Processing Power Energy management is a hot topic, with costs rising and options expanding.
Anyone who has paid at the pump lately knows that record-breaking costs for oil have caused gasoline prices to spike yet again. Anyone with eye-popping home heating bills for natural gas over the last few months is undoubtedly glad that winter is finally over. And anyone trying to contain a utility budget is aware that electricity doesn’t exactly come cheap. Meanwhile, those who have scanned recent news headlines have discovered that the debate about the role energy usage plays in global warming has reached a fever pitch.
If skyrocketing energy costs and the parallel concern about being environmentally responsible have caused headaches for average American consumers, those who manage energy in a processing setting need a double dose of aspirin. Although prices and sources vary by region in this country, meat and poultry processing plants have had to grapple with these and other issues on a large-scale basis as energy markets have fluctuated and often grown more complex.
Meatpacking facilities are somewhat unique in industrial circles in that vast swings in temperature are common in a plant, with cooking systems or smokehouses often operating under the same roof as refrigeration and freezing space, not to mention processing equipment that is often large and automated, run on two and sometimes three shifts, and the important role that hot water plays in sanitation.
Indeed, energy management is an important subject within the meat and poultry industries. “We’ve had programs dealing with energy efficiency, whether it’s about smoking operations or cooling,” reports Steve Krut, executive director of the Elizabethtown, Pa.-based American Association of Meat Processors (AAMP), adding that energy management has been addressed in the group’s conventions as well as in published information supplied to members.
What's the use?
Even within the meat and poultry sector, energy issues vary by company and, for conglomerates with facilities in different states, by plant. Meat businesses, as part of larger communities, can be run by natural gas, electricity, propane or a combination of sources depending upon the function. Nuclear power plants dot the landscape in many parts of this country, while the burning of coal generates 50 percent of the electricity consumed in the United States.
According to Joe Falci, director of energy procurement for Cadence Network Inc., a Cincinnati firm specializing in management solutions for multi-site enterprises and their associated utility expenses, the key to usage isn’t so much the source itself as it is the application of the source. “Electricity is electricity, gas is gas. There is none better than the other, and the name of the game is getting it as inexpensively as possible and using the least amount possible,” he explains.
When it comes to sourcing energy as cost-effectively as possible, there has been a lot of buzz over natural gas in particular over the past year. “Natural gas has gone up so much,” reports Krut. “You are subject to market pricing, and although natural gas was de-regulated many years ago, there hasn’t been much out there in the ability to take advantage of that.”
Falci agrees that rising natural gas expenses have altered the equation. “It will be interesting to watch, because for the last few years natural gas has been a cheaper source of fuel and in many cases, that is no longer the case,” he notes.
Whether gas, electric or another source, looking for the most economical way to power a plant is increasingly complicated in some areas. De-regulation, through which energy can be purchased in the general market or through third-party sources, has had a range of effects.
“There are examples of utility markets — such as Texas, Massachusetts, New York, New Jersey, California and Illinois coming in 2007 — where utilities themselves are forced to sell off generation assets. They no longer own the power plants and have to purchase power on the market,” explains Falci. “Those are the states that have significant swings in price — some months, you may spend six cents per kilowatt-hour, and other months you may spend 18 cents per kilowatt-hour.”
Krut, too, says that a certain state of flux has emerged as a result of de-regulation. “In de-regulated areas you have some states that have really jumped into it, others who have jumped in and out and others that are just coming into it,” he says.
In search of efficiency
With changes in sourcing and a general instability in energy markets, it’s no wonder that meat and poultry processors, have bumped up energy management as a priority and a topic of discussion and action among industry groups and associations.
AAMP, for its part, provides both information and services to its members to help them learn about and participate in energy-management solutions. “We have a group program with the affiliated power-purchasing program, or APPI, for energy pooling,” says Krut.
AAMP also can arrange audits to ensure that energy payments are accurate and that energy is being used as efficiently as possible. “We’ve had a lot of members that have saved several thousand dollars,” Krut says, adding that auditing can help manufacturers determine if they are paying too much in costs or taxes.
Companies that run several plants can benefit from audits, such as tariff analyses, that evaluate the scope of energy payments, Falci says. “One reason why we were formed as an organization was the advent of de-regulation, when customers had thousands of utility bills and no way to manage those bills.”
He adds that reviewing and keeping information in a central form allows operators to save costs and make decisions that work for each plant location. “A lot of times, it’s having the data in one place and being able to compare facilities. There is money to be found.”
Beyond reviewing and charting energy charges and tariffs, changes in the purchasing of energy also can make a difference in what operators shell out every month to providers. Falci says de-regulation, though complex, has been beneficial to many users. “In a de-regulated market, procuring [energy] supplies from a third-party supplier may save 5, 10 or 15 percent,” he remarks. Choosing in a more open market can lead to good deals.
“You can work with suppliers out there to lock in power [rates] at whatever the market has to offer. You can eliminate volatility if you do a fixed-price deal,” Falci notes.
Some providers also allow manufacturers to purchase large blocks of power at one time, while others offer “time of use” rates with lower rates available for off-peak hours, such as second or third shifts.
In the meantime, just as in a household, conservation is huge in keeping energy costs contained in a processing plant. Whether powering down during off times in one or two-shift operations, using a combination of electric, gas and other sources, or installing automated equipment with proven energy efficiency, measures taken to conserve energy usage can translate into conserved budgets.
“Every kilowatt-hour you consume less goes right to the bottom line,” Falci concludes. “That’s why they say the cheapest form of power is what you don’t consume.” NP
Check out the October 2019 issue of The National Provisioner, featuring our cover story on the partnership between Coleman Natural Foods and Budweiser, along with our annual State of the Industry Report on various sectors of the meat and poultry industry.