What is an Energy Consultant?
In many companies the position "Energy Manager" does not exist, and where it does the duties and qualifications vary greatly. At Independent Energy Consultants, we offer the following observations of how you would benefit by retaining an energy consultant and what characteristics to look for.
- Engaging an Energy Consultant allows you to retain a professional without putting him/her on your payroll
- There is no need for training
- He/she is monitoring the markets on a full-time basis
- The job is not being done internally, or is a part-time responsibility for someone
- Unlike employees, it is easy to link an Energy Consultant's compensation to your success.
With the position of Energy Manager absent in most organizations, many people do not understand the value of retaining an experienced Energy Consultant. In addition to avoiding "soft-costs" and needless man-hours, an Energy Consultant can achieve more savings on energy bill contracts than a company's internal efforts. Read our newsletter, "The High Cost of Going It Alone", to see what kind of impact an experienced consultant can have on your bottom line.
As with any professional field, education is vitally important and the learning process never ends. Most, but not all Energy Consultants, come from engineering disciplines and have the management experience needed to make and implement wise decisions. While education is essential, a good energy consultant will also possess the experience needed to apply that theory in real world applications. Ideally, look for someone who can identify problems in the boiler room and explain solutions in the boardroom.
The Public Service Commissions/Public Utilities Commissions in some states provide a certification process for marketers, brokers, and aggregators of natural gas and electric. If your Energy Consultant is certified or licensed by state regulators, you can rest assured that he or she has the managerial, technical and financial wherewithal to provide energy consulting and energy procurement services. Your Energy Consultant would also benefit from a relationship with industry groups such as the Association of Energy Engineers and access to federal programs such as Energy Star.
After retaining an Energy Consultant, his/her review process should begin with an analysis of no-cost and low-cost energy alternatives. Usually that starts by looking at your energy supply arrangements and seeking lower-cost contracts in deregulated markets. Even when energy savings may not be available (compared to your local utility rates), you should still consider beneficial terms and conditions not available from regulated utilities. A good Energy Consultant knows where the energy markets have been trading and where they are likely to go. A good understanding of market fundamentals and technical analysis will help with the latter. Armed with this information, your energy data, and a good understanding of contracts, your Energy Consultant will develop and administer the Request for Proposal (RFP) process. The RFP should seek various price options and terms that are appropriate for the prevailing market conditions and are consistent with your company's risk tolerance.
Once you know you have taken advantage of your supply opportunities, it is time to make sure you are monitoring your energy costs and consumption. Like any process, effective management requires that you capture, trend, budget and forecast your utilities. If you are not capturing your utility data and converting it into decision-quality information, it is most likely managing you. Utility tariffs are used to determine your billing amount and these tariffs are complex and change frequently. A good Energy Consultant will know how to find, understand, and explain your utility company's tariffs. Often a commercial or industrial customer is eligible to receive service under several rate schedules. An Energy Consultant should be able to prove to you which rate schedule provides the least cost to you. Because the tariffs are complex, it is not uncommon for billing mistakes to occur. A competent Energy Consultant will be able to identify errors through a systematic audit process.
Now that you have examined your supply contracts and gotten a handle on your cost and usage, it is time to move on to ways in which you could reduce your consumption. A multi-faceted consultant can help here, because energy conservation measures come in many mechanical and electrical systems. A good Energy Consultant will be comfortable working with an electrical diagram, steam table, or psychometric chart. You will want someone who can help you identify and save on energy use in the major systems in a typical commercial or industrial facility. Frequently that involves an analysis of lighting, compressed air, HVAC, steam, electrical systems, and the building envelope itself. After identifying cost-saving projects, an Energy Consultant should be able to perform a life-cycle analysis that considers up-front capital costs, maintenance costs, tax implications, energy savings, and future salvage value. As part of the financial analysis, your Energy Consultant should point out opportunities to obtain low-cost loans, grants and financing alternatives.
The energy field is broad in scope, complex and constantly on the move. When engaging an Energy Consultant, you want someone who appreciates that fact and is always looking to stay abreast of the latest changes. Those changes may be in the form of new technology, regulations, tax laws or market opportunities. You also want someone who knows when and where to look for additional support, if needed. Just like your consultant needs to know his/her limitations, they also need to understand the client's limitations. This is particularly important when it comes to the transfer of technologies. A good Energy Consultant will take the time to get a feel for the client's maintenance staff capabilities. With many companies continuing to downsize, maintenance has become an easy target for cuts. Therefore, the latest technology may not be a good fit for companies lacking the staff or training budget needed to maintain high-tech energy management systems.
Energy costs continue to rise, and deregulation is shifting risks away from suppliers and onto end-users. Contact Independent Energy Consultants to discuss how we can help you turn these challenges into opportunities.