and increased usage. Thankfully, a bill audit uncovered a substantial up-tick in water use, so the operator pulled the devices.

Reporting and Benchmarking

One reason it's difficult for hotel operators to perform these measurements is that the data is buried in hard copy bills filed away somewhere. The only way to begin making better capital spending decisions is to gain visibility of this data. One of the critical benefits of this program is that hotel operators can now get 24/7 access to reporting capabilities that were not previously available.

Reporting not only allows you to quickly verify savings results from demand-side projects, but it allows you to begin benchmarking your locations against each other. The ability to normalize the data by cost per square foot and/or weather allows you to see which properties are performing the best and which are underperforming and need attention.

Furthermore, data visibility through reporting also allows you to begin benchmarking your location through Energy Star. With this type of solution it only takes a matter of minutes for you to quickly submit sites to Energy Star for rating.

How Bill Auditing Works

One of the most effective ways for small operators to achieve savings is through energy bill auditing. Utilities make mistakes on their bills-they misread a meter, use the incorrect multiplier or incorrect demand. In a full-service solution, utility expense management companies examine client invoices for these discrepancies, and pay the utility or supplier.

The fax/scanner solution, on the other hand, eliminates this bill payment step, leaving smaller operators responsible for completing the payment now or later. The value-add: They can still fax their invoices to the energy managers, who collect the invoices from a central location, and audit them for discrepancies. Then the expense management company will maximize savings by securing any possible refunds from the utility on their behalf. These savings can be a welcome boost to the bottom line.

Let's say a utility charges $1,000 more one month when compared to the other months in the year. It could be the utility's mistake, meaning a reimbursement is due to the operator, or an indication of a possible water leak or deviation by staff from the companies energy policy that needs attention. On average, auditing and uncovering discrepencies saves clients 0.5 to 1.5 percent a year.

The solution's scanner option also allows larger franchisees with many more invoices to pay their bills, then scan the invoices to the company for review. This way, they don't have to fax hundreds, sometimes thousands, of invoices, and can instead save time.

Both options let organizations maintain control of their bills, while getting the same options as full-service customers. These options include assuring the utility is billing the property on the right rate schedule.

Opening Up Other Options

Of the dozen rate schedules that exist, there's generally one that best suits a particular site. For instance, the off-peak energy use that hotels have might qualify some operators for a better rate. And simply putting sites on the correct rate can save operators as much as 1 to 2 percent per site, which can really add up.

Often when a site opens its doors, the utility will put that site on a general rate because there is no history of usage. However, few customers understand what rate options they might qualify for. Each utility has different rate options and having a consultant on your side that can help identify the best rate that you qualify for can translate into more savings for your site.

The final option provides the most opportunity to save, but is only available to operators in deregulated markets- such as Illinois, Texas, Maryland, Massachusetts, and New York. Here, operators can pool their resources with the utility loads of other hotel chains to procure a third-party-supplier bulk rate.

Working with an expense management firm to orchestrate an aggregation allows smaller operators to be treated like a large organization and get the large-user pricing. The savings can be as much as 1 cent per kilowatt. And while that doesn't seem like a lot on the surface, it adds up when multiplied over many sites-to as much as 20 percent.

In the end, the fax/scanner solution helps smaller operators level the field, and play with the big boys. As a result, they reap savings opportunities that were once unavailable to them, and drive for higher profits.

Jim Poad, a 30-year energy industry veteran, serves as Director of Client Solutions for expense and energy management firm, Advantage IQ. In this capacity, Mr. Poad is responsible for developing and directing the Company’s energy management programs on behalf of clients. He works with clients to develop and implement a customized strategy to better manage energy usage, reduce overall operational costs, and meet overriding corporate objectives. He has helped clients save millions of dollars through the implementation of supply-side and demand-side initiatives. Mr. Poad can be contacted at 608-755-1650 or jpoad@advantageiq.com. Extended Bio...

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