Back in the days before electricity deregulation, Mel Horwitt and his Utilities Resource Management Group helped technology and other companies cut power bills by joining the now infamous “interruptible program.”
While Utilities Resource custom-ers may have been thankful then for the help, odds are they’re less than grateful today.
Utilities Resource, which consults with large and small companies on how to save money on utility bills, advised customers to go on the interruptible program before California’s power crisis began. Under the program, companies paid reduced rates for cutting power usage during shortages,or faced fines.
“Back in the early ’90s, it was a great rate,” said Horwitt, chief executive of Utilities Resource.
So are the firm’s clients upset with the way the interruptible program has played out during the power crunch?
“Power customers everywhere are upset with all the interruption,” he said. “Customers are upset with how deregulation has flopped.”
Last week, the state Public Utilities Commission voted to allow companies to opt out of the interruptible program retroactively to Nov. 1. Companies either can pay the fines they incurred since November or reimburse Southern California Edison for the discounted rates they received.
The interruptible program is just one tool Utilities Resource has used to help clients cut power bills. The firm started on the premise that utility companies can inadvertently overbill for services, which generates a lot of mistaken payments every year. Utilities Resource audits company electric bills and finds mistakes that can save customers hundreds of thousands of dollars a year.
Utilities Resource makes money by charging a retainer fee for its services and earns a 50% share of whatever savings the firm secures on behalf of clients.
Several Orange County technology companies chose to go into the interruptible program before deregulation because they could save money,especially if they used a lot of electricity. These days, though, the move has proved disastrous, as some companies incurred as much as $1 million a month in fines for not cutting back power usage.
Santa Ana-based Ingram Micro Inc. joined the interruptible program and was a Utilities Resource client. But both companies declined to comment on the nature of their relationship or whether Utilities Resource advised Ingram Micro on its decision.
“Our facilities department had been very aggressive on cutting costs even before the energy crisis started,” said Ingram Micro spokeswoman Jennifer Marchetta.
Utilities Resource also cites Santa Ana-based health maintenance organization PacifiCare Health Systems Inc., the California State University System and the Desert Sun newspaper among its clients.
Before the energy crunch, Utilities Resource likely got plaudits from clients who followed the firm’s advice to join the interruptible program. In the old days, interruptible customers had to cut their usage on only a few hot days in the summer. The savings from lower rates made the interruptible program a no-brainer.
But lately companies have incurred near-daily shutdowns and the threat of massive fines. Newport Beach chip maker Conexant Systems Inc. chose to participate in the interruptible program and,though not a client of Utilities Resource,was looking at some $3 million in fines. Like many other businesses and Utilities Resource itself, Conexant didn’t bank on a power shortage. Conexant Chief Executive Dwight Decker recently went to Sacramento to make his company’s case for scrapping the interruptible program,and the millions in fines Conexant was facing.
Horwitt said he’s getting plenty of calls about what the commission recent ruling means. In some cases, he said, joining the interruptible program still makes sense for businesses that can plan out their energy usage. n
