Light Firm Cashes In on Others’ Savings : Energy: National Lighting of Valencia analyzes companies’ electric bills, then installs systems that cut costs and may earn utility rebates.
Larry F. Shaw thought he knew a good idea when he saw it in 1986--even if he had a hard time describing it. That year, Shaw’s company started selling a device that helps florescent lights use less electricity. “I ended up with the marketing rights for this product,” Shaw now explains. “And I didn’t even know what it was.”
Since then, Shaw has learned much more about the business and decided he made a good choice.
His company, National Lighting Services in Valencia, has grown by installing energy-efficient lighting fixtures at a variety of businesses, including McDonald’s restaurants, labs and offices at Litton Industries, and recently a House of Fabrics store--and in the process has become a $1.8-million-a-year business.
National Lighting’s modifications are designed to cut businesses’ electric bills by 30% to 60% and qualify them for rebates from electric utilities that could offset the cost of the conversion. Many utilities, including Southern California Edison Co. and the Los Angeles Department of Water and Power, have been offering efficiency rebates for several years and their programs have been gaining momentum. Shaw argues that cutting electric bills--which businesses often regard as a fixed cost--can be a gold mine for companies. “What we sell is cash flow,” he said.
There’s little high technology involved in the new efficient lighting systems. One key is replacing ballasts, small devices found in all florescent light fixtures that start the lights and regulate electric current to them. The technology in ordinary ballasts hasn’t changed much since 40 years ago when energy efficiency wasn’t a concern, so a few simple modifications reduce drastically the amount of electricity the ballasts waste. In addition, reflectors installed in light fixtures to bounce back more light from florescent bulbs also help the fixtures shed more light where it’s needed.
Shaw’s company isn’t the only one in the area that installs efficient lighting equipment. Ernie Eperejesi, who runs a program by the DWP to encourage energy conservation, said the utility has a list of 46 companies based all around the country that have installed efficient lighting in Los Angeles. But only a handful of them--including National Lighting, as well as Parke Industries in Glendora and Sylvania Lighting Services, based in Danvers, Mass.--do much work in Los Angeles, Eperejesi said.
National Lighting and its competitors offer similar services to businesses that want to outfit their offices, factories or stores with new lights. First the firms count the lights, pore over utility bills, and figure out where the company could save on electricity. Next, they estimate how much the company could save using more efficient lighting and what the cost of the conversion would be--then send the results to the customer as a proposal.
In a recent proposal to a downtown Los Angeles hotel, for example, National Lighting estimated that it could cut the hotel’s annual electric bill by 63% from about $136,000 to less than $50,000. National said the modifications would cost $103,549. On top of that, National said the job would earn the hotel a one-time $19,800 rebate from the DWP. By National’s calculation, the hotel could borrow money to pay for the job, have no up-front costs, and start saving money immediately.
National Lighting, owned by Shaw, who is president, and his son, Donald, has 31 employees, including 22 lighting installers. The company gets most of its business by making cold calls to businesses, promising to reduce their fixed electricity costs. Shaw predicts his company will rack up sales of $3 million to $6 million in 1991.
National refitted seven buildings in Woodland Hills for Litton Industries, the Beverly Hills-based defense contractor, earning Litton a $166,129 rebate from the DWP--the second-largest rebate the utility has issued.
House of Fabrics, the Sherman Oaks fabric and sewing supplies retailer, is now having National install efficient lighting in its Valencia store as part of a test to determine whether it should replace lights in other stores.
The lighting modification business is growing rapidly, according to Peter Miller, a senior research associate for the Natural Resources Defense Council, which has promoted energy-efficient lighting. “But there are still not that many companies that install the lights.”
One of National’s rivals is Parke Industries. The company, founded in the early 1980s, did more than $12 million in sales in 1990, according to Daniel Parke, its founder.
Parke, which has seven offices around the country, manufactures reflectors and some other energy-saving devices, and installs them--along with ballasts that it buys from other manufacturers--in offices, stores and factories.
Sylvania Lighting Services, a Danvers, Mass., subsidiary of GTE Corp. with a local office in Pacoima, started out as a lighting maintenance company but has been installing energy-efficient fixtures for about 15 years, said Dick Dowhan, Sylvania Lighting’s manager of public affairs. Sylvania Lighting was the contractor on an energy-efficiency job that won the owners of a downtown office building a $260,000 rebate from the DWP--the largest rebate the DWP has issued, according to Eperejesi.
Such rebates from utility companies, according to Parke, help companies such as his and Shaw’s, which have little money for advertising, because they generate word-of-mouth business and create an incentive for businesses to modify their lights.
In California, some of the rebates are now issued under programs mandated by the state Public Utilities Commission. Last fall, the commission reached agreements with the state’s biggest utility companies, including Southern California Edison, requiring them to promote electricity conservation by their business customers.
For those utility companies, the incentive is that the rebates are treated as an “investment” in energy conservation. Essentially, the commission lets the utilities charge enough money for their electricity so that they can earn a profit on their energy conservation “investment.” Otherwise, they would have to eat the cost of a conservation program.
Larry Shaw had no experience with electrical contracting before he started National in 1986. He’d sold insurance and financial services until then, but “just decided that wasn’t the thing.”
Shaw took out a loan on his house in Valencia to pay living expenses and learned how to install lights from a friend in the electrical contracting business. While he and his son called potential customers by day, Shaw installed the energy-saving lighting systems at night, pushing the company from about $85,000 in sales in 1986 to about $429,000 in sales in 1987.
