Energy Helps Members Overcome Challenges of Electric Supply Capacity Charges
With acute care hospitals open 24 hours a day, seven days a week, every day of the year, the challenges they face when it comes to energy use are unique. These facilities can’t decrease their use of electricity just because the energy grid peaks. While their usage may decrease slightly at night, it continues to operate outside of normal business hours.
“The value of energy at 2 a.m. is different than the value of energy at 2 p.m.,” explains Bill Miller, director of strategic accounts for inSight Advisory–Energy, HealthTrust’s energy procurement solution. Through HealthTrust’s energy efficiency initiative, Miller and his team help members save money—often to the tune of more than $30 million a year in combined savings.
inSight Advisory–Energy equips hospitals and medical offices to lower their capacity charges—the highest amount of energy a facility is expected to use on a monthly basis. Utility companies base capacity charges on a facility’s peak energy usage during a given time. The charges are preemptive, meaning facilities pay to ensure the energy they need during peak hours will be available.
As Miller points out, energy at midday typically costs much more than energy in the middle of the night. When demand for energy across the grid peaks—in the middle of a workday, for example, or during a winter day—costs skyrocket. Up to half of a hospital’s energy bill may be based on energy used during peak times. However, most hospitals don’t realize that their opportunity for savings also rises concurrently.
Instead of treating hospitals and medical office buildings like any large commercial building, inSight Advisory–Energy offers cost-and energy-saving options that address healthcare’s specific needs. “We look at the areas where we can help reduce usage without jeopardizing reliability of the facility,” Miller notes.
To do this, Miller and his team first identify two things: a region’s supply costs for energy and a facility’s usage profile. These two indicators provide the building blocks for an energy-saving formula. If the resulting data is confusing, inSight Advisory–Energy consultants are available to help translate the information for members.
inSight Advisory–Energy offers three no-cost services to members to increase their energy savings and efficiency:
1. Forecasting. inSight Advisory–Energy eliminates guesswork by forecasting energy prices, helping facilities know when and how to sign energy contracts. “In areas where energy is deregulated and you can buy third-party supply, we track what the market looks like,” Miller says. “It’s the old adage that you want to buy low.” By tracking and analyzing increases and dips in the market, we are able to predict when members should lock in energy supplies. In some cases, it’s more advantageous to stay with a utility than go on third-party supply. We advise members when it’s a good time to either enter into a new agreement or to extend their current agreement. At the end of the day, we’re trying to make absolutely certain that the facility is getting the lowest price possible,” Miller explains.
2. Usage. inSight Advisory–Energy also teaches facilities how to be smarter about energy use. As a first step toward efficiency, Miller recommends every facility undergo a detailed energy audit. After the audit, the inSight Advisory–Energy team reviews the results and the facility’s usage profile to highlight when costs are highest and ways to reduce peak costs. “We ask questions like, ‘Is there low-hanging fruit in the form of small changes to knock some of the usage off?,’ ” Miller says. For example, can a medical office raise the set temperature of air conditioning units? If a floor is unoccupied in a hospital, can employees shut off lights in that area? By maximizing their energy efficiency, hospitals and medical office buildings reduce their peak demand and thus their capacity charges.
3. Rebates. inSight Advisory–Energy connects facilities with cost-saving incentives and rebates offered by utility companies to increase their customers’ efficiency. “Everyone wants to go green, and everyone wants to work toward energy efficiency,” Miller explains. More efficient customers work to a utility’s advantage, because they reduce the utility’s need to build renewable energy infrastructure. In many cases, a utility would rather spend money to help customers reduce usage than build solar panels or wind turbines. inSight Advisory–Energy does the legwork of taking a critical look at incentives and presenting the smartest options to the member facility, offering yet another way to reduce costs and usage.
“The bottom line is: We want to cut member facilities’ costs and maximize how they use energy as much as possible,” Miller adds. “Our members are our customers, so their goals are our goals.”