Power Crunch Is Opportunity for Energy Efficiency Experts

Rising energy costs are fueling the business of energy consultants, who offer companies fearful of outages and higher power bills everything from blackout survival plans to technology that will automatically reduce their power consumption.

Onsite Energy Corp. of Carlsbad, for example, provides energy efficiency consulting and technology for medium-sized to large energy customers, including Sanwa Bank and Del Monte Foods. Onsite will evaluate a company’s energy use, install more energy-efficient equipment and apply for incentive funds offered through the utilities.

“We’re seeing a dramatic increase in the level of interest in our services, and we think it’s a direct result of the increase in the price of a kilowatt hour,” said Paul Blevins, Onsite’s chief financial officer. “Before, the CEOs and CFOs [of major companies] were not paying attention to energy costs. Now, middle management is getting the ear of the CFO because it’s having a significant effect on the income statement.”

The Department of Energy does not keep statistics on how much businesses are paying for energy-survival services. But one energy official said spending is “absolutely up,” based on the inquiries that pour into his office.

Companies across the state say they are seeing a boost in business resulting from the energy crunch.

Silicon Energy of Alameda developed a computerized system that automatically reduces energy consumption for its customers, often without a noticeable disruption, said John Woolard, chairman and chief executive.

Woolard said that for the first five months of this year, the closely held company, which targets large commercial and industrial customers, has seen a 540% increase in revenue. He predicts a 400% increase for the year.

At Onsite Energy, net income for its fiscal third quarter ended March 31 was $265,000, compared with a net loss of more than $893,000 a year earlier. In fact, Blevins said, the increase in the company’s California business was enough to offset losses in other operations.

The gold rush is not limited to California’s shores.

At Milwaukee-based Johnson Controls, which also makes and installs control systems that can reduce energy consumption, the company already has seen a $200-million increase in energy conservation sales this year from the same period last year, said Alex Molinaroli, vice president of sales.

Newly popular players join already entrenched firms--sellers of backup generators and purveyors of alternative energy sources, especially solar.

“We have seen a tremendous surge in requests for information about renewable energy sources: wind and solar,” said Michael Lamb, a manager with the Energy Department’s Energy Efficiency and Renewable Energy Clearinghouse program. “Two years ago, almost nobody was requesting this information--maybe a few hippies in the hills. Now it’s Joe Citizen.”

Michael E. Huff is among the consultants trying to spread the word to small businesses, and he hopes to turn a buck in the process. Huff, who has spent his career teaching businesses how to improve customer service, is launching a new round of classes: Blackout 101.

As director of customer relations for File Keepers, a records management company in Commerce, Huff has been speaking to business groups on blackout-related issues. He focuses on the human aspect of blackout planning--how to prepare employees and keep customers from panicking--and targets small, often minority-owned firms. His advice is decidedly low-tech: advising small merchants to take steps such as acquiring a manual credit card processor and assigning a person to monitor the radio for blackout warnings.

From the lectures, Huff hopes customers will flow to his private company, Career Aspirations in Pasadena.

“I consider this, my lectures and workshops, a community service,” said Huff, who recently spoke on blackout preparedness to a group of African American restaurateurs and garnered one customer in the process.

“If someone wants me to come in and analyze their needs, they would pay for that.”

Huff and others have found that instant riches in the energy game are hardly assured.

Gary J. Fabrizi, executive vice president of a Laguna Niguel-based “aggregator,” faces the possibility that a state-sponsored demand reduction program, which he thought would yield a handsome profit, will push him into financial trouble.

The company, Ancillary Services Coalition, has linked 200 energy customers into a group to participate as “interruptible” customers in the demand reduction program sponsored by the California Independent System Operator. Ancillary Services and its clients are paid based on how much energy is conserved.

The company, run by Fabrizi and Terry Rich, the marketing director, helps customers determine how much energy they can save during peak hours and monitors data from electric meters to ensure that the clients reduce their energy demand to the agreed-upon level.

Fabrizi said he poured his life savings--and the savings of friends and family members--into the company and was fairly confident about the investment until questions began to arise about whether there is adequate funding for the demand reduction program.

Charles Robinson, general counsel for Cal-ISO, has said that under the terms of the deal signed by Fabrizi and other aggregators, the investor-owned utilities are ultimately responsible for footing the bill for the program. Cal-ISO forwards payments to the aggregators only when it gets paid, he said.

With one major utility in Bankruptcy Court and the others in a precarious financial position, the aggregators wanted a guarantee that the state would make good on the payments if the utilities couldn’t.

So far, no such deal has been offered, but Robinson said discussions are still in progress with the state’s Department of Water Resources, which makes energy purchases.

Fabrizi said the turn was particularly painful because, after laboring in the energy field for nearly three years, he thought his ship was finally coming in.

Mitch Wilk, a former member of the state’s Public Utilities Commission, who launched the Wilk & Associates/LECG consulting firm in 1991, said most of the consultants he’s had contact with during the crunch had been in some energy-related field long before its recent burst of popularity.

“These kinds of crises do encourage a cottage industry of advisors,” Wilk said. “I’m sure there are a few that are trying to get rich quick, but I tend to look at consultants as people who have an independent perspective that is helpful.

“I don’t know that there are a bunch of guys just hanging around waiting for the next crisis to hit.” he added. “Most would have had to be around to be called in the first place.”