"It’s difficult to put the genie back in the bottle," workshop moderator John Occhipinti, vice president of Energy Americas, The Linde Group, said of U.S. utility deregulation.

The unleashed genie of deregulation, however, hasn’t provided the magic elixir that many industrial firms initially hoped for. That fact became clear during that session — "Industrial Utility Issues: Deregulation, Lighting and Alternative Energy" — during IAMC’s Professional Forum Apr. 19-23 in Scottsdale, Ariz.

"The debate is ongoing, and the market rules continue to evolve," Occhipinti observed during the Apr. 21^st workshop.

B. Andrew Brown, a partner with the business law firm of Dorsey & Whitney, echoed that assessment with his presentation in Scottsdale.

Brown briefly recounted the history of deregulation, which promised "lower prices and broader choices." The results, however, haven’t lived up to those expectations. Deregulation’s arguable low point, Brown noted, came with the California power crisis of 2000-2001, when the state’s energy prices "increased by 200 percent, there were rolling blackouts, and Pacific Gas & Electric went bankrupt."

Lack of competition, he explained, has hamstrung deregulation, owing to a number of causative factors:

• pricing discrepancies;
• high barriers, particularly capital-intensiveness, in entering the deregulated market;
• the inelasticity of demand; and
• constraints in storage and transmission.

Even the free market-championing Cato Institute "has grave reservations" about deregulation, Brown noted, citing one of the organization’s 2006 position papers.

"The result" of U.S. deregulation, Robert J. Michaels wrote in that report, "has been the passage of electricity utility restructuring laws that may create production inefficiencies that shrink the net benefits of any move toward market provision of power supplies."

Professional Forum attendees learn about industrial utility issues.

The question now, said Brown, is what happens next with utility deregulation. He outlined several options, including:

• going back to a regulated system,
• going slow with deregulation, "at least for a while,"
• "encouraging choice,"
• "letting government step in," or
• "relying on transmission and public interest policies."

"The pure free market," said Brown, "is not likely to develop broad-scale competition," As an example, he cited how some financially pressured California utilities colluded to withhold capacity.

On top of everything else, the utility industry, he added, is now dealing with "a perfect storm of uncertainty" with the current "climate-change policy."

The next speaker, Cistern Enterprises President Ned Harvey, followed up with a presentation that illustrated part of that "perfect storm." Harvey provided a detailed review of the issues surrounding the fast-developing field of alternative energy.

"I doubt a major coal plant will be built in the U.S. in the next four or five years," said Harvey, whose firm consults with companies on issues related to sustainable development. "There are multiple reasons to explore alternative energy."

Those reasons, Harvey explained, include:

• the rising cost of electricity and fuels, with "increasing demand vs. flat-to-declining supply," and a possible "50-to-100 percent increase in energy costs;"
• the reliability of traditional utility infrastructure, including the possibility of "reduced availability and service levels;"
• "restrictions on carbon emissions and developing carbon markets;"
• stakeholder pressures for greater use of alternative energy; and
• concerns about corporate branding.

A healthy business approach to energy issues involves embracing "the efficiency vegetables," Harvey contended. He displayed a chart that resembled the traditional food pyramid.

At the top of that chart, at the very small tip, was an area labeled "alternates." Immediately below was another small portion titled "offsets." But by far the biggest part of the pyramid was labeled "efficiency."

"Excess energy and carbon entrained in your products or services is real money being thrown out the door," Harvey said. "Energy and carbon efficiency provide the most effective energy alternative."

And "real estate is at the center" of the business world’s energy usage, he added. "Real estate is the second biggest corporate expense (trailing only labor)."

Companies, he asserted, can take a number of steps to boost their energy efficiencies including:

• "taking a comprehensive and holistic perspective;"
• "engaging employees, utilities, government and consultants as needed;"
• integrating efficiency concerns into facilities-related decisions and strategies; and
• integrating efficiency concerns into operational process analysis and design.

"Be bold," Harvey advised. "Go beyond cost reduction and profitability in search of an eco-efficiency ethos."

But investing in alternative energies and clean technologies, he added, "is still a bleeding-edge, leading-edge strategy." Such direct investments should be made only after careful consideration, Harvey advised.

The developing alternative energy industry, he added, is rife with unique risks — ones that may be new to many companies. Those potential risks, said Harvey, span concerns that include transmission and infrastructure; feedstocks; regulations; incentives; and construction, permitting and operations.

Here, the presenters field questions from the audience.

Prologis Manager of Sustainability Drew Torbin then illustrated how green principles are working at his company. Torbin began by briefly describing the real estate reach of Prologis, the world’s largest owner, manager and operator of distribution facilities. All told, the company has about 509 million sq. ft. (45.8 million sq. m.) of space in its portfolio. The value of the properties that Prologis owns, operates and is developing totals about US$36.3 billion. Torbin then explained how the company has installed high-efficiency lighting in about 14 million sq. ft. (1.26 million sq. m.) of space. "The energy saved by doing that is enough to power 1,000 homes for a year," he said.

One example that Torbin cited was the recent build-to-suit facility that Prologis constructed for Anixter in Chicago. That LEED-certified building, he explained, uses 30 percent less electricity than Anixter’s previous space, and it’s 40 percent more energy-efficient.

He also detailed some of Prologis’ renewable energy installations, including major solar arrays that were installed last year in facilities in Barcelona, Spain, and Moissy-Cramayel, France.

But companies should be careful in adding rooftop solar operations, first carefully examining a number of variables, Torbin advised.

Financially, for example, topics that should be looked at include tax credits, rebates and incentives, accelerated depreciation, and "off-taker agreements," he said. Equipment issues, too, must be analyzed, including cost, availability and compatibility.

Finally, Torbin added, site issues must be studied in considering the installation of rooftop solar operations. Areas of concern vis-à-vis sites include seismology, structure, irradiance and wind, he said.