ENERGIZING SAVINGS

PATRICK SCIACCA

Most retailers are looking to add dollars to the bottom line by reducing energy expenses. Armed with increased opportunities to cut costs in the deregulated energy marketplace, improve energy management via new software tools, and implement enhanced lighting and refrigeration systems, many companies are already experiencing significant savings.

Some retailers, like Lamb's Thriftway Marketplace, Portland, Ore., are spending big to save big, and are developing new energy-management systems and making mechanical improvements in the areas of refrigeration and lighting.

Lamb's spent almost $5 million during a recent store renovation that included a broad array of energy-saving initiatives such as a switch to T8 lighting and doors for refrigerated cases. The new system saves about $65,000 in annual energy expenses.

Western Beef, Ridgewood, N.Y., has also seen savings of 2% to 3% over the past 1-1/2 years on electric costs and 5% to 8% on gas-supply costs by implementing an effective energy-savings plan.

Even retailers not looking to spend large amounts of money, however, could reap significant energy savings benefits by implementing new programs.

Star Market, Cambridge, Mass., put together a comprehensive program that combined new technology with best practices. The investment saved the retailer more than $1 million in energy expenses over two years, according to Gary K. Markowitz, corporate energy manager for Star Market from 1997 to 1999.

Markowitz recently left Star and is now president of an energy consulting company, Kilojolts Consulting Group, Lexington, Mass.

"The formula for finding ways to save [energy dollars] is initially getting a base of information and setting up benchmarks," he said. "You have to try to understand where you rank against your competition regionally, as well as nationally.

"What we did was start with nothing. The database was at best flawed," Markowitz told SN.

The retailer created a new database that included information on past energy bills, energy consumption, square footage, sales and weather in an effort to understand outside influences on costs.

"We set up annual efficiency indexes to better understand the true condition of each store," he said. "The right database actually gets [retailers] to the point that allows them to take advantage of deregulation," Markowitz added.

After determining the benchmarks and understanding how the retailer consumed energy, Star Market implemented several energy-conservation projects. Some of these were based on energy-efficient technology, while others involved best practices.

During one of several energy-conservation initiatives, the retailer replaced a primary feed transformer, Markowitz said, noting that an $85,000 investment in the new transformer yielded a $240,000 payback.

Other mechanical issues called for the recalibration of old gas meters and a switch to a T8 lighting system, which is considered to be more efficient and provide better light then traditional T12 lighting.

Markowitz noted that old gas meters actually tend to run faster, creating inefficiencies in readings. He referred to these money-saving mechanical projects as "no-brainers."

In addition to mechanical upgrades, Star Market also sought to improve its diligence at maintaining the efficiency of the new technology.

Markowitz penned a book, initially for Star Market employees, detailing 12 steps that store managers could take to improve energy efficiency at low or no cost. The book is available to other retailers.

He also cited an example of how the retailer saved energy dollars at almost no expense. Star Market gave its store managers a digital pocket thermometer to check the temperatures in the refrigerated cases every two weeks.

"Sure everyone has a temperature sensor [in the case]," Markowitz said, adding "but about half the time it isn't reading right because of calibration issues such as age and dust."

Once a problem was detected, the store manager could alert the energy manager, who could take corrective action and maximize the efficiency of the case.

Markowitz told SN it wasn't until the retailer had developed an efficient energy-management system and possessed a high load factor that it was able to take advantage of the deregulated energy marketplace in Massachusetts.

Western Beef has also implemented a comprehensive energy-management plan.

"First and foremost, we have contracted our entire electric- and gas-supply portfolio in New York/Long Island to Energy Services Cos.," said Jerry Vecchio, engineer/purchasing agent for Western Beef. "Although the savings are not tremendously large, in our business each dollar savings on energy goes directly to our bottom line.

"In our industry, for every $1 made at the cash register our margin is 1% to 4%. However, when you save $1 on energy, it goes directly to the bottom line. I estimate that we have saved 2% to 3% over the past 1-1/2 years on our electric costs and 5% to 8% on our gas-supply costs," he noted.

The retailer said that several factors, including deregulation, have led the retailer to view its energy consumption differently.

"Surely, deregulation has given us the ability to explore alternate ways to save on energy acquisition," Vecchio said.

"We have contracted our electric/gas-supply requirements to Energy Services Cos. In addition, we are working with these companies to determine additional ways to optimize our energy usage," he added.

The retailer said it currently has manual processes to manage its energy usage but is considering moving to a Web-based system in the near future to help optimize its energy use.

"Currently, we manually monitor our demand/consumption of energy. In addition, our central staff and on-site managers are knowledgeable of our systems and their operational expectations. We presently have controls and measures in place that assure us a certain level of performance," Vecchio said.

The retailer said it is considering other energy-saving measures, such as oil/gas conversions and dual-fuel capabilities, which would give it the ability to select the least-expensive fuel while taking advantage of reduced utility tariff rates and store retrofits. These initiatives could tremendously reduce the retailer's electric costs and maintenance expenditures.

Lamb's Thriftway Marketplace, Portland, Ore., has seen increased sales of more than 40% and has enjoyed an annual energy savings of about $65,000 since expanding its Portland store in 1997.

The store received the energy-technology upgrade during an expansion from 27,000 square feet to 50,000 square feet, said Colin Lamb, vice president of Lamb's.

Two of the retailer's energy-cost projects included new lighting systems as well as placing doors on the medium-temperature and frozens cases.

The payback on the lighting system, which called for a switch from T12 to T8 lighting, was 18 months, he said, noting that the retailer used an energy consultant to do the benchmarking of the store's systems and develop a plan of action.

Lamb told SN that the doors on the cases have been well received by customers, adding, "we don't have cold aisles."

In addition, the closed cases can also keep products from spoiling during a power outage.

"Last year we had a power outage that lasted all day and normally we would have had a huge hit [but] we had almost no [damage]," Lamb said.

Some other energy-technology improvements included installing an inverter that matches load to demand, installation of new screw compressors that could eliminate the vibration that causes metal fatigue in copper pipes and the implementation of a programmable energy-management system that regulates indoor temperatures and lighting as well as many others.

The price tag for this massive renovation, which included the building expansion as well as the energy efficient technology, came in at about $4.8 million, according to the retailer.