Energy Costs Have Stores Searching For Answers

September 25, 2001
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CLEVELAND, OH — Rolling blackouts in California and skyrocketing energy bills across the country have signaled potential energy woes throughout the United States.

High on the list of the nervous are the contractors and technicians who work on supermarket refrigeration equipment. How do you keep all that mechanical equipment running when your power sources are suspect? And how sure are you about getting paid if the customer is having trouble paying the utility bill?

Those were the issues dealt with at the most recent Food Marketing Institute Energy & Technical Services Conference, held here. Several hundred supermarket engineers and technical specialists from manufacturers sat in on the discussions.

Speakers and attendees reviewed the California situation, explored a variety of alternative energy sources, and looked for ways to cut costs.



THE CALIFORNIA CRISIS

“How to Make a Bad Thing Worse,” was the topic of a talk by Dr. John Jurewitz, director of regulatory policy for Southern California Edison Co.

Deregulation was designed to “move toward market-based pricing,” he said. In California, “generation divestiture” resulted in more than a half-dozen power owners. But “restructuring rules created overexposure to the spot market.”

There was also a “transitional retail rate freeze” just about the time the cost of securing electricity started rising.

He said the causes of Califor-nia’s problems include:

  • The restructuring itself;
  • Adverse market fundamentals (“an imbalance of supply and demand”);
  • Complex market rules and exercise of market power (“in other words, there has been price gouging”); and
  • Regulatory and political inaction.
  • Further adding to the spot price hike were growth in the region, the inability to import power, from sources that were unsure the California sources could pay the bill, and skyrocketing gas prices that affect power-generating facilities.

    A recent part of the mix, he said, was the state signing long-term contracts to secure adequate power only to see spot prices collapse, resulting in the state having to pay more than it should have.

    Ironically, despite all the chaos, Jurewitz contended the state came through the crisis with less of a negative impact than originally feared. “We haven’t had that many rolling blackouts. The entire state is not flickering. All of California is not going black.”

    In the near term, consumption is down by 5% to 10%, which has contributed to lower prices and the reduction of blackouts. But the state is “not out of the woods yet.”

    Jurewitz said a number of lessons have been learned from the California situation. He said, for example, there needs to be:

  • A regulatory climate favorable to generation investing;
  • An adequate infrastructure in electricity and gas transmission;
  • Efficient wholesale markets;
  • Clear market power standards and rules; and
  • Real-time pricing and voluntary load reduction programs.


  • IN THE STORES

    The impact of the California crisis within the supermarkets was the topic of a seminar entitled “From the Trenches.”

    Scott Moore, director of energy management and procurement for Albertsons, Inc., noted the first wave of problems arose a number of years ago when many of the energy service providers that formed as the result of deregulation just as quickly vanished.

    “Many left town,” he said. “There are very few providers left.”

    He encouraged his colleagues to understand their particular state’s deregulation program and compare it with the situation in California to look for pitfalls. He also encouraged them to ask their state officials if utility companies would continue to own their generation plants and if utilities can make long-term contracts with generation companies.

    In the case of Albertsons, “We reviewed existing energy supply contracts. We had to dig them out of the files. We found we were in pretty good shape.”

    Next, “We gathered information regarding blackout and determined grid and block designation for each site.” This, he said, meant asking which stores are on what electrical grid sections, identifying areas that were prone to possible blackouts, and trying to determine the blackout sequence.

    From there, notification procedures were put into place, as well as contingency plans.

    The company committed to keeping stores open during blackouts (“because the competition was doing the same”) and checking backup systems to make sure they would operate properly if needed.

    All this was done through much of last year and early this year in anticipation of major blackout problems this past summer that never really materialized.

    “We waited and waited and waited — can you say Y2K?”

    Moore did caution his peers, “Don’t make assumptions regarding the deregulation program; anything can go wrong. Apply a larger percentage of risk than you think you need to when analyzing decisions. And realize that the government owns the bat and the ball, so you play by their rules and the rules can change.”

    Edward Estberg, senior director of facilities at Raley’s Supermarkets, also warned his colleagues that the supermarket industry is still susceptible to blackouts. He noted that all stores from time to time experience power outages due to adverse weather. When compared to such outages, “rolling blackouts are actually better,” he said. “It’s a clean off and a clean on,” he said, noting that the rolling blackouts sometimes last only an hour or so.

    The uncertainty of utilities is causing Estberg to look for more options. He asked, “Do you trust your utility? Do you trust the generator? Do you trust your government regulatory agencies?” For his part, Estberg said he is looking to putting in a cogeneration unit at one of the company stores to see how it works.



    DISTRIBUTED POWER

    That issue of distributed power was the focus of a “Benefits and Barriers” seminar. Halley Dickey, representing Southern States Power Co., urged the continued exploration of such technology because “the cost to purchase power is volatile, with price spikes and high commercial rates.”

    He ticked off reasons that showed distributed generation made sense:

  • There will be political problems bringing fossil fuel plants on line.
  • Building large power plants requires long lead times.
  • Distributed generation can be offered with low-cost power delivery, system reliability, and “environmentally manageable emissions.”
  • He said the primary alternative fuels for the technology are natural gas and what he called “bio-diesel,” which he described as fuel made from non-petroleum feed stocks.

    Another approach is what he called “bi-fueled,” with a mixture of 10% liquid bio-diesel and 90% natural gas. “This offers plant operators the performance and simplicity of conventional diesel cycle operation and the lower emissions of natural gas.”

    Bruce Miller, vice president of operations for the company Store Maintenance Services, called on the grocery industry to ponder such technology and move beyond “minimally sized units that meet only basic legal requirements and, of course, power the cash registers.”

    He also voiced concern over outages that can “last from several hours to several days,” as well as the resulting costs. He said this is “more likely to happen in smaller stores that are not computer controlled.”

    Richard Sweetser of Exergy Partners Corp., reviewed some of the options in distributed generation and what he called “combined heating power” (CHP) plants. He said such equipment “is evolving,” and noted that “The Department of Energy is engaged in R&D, education, and outreach to further DG and CHP.”

    In supermarkets, he said, “matching power and thermal loads for the near term is centering on combining microturbine and desiccant dehumidifier. Matching power and thermal loads to food processing near term is centering on combining engines/turbines and hot water/steam needs.”

    He noted that while such technology should be studied, current costs are quite high.



    MECHANICAL MATTERS

    Rob Url, senior refrigeration editor, Safeway, Inc., discussed evaporative and air-cooled condensers. He and some colleagues conducted a study involving units of each type in San Francisco, Houston, and Los Angeles.

    One finding was that “in hot, dry climates, evap does a better job for you.”

    But he also said consideration has to be given to the cost of operating each type of system. “Evaps are more maintenance intensive. You’ve got to treat the water and consider the cost of water. Be sure to look at overall energy costs.”

    Different types of compressors also came in for an in-house study from Raley’s Estberg and his colleagues. He studied three types: reciprocating open-type direct-drive; reciprocating semi-hermetic; and screw compressor semi-hermetic. Forty-five stores were studied over a year, involving 15 of each type of compressor. All 45 stores had been running more than 18 months with various formats in each group of stores.

    When all the number crunching was done, he said direct-drive proved to be most cost effective. Assuming a direct drive base of 0, uneven recips came in at an additional cost per month per store of $1,660 and screws at an additional $2,713.

    These findings are causing Estberg to commit to recip open-type direct drives for the foreseeable future.

    Clive Samuels, engineer with Clive Samuels and Associates, talked about fine-tuning subcoolers. He encouraged the audience to keep suction pressure as high as possible and condensing temperatures as low as possible. He said despite manufacturer recommendations, “There does not exist a single set of parameters for each system in each store.”

    He voiced concern in the recommissioning of equipment, claiming “training has not kept up with technology. Systems are rarely commissioned properly.” He said recommissioning is the using of existing parts and equipment but finding ways to reduce annual operating expenses.

    Among suggestions:

  • Give decision-makers information on the scope of work to be done.
  • Give reasons for any changes and why they will be effective.
  • Work with accurate measuring devices that need to be recalibrated.
  • Document actual case product and discharge air temperatures.
  • Compare actual case temperatures with energy management sensor values.
  • Samuels added, “Supermarkets are not in business to save energy. They are in business to sell products. But there is no reason why you can’t do both.”

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