The Critical Need For A Strategic Energy Plan…………

The stock market hasn’t set the world on fire, industry wide sales are hitting snags, oil prices yesterday reached $54.00 a barrel for the first time, surging 80% over last year and analysts said that prices could keep rising because of demand, tight supplies, threats in oil producing countries and supply disruptions caused by Hurricane Ivan.


Although oil and natural gas prices have risen sharply, most retailers are not prepared to deal with a full-blown energy crisis and the impact it will have on their bottom line. So far global economic growth has withstood the impact of higher energy costs. The big question is whether it will continue to sustain it. If we strip out the impact of inflation, oil prices are now near the same levels hit during the Arab oil embargo in 1973-1974. Many analysts believe that the current situation will only get worse over the harsh winter months sapping the country’s economic strength. To further exasperate matters 98% of the power plants that were built in the late nineties are gas fired. Thus, the higher the oil costs, the higher the gas and electric costs.

Mark Twain once made a comment about the weather, which might well apply to strategic energy planning. “Everybody’s talking about it, but no one is doing anything about it.” Faced with the pressing problems of the day-to-day operation most retailers neither have the time nor the inclination to develop a strategic energy plan. However, where retail companies are falling behind, most Fortune 500 companies have already done something about it. These companies no longer tout it as a key to success, they look at it as a means of survival. No longer is it feasible to look at energy as non-controllable expenses. This is a luxury no organization can afford.

The first step in developing a strategic energy plan is to recognize that there is a problem and that there is an opportunity for savings. The foundation of a strategic energy plan involves decision-making by top management in four areas, short-term emergency preparedness, establishing energy planning objectives on the basis of corporate goals, resource commitment (in-house or outsourced) and the management for overseeing these resources. The starting basis of a good Strategic Energy Plan can be best summarized as follows:

A. Starting Steps for a Strategic Energy Plan:

1. Recognize that there is an opportunity for savings.
2. Fully grasp the economic impact on the organization.
3. Summarize major goals and how these goals will be achieved.
4. Integrate the plan with the company’s overall business plan.
5. Determine aggregate cost and savings projections and what cost can be potentially avoided by the program..
6. Developing an emergency plan to reduce current costs immediately.
7. Develop short term, medium range and long range strategic energy plans
8. Outline actions describing how objective will be achieved.
9. Quantify major challenges and problems.
10. Determine Resource requirements/Partner Selection Process.
11. Develop a roll out schedule & time lines.
12. Verify and report on savings.
















B. Project Identification (Partial List)

1. Utility Auditing (both landlord & utility company)
2. Rate Verification and Analysis
3. Energy Monitoring 24/7 web based access
4. Energy Procurement
5. Back room motion detectors
6. High Efficiency HVAC Units & Energy Mgmt. Controls
7. White Roofs
8. Sky lights
9. More efficient lighting
10. Dimmable ballasts
11. LED signage
12. High efficiency pulse start parking lot lights
13. Dual pane glass

C. Define Energy Policies

1. Organization Structure
2. Resource Allocation
3. Funding Criteria / Contingency Arrangements
4. Use of Outside Services
5. Determine the need for systems or outsource entire function
6. Define Stores Best Practices

D. Energy Awareness Program (Get Everyone involved from the top to the bottom)

1. Create an Energy Task Force headed by the top management and department heads of Accounting, Lease administration, Store Operations, Construction and Store Planning.
2. Meet every month to discuss progress and status of various energy projects.
3. Reinforce energy practices at the store level by monitoring energy consumption
4. Disseminate information to the stores on how they are doing
5. Discuss energy goals and objectives at associate meetings
6. Discuss energy rank amongst stores i.e. KWH usage, cost per sq. ft.
7. Establish an energy control hot line for energy waste.
8. Develop a program for communicating energy awareness among management & all associates and reward success.
9. Communicate results to shareholders, the board.
10. Tell your customers about the environmental benefits of the companies energy program.

To summarize retailers need to create the right business processes to protect the bottom line in uncertain times. Having a strategic energy plan in place is no longer a competitive advantage it is a strategic necessity.