Energy Star: Best Bang for the Buck

For property managers who oversee buildings in many states, dealing with rising energy costs, due to varying energy rates and pricing structures, can present a mighty challenge. “You may be dealing with literally hundreds of vendors,” said Joseph Falci, director of rate analysis and energy procurement consulting for Cadence Network.But Falci says that a giant step toward getting some cost control on energy expenditures is to closely examine all energy bills. “You have to know where you’re spending money, and how much you’re spending,” Falci said. “You can’t improve what you don’t measure.”Indeed, energy buyers in some states with deregulated energy markets have the option of using energy providers outside than their local energy providers. But buyer beware. In an unregulated energy market like Ohio, various tariffs and restrictions can translate to higher energy costs for a buyer who uses a provider other than a default energy provider.Some energy buyers may lock in an energy rate by buying long-term, but Falci noted that the market makes allowances for global events, such as supply disruptions, so buying short-term today, even on a daily rate, could be the smart move. “You should take Mylanta, and tough it out,” Falci said. He acknowledges, though, that users have different risk-tolerance levels, and some energy users prefer to pay a set utility rate, even at up to 40 percent higher than a fluctuating daily rate, in order to achieve price certainty.Monitoring energy costs across its portfolio is a constant job at S.L Green, noted Edward Piccinich, executive vice president at S.L. Green. “We’re always monitoring cutting edge procurement and energy budgeting programs,” he said. The firm employs an energy consultant to help on these matters. On a longer-term basis, the company is making major strides to go green, installing a green roof at its 100 Park Avenue building in New York City. This, and other measures at that building, will eventually translate to a savings of 600,000 kilowatt hours a year, or enough electricity to power 54 homes. Property managers have a growing array of tools at their disposal to manage energy costs. For example, in mid-February, Hess Corp. launched the Hess Demand Response program, for commercial and industrial customers, which will pay customers monthly who commit to reducing electricity usage during times of peak demand, when local power grids are under significant stress. The program launched officially after a one-year pilot program.       For more on these and related property management issues, refer to the March 16, 2008, issue of Commercial Property News.