Cutting The Costs Of Energy Use

Nation's Business, Nov 1, 1998 by James Worsham

A federal program gives small firms the technical know-how they need to make their facilities more energy-efficient.

When Armando Petruccelli, general manager of his family's beauty-products firm, decided that he needed to cut costs and boost profits, one area he pored over was the company's energy expenses.

That meant taking a long, hard look at the lighting and heating systems in Petruccelli International's warehouse in Flushing, N.Y., next to busy LaGuardia Airport. There, the firm stores chairs and equipment as well as supplies of shampoos and brushes.

To reduce energy use, Petruccelli installed more-efficient lighting in the warehouse, in his offices, and in exit signs as well as outside the building. Then he replaced an oil-burning, forced-air heating system in his warehouse with gas-fired, infrared heaters that hang from the ceiling and spread heat much as radiators do in homes. The annual savings in energy bills came to $4,260, and the time it would take to recover the renovation costs through energy savings was estimated at 4.4 years.

"It's been a great thing," says Petruccelli. "We're hoping to do more."

The Petruccelli firm got some help in its renovations from a voluntary federal program called Energy Star Small Business, run by the U.S. Environmental Protection Agency. The program aids small companies that need technical help to make their facilities more energy-efficient.

The program was begun in 1996 in response to congressional concern that the agency wasn't doing enough for small businesses. One earlier program was Designed to help large businesses as well as local and state governments, and another was directed at individual buildings.

Energy Star has about 525 participants, and the agency hopes to have 1,500 by year's end. The major focus is on reducing energy used in lighting and in heating and air-conditioning systems.

Jerry Lawson, the EPA's Energy Star program director says that because about 23 million small businesses account for slightly more than half the nation's economic output, energy savings by these companies would have a significant impact. "If all American small businesses cut their energy costs by 30 percent," says Lawson, "more than $15 billion a year would go straight to their bottom line."

Improving The Light

The usual starting point for increasing energy efficiency and reducing costs is lighting-in public areas as well as in offices, warehouses, and even restrooms. "Lighting usually provides the quickest payback," says Lawson.

That's just what happened at Casual Creations Inc., a home-furnishings firm in Mary Esther, Fla., on the Gulf Coast near Pensacola.

The lights at Casual Creations weren't showing off the merchandise very well, says Fred Cochran, the firm's president. Furniture looked plain and drab and was not catching the attention of the customers, he says, and even the lighting in the office spaces left a lot to be desired.

So Cochran installed lighting that not only is more energy-efficient but also shows the furnishings in truer, brighter colors, he says. In addition, motion sensors installed in the restrooms turn on the lights only when someone enters.

Cochran says he thinks new lighting in the office area has helped boost sales.

A $6,500 investment reduced energy bills by $5,000 the first year, Cochran says, with the total payback time estimated at 1.4 years.

"Early into the process, we're very pleased," he says. 'There's been significant savings from the get-go."

Lighting was also a problem for Larry Stanley, president and CEO of Empire Bolt & Screw, a parts-distribution company in Spokane, Wash.

Stanley had already begun efforts to solve it when he heard about the Energy Star program. Participation entitles the business to a copy of a guidebook, Putting Energy Into Profits, so Stanley compared his plans with the program's recommendations.

"It gave me the opportunity to go through the guide and do the double-check to see if there was something that I missed," he says.

He hadn't missed much. He decided to replace 8-foot fluorescent lights with 4-foot lights because they last longer, cost less to burn, and yet produce more light. Illumination is crucial in his warehouse, where employees have to deal with many small hardware items, such as screws and bolts, and with small labels.

The payback time is an estimated 4.6 years.

For many companies, lighting is a good place to start, says Lawson, not only because it's the easiest and least costly fix but also because the savings achieved often can be used as a down payment on renovation or replacement of heating and air-conditioning systems. "You can leverage your lighting savings into the next investment," he says.

However, improving the energy efficiency of heating and air-conditioning systems can be more complicated. Although lighting can be improved just about any time, heating and cooling systems are usually not changed until it becomes time to make major renovations or replace the systems, Lawson explains.

Because his warehouse needed both lighting and heating changes, Petruccelli decided on a major renovation. In addition to the lighting, he opted for radiant-heat infrared heaters. He got help for the project from George Kritzler, a certified energy manager and principal in Imagineers Unlimited, an energy consultancy in Hillsdale, N.J.