To Choose of Not to Choose?
Five Tips for Making the Right Energy Choices

By John Burt CEO, Power Management Company

To choose, or not to choose. That is the question that many businesses have to answer this year as utilities implement a wide range of "Choice" programs in the US.

Many utilities are offering some variation of a "Choice" plan that basically doesn't really give you many choices at all. Most will offer you a choice between a variable or fixed price on electricity. If you don't want to make a choice, some will make the choice for you, whether you like it or not, usually to a variable plan that eliminates the utilities exposure to risk, but may not be ideal for your business.

Many utilities will also give you the choice of buying energy from them or using an energy supply company. Often, the area's leading energy supply company was actually created by the local utility. What choice is that?

Worth noting is that gas is completely ignored in many of the "Choice" campaigns. This is curious since gas is of course one of the primary fuels for space heating for businesses. Plus, businesses in some states have the right to choose their gas supplier, so why aren't they offering you a gas option. It's complicated they may say. We don't think so.

So how do you put all of this in perspective if you hope to choose your energy wisely? After all, energy for most companies represents the second largest operating expenditure after wages. We think business owners deserve more choices than what they are offered now. We hope that our five tips for choosing energy wisely will help you develop an effective energy strategy.

Tip One- Are You Looking at the Big Picture?

The first thing you should do is step back and see the big picture. Analyze how all of your energy is used, and begin to form an energy strategy. Where deregulation is available, choose to benefit from it. Since energy is an operating cost, any reduction is reflected in your bottom line and results in improved margins. Also, try to find savings from all energy sources, not just electric.

Tip Two- Are You Seeking Balance?

All commodities swing up and down. Companies shouldn't take bets on the future, but they should strive to achieve a balanced approach. A successful energy purchasing plan is one that mitigates the effects of price volatility. A tactic such as purchasing fixed and variable rates simultaneously makes perfect sense, but is not possible under campaigns similar to "Voice Your Choice".

Tip Three- Are You Managing Energy Wisely?

With all due respect to the utilities, how wise is it for a businessman to look to a utility company for energy saving ideas. It is important to find an objective consultant who is not tied to a specific utility or producer. An independent energy consultant can cut energy cost by 10% to 15% by implementing energy management plans. It is up to the CEO and CFO to step up to the plate and lead their company in an energy management initiative. Many of these conservation efforts can be partially funded by state grants, and almost all of the plans that Power Management has initiated have had ROI's of less than a year.

Step Four- Are You Thinking Long Term?

Too many companies have an energy plan that runs from monthly bill to monthly bill. By pursuing the suggestions in Tip #1, "See the Big Picture," CEO's and CFO's can create a 5-Year Energy Mastery strategy that would consist of purchasing, management, conservation and sustainability tactics to achieve a clearly stated corporate objective. With a proven outside consultant, your company could begin seeing significant facility-level reduction almost immediately.

Step Five- Are You Starting a Plan Now?

Whether you like it or not, energy will continue to play a major role in determining your profit margins. The amazing doubling of gas prices that we've seen over the past few years has shocked many executives into action. Prices have subsided a little. We are all affected by global macro events. India and China are expanding at rates never seen in modern history, and with it their increased demand for energy.

Many gas executives are concerned about the lack of elasticity in the supply of US domestic gas, which has resulted in dramatic price swings recently. Unfortunately, the global trend of consuming more energy than we can produce can only lead to higher energy prices in the future. That's why there is no better time than now to ask the smart questions and to make the right choices for your energy future.

Power Management has initiated a program called Energy Mastery that you can start today, no matter how you voiced your choice with your utility. We invite you to contact John Burt or Eric Douthit in New York at 585-249-1360; or Kevin Kelly in the New England area at 781-826-7920 to learn more about Energy Mastery. The right choice is out there and we'll find it for you.