With the increased use of energy management software and opportunities afforded by deregulation, retailers are no longer viewing the energy budget as a necessary expenditure, but a place to retrieve revenue.
The savings are a result of more efficient use of energy as well as in-store modifications ranging from lighting to refrigeration to on-site generators.
The expansion of energy deregulation, which varies from state to state and allows retailers to choose a third-party provider for energy generation, has also opened up a new avenue of energy dollar savings.
"For most folks, utilities are the third largest controllable cost, usually behind leasing and payroll," according to Richard Andelman, energy systems and utilities manager for BJ's Wholesale Club, Natick, Mass. "It's a sizable number that you could shave some cost off."
BJ's currently has 75 energy-related projects at various stages of implementation, according to Andelman. Over the last year, BJ's has seen millions of dollars in energy cost savings through restructuring, buying energy competitively where available, as well as implementing energy-conservation projects, Andelman said.
"If you really crunch the numbers and look at profit margins, the numbers you save could equal several stores' profits," he added. "You can use your utility budget as a profit-making center."
This year, with energy expenditures for BJ's 98 stores nearing $27 million (including electricity, gas and water), saving pennies along the way can make a difference.
Some of the energy- and dollar-saving projects include using an energy-management system that can control lighting and refrigeration. The retailer also uses a third party for energy generation.
"We can tweak the systems to essentially do whatever we want," said Andelman, adding that the retailer can go to half lighting at night via the energy-management system as well as regulate the HVAC and refrigeration to optimize the units' abilities.
The retailer has also adjusted the timing of the defrost cycle in refrigeration units to reduce electricity use from excessive defrosting.
Another fairly new project that BJ's is looking into involves the use of on-site generators called turbo generators or micro turbines for use during the retailer's peak energy consumption.
The way many utility tariffs are set, the retailer is billed on a 12-month basis at the highest usage rate, Andelman explained.
"You might be at 550 kilowatts and then one hot day at 700 kilowatts. [The] tariff would be based for 12 months on one hot day," he added.
If the retailer has an on-site generator, it could be set to kick on anytime the energy usage is going to go over an acceptable level, effectively reducing the tariff rate as well as the strain on the energy supplier. "There's a whole push to put these small generating units in to help shave off peak loads," he said, adding that "we are looking to do that."
Although not an energy cost savings medium yet, BJ's is also expanding the use of its rooftops for solar-power generation plants.
Andelman told SN that BJ's is planning to expand its environmentally friendly energy program this month with the opening of a new solar-power plant on the roof of its Middletown, R.I., store.
The retailer currently has similar solar plants on roofs in North Dartmouth, Mass., and Conshohocken, Pa.
"This is a different and larger facility," Andelman said of the 176-panel solar-power plant that will produce about 50KW at peak times. He added it would supply enough energy to run 15 to 25 houses for a year.
He said that although the solar panels really don't generate energy cost savings for the retailer, they do produce cleaner energy. Andelman said it's part of BJ's being a "good neighbor."
BJ's, like many retailers, is also taking advantage of energy deregulation.
"The claims of 20% and 25% [in energy cost savings] are greatly exaggerated," he said, adding that up to 10% could be reasonable. Andelman added that the retailer has gained some energy cost savings by purchasing the commodity from a third-party supplier.
Albertson's, Boise, Idaho, has also found some savings in the deregulated marketplace, according to Raymond Splinter, senior manager of energy procurement for Albertson's.
The retailer has recently inked a one-year agreement with APS Energy, Phoenix, to provide energy for its Tolleson, Ariz., warehouse. In an effort to qualify for the choice program offered to a limited number of businesses, the retailer submitted its request last fall, Splinter said.
There were sufficient savings to warrant using a third-party energy provider, according to Splinter, adding that "right now the [Tolleson] DC was the only one of our [facilities in the area] that qualified. It was only for certain loads."
The DC began using the energy provided by the third party June 28.
The Idaho-based retailer has also recently renewed an agreement with the same third-party supplier to provide energy for 149 of its California stores.
In order to take advantage of deregulation, some retailers have used consultants as well as installed energy-management software, but Splinter said Albertson's keeps its energy management simple using "normal tools."
"It's just mathematical analysis using Excel from Microsoft," Splinter said, adding that Albertson's monitors its own load usage.
And with the recent acquisition of American Stores it has a lot more usage to monitor as well as another energy-supply contract.
"Since our merger with American Stores we have two different suppliers in California," Splinter said. "One is APS and the other is through Pacific Gas & Electric Energy Services. We inherited that contract with our merger," he added.
Although the retailer inherited the American Stores energy-supply contract, most energy-supply contracts are usually not long-term agreements.
"Well, the [energy] marketplace is changing so rapidly, you must have a way to buy out of it," Splinter said.
Like Albertson's and BJ's, Food Lion, Salisbury, N.C., is leveraging deregulation in states where choice is available.
The retailer is currently purchasing its gas from third-party suppliers in Delaware and Maryland, a spokesman told SN, adding that there are some new third-party provider pilot programs that will start over the next six to eight months.
Food Lion uses three different energy-management systems in about 1,200 of its stores, said the Food Lion spokesman, adding that the retailer started using energy-management systems about 10 years ago.
Food Lion is also finishing its first year in the Energy Star program sponsored by the Environmental Protection Agency, Washington.
The five-stage program, which has 60% of the retailer's stores enrolled, contains information on highly efficient energy technologies in areas such as refrigeration, HVAC and lighting, allowing the retailer to maximize its energy efficiency through use of the recommended products.
Through the implementation of the energy-efficient technology as well as use of best energy-efficient practices, there is a potential 20% to 30% reduction in energy consumption for the 650 Food Lion stores enrolled in the program, the retailer said.
While energy-management systems can minimize energy expenditures, some retailers have also realized savings by scrutinizing energy bills more carefully.
BJ's, for example, uses an energy-accounting system to deal with computing energy expenses and tariffs for electricity usage.
"We check bills through an energy-accounting system [from a third party]," Andelman told SN.
He explained that when a store is set up, the construction group in conjunction with the utility company looks at similar stores and figures out the best electricity rate for the store.
However, over the last few years, BJ's energy department also looks at the proposed rate for a few reasons.
When a new contract is signed the retailer wants the best rate for energy. In a new area, some people may not know what BJ's load shape looks like and whether the rate should be a flat or load use rate, Andelman said.
He added that most utilities are usually correct with their figures, but BJ's calculates the energy bills with the system each month and performs baselining, data analysis, determines the hours per square foot and dollars per square foot just to be sure.
Occasionally, BJ's will find an error, he said, noting that an error that's not caught by the retailer could be "really expensive."
