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Utility Deregulation 10 Lessons Learned (the Hard Way)

Utility Deregulation 10 Lessons Learned (the Hard Way). George R Owens PE CEM, President Energy and Engineering Solutions, Inc. gowens@eesienergy.com 410-964-3513. Lesson #1 Don’t Do Nothing. I know it is not good english!

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Utility Deregulation 10 Lessons Learned (the Hard Way)

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  1. Utility Deregulation10 Lessons Learned (the Hard Way) George R Owens PE CEM, President Energy and Engineering Solutions, Inc. gowens@eesienergy.com 410-964-3513

  2. Lesson #1Don’t Do Nothing • I know it is not good english! • However, with no action – especially in MD for BGE P customers – your utility budget is at risk with market pricing. • As for the rest, every year nothing is done is one more year that you (and your tenants) are paying higher utility bills. Energy and Engineering Solutions, Inc. (EESIenergy.com)

  3. Lesson #2Know Your Energy Profile • You Can’t Control What You Can’t Measure, and • Suppliers Can’t Sell Electricity If They Don’t Know What You Use • Need Monthly Bill and Interval Data for one year minimum. Energy and Engineering Solutions, Inc. (EESIenergy.com)

  4. Lesson #3Keep Informed • Utility Deregulation is New and Changes at a Fast Pace • Sources of “free” information • Public Service Commission • Regulated Utilities • Unregulated Suppliers • Other Building Owners and Managers • Consultants Energy and Engineering Solutions, Inc. (EESIenergy.com)

  5. Lesson #4Electricity Prices are Volitale • Prices are available for one hour, four hours and 24 hours, each less favorable. Longer times are even more onerous. • Time is of the Essence, get the T&C’s out of the way through a good RFP process. • Find out who has to sign the contract, brief them, make sure they are in town • Confirm supplier receipt of the contract Energy and Engineering Solutions, Inc. (EESIenergy.com)

  6. Lesson #5Price Is Not Everything • Contract Terms and Conditions – The Fine Print • Can take a good price and make it bad • Can hinder the way you operate your business • Usage limit clauses • Assignability if you sell the asset • Lack of nonperformance clauses • Loose Force Majeure clauses • Get Professional and Legal Help Energy and Engineering Solutions, Inc. (EESIenergy.com)

  7. Lesson #6Enron • I had to put that in to get your attention. • Do your due diligence on suppliers, just like you would for any big contract, and then some. • Review • Financials • Parent companies/guarentees • Track record • Licensed Energy and Engineering Solutions, Inc. (EESIenergy.com)

  8. Lesson #7Not Done Yet • At last, a contract is in place, so you can sit back and enjoy the savings NNNNAAAAA!! • The Supplier still has to sign you up with the Utility. Stay on top of this or you can be penalized if they miss a date. • And then there is billing! Energy and Engineering Solutions, Inc. (EESIenergy.com)

  9. Lesson #8The First Bill Will Be Wrong • It never fails, you get a contract in place, the juice starts flowing and then the billing problems occur (it always gets messed up, plan on it): • Late bills • Wrong bills • Charges for components that were included in the bid. Energy and Engineering Solutions, Inc. (EESIenergy.com)

  10. Lesson #9It Ain’t Over Til It’s Over • Whew, you have the Supplier under contract, they got you signed up with the Utility and you finally got your first bill. • Don’t Stop Now • At Least Monthly (Sometimes More) • Review billed amount calculations • Review usage to prevent penalties • Read the newspapers (no Enron surprises) • Get Ready for the Next Bid Cycle Energy and Engineering Solutions, Inc. (EESIenergy.com)

  11. Lesson #10Utility Deregulation is Only a Part of the Solution to Energy Costs . Energy Management Offers More Impact to the Bottom LineAnd, Utility Deregulation Combined with Energy Management Provides the Biggest Bang for the Buck Energy and Engineering Solutions, Inc. (EESIenergy.com)

  12. The Ten Step Program to Successful Utility Deregulation • Step #6-Understand the Risks • Step #7-Solicit Proposals • Step #8-Evaluate Options • Step #9-Negotiate Contracts • Step #10-Sit Back and Reap the Rewards • See www.eesienergy.com for the full paper • Step #1-Know Thyself • Step #2-Keep Informed • Step #3-Talk to Your Utilities (all energy types) • Step #4-Talk to Your Future Utility(s) • Step #5-Explore Energy Services Now (Why Wait for Deregulation) Energy and Engineering Solutions, Inc. (EESIenergy.com)

  13. Conclusions • Utilities are a controllable expense • Deregulation is here, now • Energy management pays off • Develop a program and take care of the details first • Understand and manage risks • Get involved in the process or get left behind Energy and Engineering Solutions, Inc. (EESIenergy.com)

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