Xcel Energy Increases Minnesota Electricity Rates by 9% in January 2013
Five additional states may approve similar rate increases in 2013. This gives supermarkets more reason to consider energy efficiency and conservation projects.
Supermarket operators in Minnesota will have even more incentive to improve their energy efficiency after January 2013, when utility Xcel Energy increases its rates for retail electricity by an average of about 9%.
Xcel Energy has also requested rate increases of similar size in five other states, including New Mexico, North Dakota, South Dakota, Texas and Wisconsin.
The Minnesota rate increase is an interim measure, pending a regulatory ruling on Xcel’s request for a permanent rate increase later in 2013.
“A typical grocery store of 50,000 square feet spends about $225,000 a year on electricity,” says Abtar Singh, chief executive officer of Singh360, a facility-management consulting firm that helps supermarket chains and other retailers improve energy efficiency. “The 9% rate increase will add about $20,000 of expense per store per year,
“Grocery retailers average net profit margins of only about 2%,” Singh says. “To offset the increased cost of energy, each store must either increase its sales by a million dollars or cut its energy consumption by 9%. The latter is probably easier.”
“Xcel’s rate increase provides another good reason for supermarket operators to implement energy-saving technologies,” Singh says. “Many technologies are available to help supermarkets do so. Nearly all of these technologies are eligible for rebates from utility companies. Investments in them typically pay back in three months to two years.”
Energy-saving measures may include use of the following technologies:
- Variable-frequency drives (or VFDs) for motors used in heating, ventilation and air-conditioning (or HVAC) and refrigeration systems
- Light-emitting diodes (or LEDs) for lighting in refrigerated cases, store aisles and parking lots
- Demand-controlled ventilation (or DCV) for oven hoods used in kitchens and in HVAC systems
- Digital capacity control for refrigeration compressors
- Hybrid (air and water cooled) refrigerated condensers
- Electronically commutated (or EC) motors in HVAC and refrigeration systems.
In addition, supermarkets can retrofit the doors of refrigerated cases and can retro-commission entire facilities.
“Refrigeration systems consume about 40% to 50% of all the energy used in the average North American supermarket,” Singh says. “Yet many supermarket operators have not implemented energy-saving measures in their refrigeration systems. Those who have done so may not have taken full advantage of utility rebates available to them — in part because the rebate-application process can be daunting.”
“Many of our clients have seen payback of less than six months on projects when utility rebates are included,” Singh says.
Singh360 helps its clients manage their rebate-application process to accelerate payback and increase return on investment. The company follows applications all the way through to their final approval. Use of the service often saves time and increases eligibility, Singh says
About Singh360 Inc.
Singh360 is a full-service consulting firm that specializes is facility management. The firm is independent of suppliers of energy commodities or equipment. The company provides counsel from the client’s perspective and is objective in recommending the best solutions for the client’s goals in energy and maintenance management.
