Energy Deregulation Poses Challenges

October 10, 2000
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SAN DIEGO, CA — In an era of deregulation, figuring out how a supermarket is going to get the energy it needs is a challenge to the nth degree.

Those charged with such a task gathered at the 21st-annual Food Marketing Institute Energy & Technical Services Conference here. One session focused on “Getting the Best Rate: Strategies for Energy Procurement.” But if the attendees hoped to get a unified message from the four presenters, they were disappointed. In fact, there was a fair amount of disagreement among those on the dais.

Lauren Laplante, supply markets energy analyst for Freemarkets .com of Pittsburgh, PA, suggested looking at online auctions for the purchase of energy.

“Should you take your energy spending online? Look at your energy demands. Where are your facilities? They have to be in a deregulated market. What is your energy consumption? What is your load profile?”

In addition, she said, other web sources offer ways to obtain products (such as signage and rooftop units) and services (such as accounting). Sites can also be searched, she said, for industry and competitor information.

“The Internet offers another marketing-selling channel, but the players haven’t changed. They are still people. It is still about relationships.”

James Morford, president of the New Jersey Food Council, urged the formation of food association aggregations. Morford said supermarkets, convenience stores, and suppliers in New Jersey formed an Energy Issues Task Force and engaged a legal council to represent their mutual interests before the state public utilities board.

Next, he said, they contracted with an independent consultant to work with a committee to “negotiate a master agreement between [the council] and an electric supplier.”

Morford said that the “average supermarket saved $1,000 a month on electric bills through aggregation. The aggregation price ‘beat the street.’”



Deregulatory Lessons

Randy St. John, senior vice president, Pennsylvania Food Merchants Association (PFMA), spoke of his association representing 6,500 stores in Pennsyl-vania and other states. PFMA lobbied for the passage of deregulation legislation in 1995, he said.

He said PFMA eventually secured an energy supply contract running during the current year, and along the way the organization learned a lot of lessons about the chaos of deregulation.

Among his comments:

  • “No one understood the [original deregulation] legislation, including us.”
  • “There are no association gurus to lead the way to aggregation; we were clueless and guruless.”
  • “Other associations were uninterested and uneducated. We were just uneducated.”
  • Success involves developing a corporate energy strategy within a supermarket store or chain, stated Mark Bukaty, manager, Niagara Mohawk Energy Solutions, Buffalo, NY.

    He contended that stores or chains can work with an organization like his to answer such questions as, “How can we control our energy costs without sacrificing our core objectives,” and “How can we lower our overall energy bill?”

    Publication date: 10/16/2000

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