Significant savings are increasingly hard to come by for large,multi-facility energy users even when using outside energy expertsin the face of volatile commodity markets and increasing pressuresinside their companies to show significant returns on investments,according to panelists yesterday discussing energy managementoutsourcing Monday at GasMart/Power ’99 in Dallas.

Industrial customers need to push down the energydecision-making in their organizations in this more competitiveenergy world in which hour-by-hour and minute-by-minute decisionsneed to be made in terms of commodity buying, said Terry Cowan,vice president for energy procurement and management at Brubaker& Associates, Inc., a Plano, TX-based energy consulting firm.

Among the issues facing industrial customers seeking energymanagement help, the “objectivity” of energy service firms becomesa major consideration, Cowan said. “We specifically do not own orsell any commodity. We only sell services. If a company wants us tobuy their energy, we open it up to the whole field out there.

“The news media emphasize the big guys who participate on bothsides. I find it difficult to believe they can participate in anunbiased way.”

PG&E Energy Services, a non-utility affiliate to giant SanFrancisco-based Pacific Gas and Electric Co., avoids thesepotential conflicts by concentrating on overall energy savingsresults rather than the specific products used to achieve thesavings, said Paul DeMartini, vice president of integrated servicesat PG&E Energy Services. DeMartini emphasized that savings aresomewhat illusory for commodity buying alone due to continued pricevolatility for gas and electricity.

“We try to structure our alliances (contracts) in a way thatdoesn’t put us in a position of having to force our particularcommodity product on a particular market. We’ll put our competitiveproduct on the table, but if it doesn’t work, our reward isn’t tiedto the specific product. We’re not tied to selling specifickilowatts or therms, we’re tied to delivering value to customers.”

Jay Rooney, an energy manager for 100 manufacturing facilitiesowned by Armstrong World Industries, said he thinks there is a realproblem when energy service providers are tied to suppliers. Rooneysaid he doesn’t necessarily not do business with these affiliates,but he examines on a facility-by-facility basis whether he needs a”supply-related consultant.”

“Are they going to give you truly creative solutions?” he asked.”We look at it on a site-by-site basis.”

In general, Rooney said, energy consultants tend to provide”average results,” but Armstrong continues to hire a variety ofthem for specific projects at specific plants. They are helpful, hesays, but to “really push the envelope,” his firm depends oninternal sources in his functional area.

There are ongoing debates about how much potential bottom-linesavings are available throughout the industrial sector, butPG&E Energy Services’ DeMartini estimates that only about 70%of potential savings are actually captured by the typicalindustrial energy user. Attaining that remaining 30% is a primetarget for outsourcing consultants.

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