American Energy Solutions, Inc.

Leading lights┬áAny number of companies will broker power supplies for you, and many others will advise on energy-saving measures. American Energy Solutions will do all that and more, Ruari McCallion learns from Mike Moore.  When companies begin to take energy saving seriously, it can be a surprise to find out how much can be saved by quite simple measures. Close external doors, switch off power to unoccupied areas or unused equipment, change lighting to energy-saving technology and just watch the energy usage fall.   Managing energy purchases and energy contracts can also produce big results. A 10 percent reduction across the board can make your mouth waterÔÇöbut 50 percent increases in volatile markets can make your eyes water. American Energy Solutions was established in 1995 in Kansas City, Missouri, on the premise that a comprehensive approach to managing energy adds more value.ÔÇ£Energy contracts are complex; big companies have enormous energy budgets but do not have the expertise to buy or manage energy commodity supplies,ÔÇØ says Mike Moore, company president and CEO. While most companies have their own tax departments or legal advisors, very few, if any, have people dedicated to managing energy, its procurement, price risk management and usage. ThatÔÇÖs what American Energy does, and very successfully. It has helped a large customer in the South achieve savings of $36,000 a monthÔÇö$432,000 a yearÔÇösimply by taking advantage of a better tariff from its existing supplier. On a larger scale, it worked with a major manufacturer to coordinate utility policy across 62 plants. The savings have been massive.ÔÇ£We are not brokers,ÔÇØ says Moore. ÔÇ£We typically develop requests for supply proposals, put them out to the market and get responses from suppliers and brokers. We help customers make appropriate decisions and manage their needs and usage. We take the concept of energy management way beyond brokering.ÔÇØ The first step in the American Energy program is familiar: find the lowest cost per unit for the commodity. That will involve the request for supply proposal, bill analysis, tariff analysis and, crucially for a number of customers, sales tax exemptions. ÔÇ£CompaniesÔÇÖ tax departments donÔÇÖt tend to focus on the minutiae of utilities, but our tax group always looks for exemptions, and weÔÇÖve been able to recover millions of dollars for customers.ÔÇØ Volatile oil and natural gas prices have made finance officersÔÇÖ job of forecasting a nightmare. As a result, risk managementÔÇöAmerican EnergyÔÇÖs second service areaÔÇöhas become very high profile over the past two or three years. ÔÇ£We help our customers manage price risk through a variety of means, whether as sophisticated as setting up margin accounts or as simple as arranging fixed-price contracts.ÔÇØIf thereÔÇÖs one lesson from the past few years that should have become embedded in every mind, itÔÇÖs that the drive for improvement should never stop. Big reductions in bills are great, but theyÔÇÖre only the beginning; what will you do to cut costs next year? How do you achieve ongoing, base-level reductions and ensure legislative and regulatory changes donÔÇÖt catch you? ThatÔÇÖs where American Energy really gets to work.ÔÇ£We work with customers to identify appropriate energy conservation measures, to reduce energy consumption. Our job is to find and develop the projects that meet their operational and financial objectives,ÔÇØ says Moore. ÔÇ£But we go a step beyond. ThereÔÇÖs an international focus on greenhouse gas emissions. We help to ascertain the current level of greenhouse gas emissions and see how they can be reduced. That helps companies to meet their CSR [corporate social responsibility] targets and anticipated legislative mandates. I expect we will see in the US a similar situation to that in the European Union, with a mix of penalties and encouragement. Some utility companies and state governments are already promoting demand reduction through rebating. A recent energy conservation project for a refrigerated warehouse company had a project cost of roughly $1 million, and we were able to reduce the project cost by roughly $250,000 because of rebates from the utility company.ÔÇØ ItÔÇÖs likely that carbon trading will also become a big part of the companyÔÇÖs business going forward.American EnergyÔÇÖs market focus is on industrial and commercial utility users. It has customers in refrigerated warehousing and logistics, food manufacturing, heavy industrial, metals and steel fabrication and retail segments. Lighting is one of its immediate areas of focus, as the technology changes quite rapidly and there are measures available that simply did not exist five or so years ago. Compared to the EU, the US is a long way behind in energy-saving lighting, monitoring and control, Moore observes. There are a number of areas where relatively straightforward remedial measures are available, and American Energy doesnÔÇÖt overlook them.ÔÇ£We audit compressed air equipment for leaks and to ensure the motors are as efficient as possible,ÔÇØ he says. ÔÇ£We look at heat recovery from kilns, ovens, boilersÔÇöanything that dissipates heat into the air. We may be able to install systems for preheating of boiler water or ambient air. We approach each client with a blank piece of paper and find solutions that are appropriate and economically viable for them.ÔÇØ American EnergyÔÇÖs 38 employees currently generate revenues in the $15 million range.ÔÇ£A small percentage of our revenues comes from shared savings types of contracts,ÔÇØ says Moore. ÔÇ£Mostly, we charge fees for our services. When it comes to engineering and construction, weÔÇÖre paid engineering fees to evaluate projects, and for the most part our construction activity is ÔÇÿcost plus.ÔÇÖ WeÔÇÖre strongly focused on our role as an independentÔÇöweÔÇÖre objective; weÔÇÖre not selling or brokering gas or electricity. WeÔÇÖre focused on one thing, which is to help our customers manage and control their energy spend, and we set limits to ensure customers get value from us. If our first-year costs are $75,000, then we undertake to save our customer at least that amount, permanently. At American Energy, we demonstrate that managing energy has value.ÔÇØ ┬á