Retailers Battle Energy, Refrigeration Issues

MICHAEL GARRY

ORLANDO, Fla. — Evolving refrigeration technologies and regulations as well as rising energy costs were among the most pressing issues facing retail energy and equipment executives gathered here last week at the Food Marketing Institute's Energy & Technical Services Conference.

“We're trying to procure energy at the lowest costs,” said John Behr, director of facilities/maintenance at Schnuck Markets, St. Louis. “And we have several efficiency initiatives where we're trying to reduce electricity usage, such as lighting retrofits and variable-frequency drives for air handling equipment.”

Managing price volatility was on the mind of Glenn Barrett, director, energy management, real estate and store development for Supervalu's Boise, Idaho-based operations, who gave a presentation on energy procurement.

Supervalu uses a “managed approach” to energy procurement whereby it buys “some percentage of our electrical needs in the forward market at a fixed price and let[s] the remainder float on the price index,” Barrett said in his presentation. “This provides some cost control and risk management but also gives you the flexibility to monitor the markets and purchase when the price is at a point you'd like to buy.”

Safeway, Pleasanton, Calif., is facing especially high energy costs in California, said Rob Uhl, the retailer's senior refrigeration engineer, corporate construction and design. As a result, the company is employing LED lighting systems and installing energy management systems that take advantage of “demand-response” programs.

Other retailers queried by SN at the conference pointed to refrigeration as an area of concern, in particular the mandated 75% reduction in production and consumption of HCFCs by 2010, including R-22, the most common supermarket refrigerant. “There may be shortages of R-22 earlier than anticipated,” said Nora Miller, procurement sourcing specialist, contract services, for Target, Minneapolis. The U.S. Environmental Protection Agency doesn't expect industrywide R-22 shortages until 2015, Dave Godwin, environmental engineer for the EPA, said at the conference.

Target is looking at its R-22 reclamation strategies to ensure that it has enough of the refrigerant to service legacy equipment, Miller said. The retailer is also looking at HFC refrigerant it can use in retrofits, such as R-422D, in place of R-22, which is an ozone-depleting gas.

A number of issues remain unresolved pertaining to the 2010 phaseout of HCFC refrigerants, said Sheila Millar, partner, Keller and Heckman, Washington, who spoke at the conference. As part of the phaseout, production and import of HCFC refrigerants will be permitted only for use in equipment manufactured prior Jan. 1, 2010. However, said Millar, “problems may arise in how [the EPA] defines equipment manufactured before Jan. 1, 2010,” such as when store construction delays cause a project to be unfinished by that date. In addition, the EPA has still not issued a rule on allowances for the amount of HCFC that approved suppliers will be able to make or import after Jan. 1, 2010. “It is critical to get this [rule] out,” she said.

Godwin said that a proposed rule for allowances and the definition of new equipment is expected from the agency this year, and a final rule should arrive in 2009. He acknowledged that the changeover in the White House could affect the delivery of that rule. EPA is also planning to release a proposed ban on the sale and distribution of equipment — such as soft-drink dispensers used at checkout lanes — that is pre-charged with R-22.

Publix Super Markets, Lakeland, Fla., is keeping an eye on advanced refrigeration technology that will help it reduce the amount of refrigerant it needs, said Chris Sell, project support coordinator, refrigeration and energy program. “We're actively looking at any alternative, including secondary-loop and carbon dioxide systems,” he said.

Tesco is piloting carbon dioxide-based refrigeration systems at a handful of stores in the United Kingdom, said Andy Campbell, head of refrigeration environmental, in a presentation at the conference. But Sell noted that Publix would “like to see [carbon dioxide systems] proven” before the chain makes an investment in that direction.

Jon Scanlan, service administrator for Hy-Vee, West Des Moines, Iowa, said he is awaiting news on the EPA's refrigeration leak regulations. “We would like to know what's coming and the anticipated time frame,” he said. EPA is expected to lower the annual leak rate — now set at 35% — above which retailers are required to make repairs to equipment.

EPA's Godwin said that the revision of the leak rate regulations is also expected to be released later this year, along with a new definition of leak rate and what records retailers will need to keep. “We do realize the industry is waiting for this rule, and we're trying our best,” he said.

Scanlan is also wondering about federal legislation governing limits on a company's carbon footprint, which is expected with a new administration in Washington. “The federal rules should be consistent with what's happening internationally, so we're all playing with the same playbook,” he said.