Cost Reduction

Energy CX Discusses Rising Utility Costs and Solutions

Last week, I had the pleasure of speaking with Nathan and Max Rice, owners and operators of Energy CX. This family-owned, 5th generation business, now an energy brokerage firm, that came to our attention because they were saving our clients money.

I knew little about energy brokerage before I began our conversation. After our discussion, I was ready to go door-to-door or shout from the rooftops, anything to let restaurants know that there was a no-cost solution that could save them a substantial amount of money. I love restaurants. I grew up in them. I want to share with them what I’ve learned. 

It All Started With Deregulation

In 2009, energy deregulation hit Illinois. Energy CX was already an expert in energy production and the energy market, recycling biodiesel waste before green energy was cool. So, it was a natural transition to start a small energy brokerage. Today, they have billions of kilowatt-hours (kWh) and 500 hundred million therms under management. (For those of you who are, like me, utility challenged, kWh refers to electricity and therms to gas.) And they are saving their clients, who number in the tens of thousands, large sums of money in all deregulated states.

Energy CX’s core competency is helping restaurants and other commercial businesses lower their energy costs and consumption.

Nathan Rice had this to say about their business model, “Over the past couple of years, our customers have had a need to be supported by a one-stop-shop that can do anything from building efficiency to operational support with utilities, to sustainability initiatives. We are a true in-house energy department focused on restaurants, commercial real estate, and industrial users.”

So, my questions were these: How do you save restaurants money, and how much does it cost, and why are our utility bills going up? Let’s start with our rising utility rates.

Supply Versus Demand

The pandemic delivered a hard blow to utility companies. Suddenly, businesses were shut down, and demand slowed to a snail’s pace. In fact, the demand was so low that the cost of production was often less than the cost to buy it. Now, as the nation reopens, demand is rising, but the supply of traditional brown power is starting to diminish.

Max shared this about the diminished supply, “Coal has never produced less in 64 years. There have been no new nuclear power plants in 15 years, and we lost 78 reactors in 2021—the most losses ever in one year and no plans for expansion. So, energy costs have been going up because the supply’s been hit, and the demand is slowly creeping up again.” Both energy experts believe that brown power will continue to increase in price

Despite the push for green energy, solar and wind are presently the only real opportunities. “Solar and wind are currently more expensive, and they always will be because you can’t predict when you’ll use them,” Max reported. “So, the push towards renewable sources is actually creating more of a reliance on traditional sources of energy. The other ‘elephant in the room’ is the poor infrastructure. This is evident in places like California that have 10 years of rolling blackouts planned. There is not one factor why prices are going up, but many conditions that are making it inevitable.”

In addition to diminished supply, increased demand is showing up in ways unimaginable a short time ago. In an effort to reduce carbon emissions, states are aiming for a specified percentage of residents to drive electric vehicles in the next decade. As states like Washington, California, and Hawaii urge the purchase of these vehicles, the question becomes: Can the electrical grid handle it? And will the proposed beneficial environmental impact diminish if the electricity is generated from traditional sources and not renewable energy?

Today’s electric vehicles require about 30 kWh to travel 100 miles. This is about the same amount of energy your typical American household uses in one day. According to PEW, a study conducted by the U.S. Department of Energy revealed that national electricity consumption could increase by as much as 38% by 2050 due to increased use across all sectors.

A surprising increase in demand is also coming from the current cryptocurrency craze, which may one day be less of a craze and more of a standard rate of exchange. CNET reported that Bitcoin mining rigs run 24 hours a day and consume more power than the country of Argentina.

So, in a nutshell, prices are rising because of Economics 101: Supply Vs. Demand.

How Energy CX Helps Restaurants Save Money

As a third-party brokerage firm, Energy CX has the weight of all its customers behind them. Nathan describes it this way, “We are a large customer to the supplier network.  So, when we make a bid, we completely clear the market and have every supplier compete for the customer and then lock in the lowest rate. Because we have a considerable amount of load and a good relationship with these suppliers, we tend to get that wholesale Costco-like pricing.”

Because customers use power in different ways and have different priorities, every plan is customized, and clients can lock in rates for 3-5 years.

Without this safety net, prices fluctuate based on the daily market rate. When the polar vortex arrives, the rates go up. Some restaurants can even see their utility rates double, blowing their budgets out of the water.

Nathan also shared another interesting fact about energy usage and cost calculations. “Half of the price of a kWh is based on the energy market, and the other half is based on the behavior of the business. The capacity charge is usually 30% of a fixed rate and is basically determined by a couple of days in the summer when a utility can compare the demand during peak moments versus usage during normal hours. Because restaurants demanded less energy in the summer of 2020, their capacity level stayed fixed through the calendar year of January 2021 – 2022. This means operators are getting artificially low rates. Capacity values read this summer will apply to January 2022, and restaurants should expect to see significant increases in their bills.

The Cost to Lower a Utility Bill

Now, to answer the final question: How much will it cost to lower our utility bills? The answer: Nothing. Nathan described Energy CX’s process. “Whether or not we work with customers, we always provide meaningful value by doing a report and assessment of the current energy usage and spend. There is no obligation or cost to review gas or electric invoices and see if we can lower their utility costs. We either share what they can save or let them know that they are paying the lowest possible costs, leaving them with peace of mind.”

If they can save a business money, they owe nothing to Energy CX and simply continue to receive their gas and electric bills as usual, with one exception—lower rates.

I came away from the interview having learned quite a bit about energy and knowing that Max and Nathan were genuinely dedicated to their profession and their clients.

“We are a family business and will be doing this for the rest of our lives, so we treat each customer as if they’re the only one. We feel good about what we do because we truly help businesses increase profits and become a reliable partner when dealing with energy.”

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