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Sunday, 13 October 2013 22:00

Midwest Energy Group to offer outsourced energy management

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West Michigan companies that want to watch their energy usage but lack the in-house capabilities to manage it effectively have a new local option: outsourced energy management.

It’s a new service being officially launched this month by Hudsonville-based Midwest Energy Group that aims to take the guesswork out of energy management for local manufacturers and other companies that consume large amounts of energy.

Midwest Energy plans to offer companies the ability to tap its expertise and capabilities in energy management in much the same way firms would outsource logistics, maintenance or other services, said Brian Pageau, director of business development and marketing for the company.

The company decided to launch the new service and develop its own energy management software after seeing how many of its clients were concerned about energy use but had no strategy for managing their energy costs, Pageau said.

“I kept running into this real gap in that people did not have a plan,” he said. “A company will have some secretary keeping track of a spreadsheet of usage, but they don’t know why they were using as much as they were. They had no breakdown on any of it and they weren’t tying it to variable productivity. They were working blindly.”

Midwest Energy, which was formed six and a half years ago by parent company Allied Mechanical Services Inc. of Kalamazoo, has helped companies like Gordon Food Service, Michigan Turkey Producers, Van Eerden Foodservice Co. and Cole’s Quality Foods Inc. implement one-off energy efficiency projects. But it wanted to start to develop a more long-term relationship with companies — including small businesses and nonprofits.

To that end, the company developed an energy management service and created its own software to help companies manage operating costs related to energy use. Midwest Energy recently completed beta testing its new Foresight energy efficiency program, which involved 15 organizations ranging in scope from churches to large manufacturers.

While the company hopes the new service could be a good revenue generator for Midwest Energy, it is also trying to make energy efficiency understandable and accessible for a variety of businesses in different markets, Pageau said.

Customers were aware that some companies were creating energy manager positions, but most were not familiar with the responsibilities of people in that position. Seeing that need, Midwest Energy started to position itself as an outsourced energy manager.

“We basically built a dashboard, asking companies what do you need and what do you want to see,” Pageau said. “But along the way, we started asking, ‘Are you looking at your utility bills every month, are you looking at your rate structure?’”

Walters Gardens Inc., a Zeeland-based supplier of perennial flowers, is roughly eight months into using Midwest’s Foresight program. Walters farms 1,500 acres of land and operates 500,000 square feet of greenhouse space, both of which require substantial energy usage. Specifically, electricity is now a top-20 expense for the company, recently surpassing heat, said Troy Shumaker, the company’s CFO.

“From Midwest, the number one thing they’ve helped us identify is what we’re spending on energy and where,” he said. “They’re not just tracking the bill, but showing how it actually relates to different areas of the business, making it an apples-to-apples comparison.”

Walters Gardens completed a lighting overhaul with Midwest Energy’s help, and that project was able to achieve a one-year return on investment, Shumaker said. Now the company is looking at an HVAC system and new boilers.

After the Foresight pilot was completed, Midwest Energy returned to the pilot companies, but also added a bundle of possible engineering services to the program. The company wants its software to be useful and informative, even it it sacrifices a bit of flair in the process.

“There are way fancier energy management dashboard in the market place — way, way fancier,” Pageau said. “But at least from what we’ve seen, there aren’t any that come with energy experts that are basically on the other end of the line, in your building, running reports and doing things.”

In the suite of services, Midwest Energy provides a month a utility bill analysis, a quarterly utility rebate update and an annual rate structure analysis, among other services. The program is built for C-level management and is intended for people looking at a company’s bottom line, Pageau said.

“It provides a high-level snapshot of what is going on their buildings,” he said. “We take all the confusing information and boil it down to super simple stuff they should care about.”

An action as simple as making sure that usage is adjusted to reflect a shorter or longer billing cycle is something many companies often overlook, Pageau said.

The software is also tied into the National Weather Service to better understand fluctuations in energy usage, but probably the most significant asset to businesses is the utility rebate tracker, Pageau said.

In Michigan, utilities are required to invest in energy efficiency projects, but the value of the rebates they use to encourage efficiency projects can vary. The utilities collect funds for the rebates through an energy optimization surcharge on energy bills, and those funds go into a pot that’s distributed over a calendar year.

The utilities distribute those rebates to efficiency projects throughout the year, but often toward the end of the year, they make a push to move the remaining funds out the door, Pageau said. Those more lucrative rebates can make a big difference for companies when calculating the return on investment for a given efficiency project, he said.

In one case, Pageau said Midwest Energy audited a project for St. Francis de Sales Catholic Church in Holland. When the project was first discussed, the parish’s energy provider, SEMCO Energy Gas Co., would have offered a $2,000 rebate on a $40,000 boiler replacement. But SEMCO later changed its offer to a $16,000 rebate on the same project.

“It’s just an example of why it makes sense to have a quarterly rebate report,” Pageau said. “Something fourth on the list of projects could all of a sudden move up to first because there is extra money associated with it.”

Shumaker of Walter Gardens said the attention to available rebates has helped move the needle on certain projects.

“Where (Midwest Energy) has really been knowledgeable is finding out what rebate monies are available for projects,” he said. “These things are difficult to monitor and the program really breaks it all down. They’ve been able to help us justify and move faster on energy projects.”

With something as simple as verifying a company’s utility rate structure, Midwest Energy found several occasions where companies were paying way more than they should have simply by checking the wrong box on their paperwork.

“You would be shocked how many companies aren’t on the right rate structure,” Pageau said. “Whether it’s a growing company that never thought to revisit it or a company that’s contracted — either way, it could mean real money to a company.” 

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