Utility Deregulation May Mean Big Savings For Local Hospitality Industry

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In a worst-case scenario, Inn of Payson manager Corky Barker will soon be saving her employers about $2,500 --or as much as $12,500 --per year.


At the very least, Dave Conti, owner of Mario's Restaurant, thinks he'll be shelling out about $1,250 less in overhead costs over the next 12 months. But it's possible that his savings could amount to as much as $6,250.


Theirs aren't the only businesses in Payson that may be able to shave sizable numbers off their electric bills thanks to the recent deregulation of Arizona's utility industry.


So far, many area restaurants, motels and other hospitality-related businesses have banded together in this program co-developed by the Arizona Restaurant Association (ARA) and upstart utility company New West Energy.


The key idea is to give participating businesses "substantial buying power," said Joe Yuhas, ARA's executive director. "The resulting savings have a definite impact on the bottom line of individual establishments in what is a highly competitive industry."


The end result, according to ARA calculations, can mean as much as a 25-percent reduction in annual electric costs.


"It sounds unbelievable to me," Barker said. "We heard about it from the Arizona Hotel/Motel Association, and I'm just waiting to see what they can do for us."


Conti thinks the 25-percent estimate might be a little high, but that doesn't diminish his enthusiasm for the program.


"We're hoping to start off with just a 5-percent reduction here at Mario's, which is what New West Energy is guaranteeing eligible establishments over the next three years," Conti said, "and it does look like that savings could grow."


Conti said that while the cooking source at Mario's is gas, his 85,000-square-foot building uses electric for lighting, air conditioning, and nearly everything else. His annual electric bill can run anywhere from $20,000 to $25,000 -- a number he would love to slash.


"As a business, we're only going to gain from this," he said. "We all know the deregulation of the utility industry is coming, so this program makes a lot of sense."


Conti does have some unanswered questions, however. Such as:


"I've heard that our electric meter is owned by APS, and if we were to switch, we'd have to purchase an electric meter. Is that the case, or does New West Energy give you a new meter?"


According to New West Energy's Cindy Lynch, "Under the regulations that have been set, any property that has 20-kw service or above will need a new meter, so most of the commercial customers within (Payson) will need a new meter."


The cost of a new meter installation will depend on the customers' situation, Lynch said, declining to cite an average dollar amount for the expenditure.


"All businesses have different needs and requirements," she said.


Despite that added expense, whatever it may be, the Arizona Restaurant Association has embraced the program with a full-body hug.


Noting that most hospitality establishments are small businesses which employ fewer than 10 employees, the ARA's Joe Yuhas believes the program will help the entire community because it "frees up dollars which can be reinvested in the business in terms of added payroll, equipment or supplies."


Although the deadline for enrollment in this specific program is today -- Friday, April 28th -- Yuhas says there is a second phase which will continue for the duration of the ARA's three-year contract with New West Energy.


Called Demand-Side Management, it offers potential savings of 10 to 20 percent with the installation of various energy efficiency measures, such as upgraded lighting, air conditioning and electricity-consuming kitchen equipment.


"The initial expense has prevented many hospitality establishment operators from installing such upgrades in the past," Yuhas said. "The Demand-Side Management program provides for financing out of the anticipated savings, minimizing or even eliminating out of pocket expense for the operator."


Local businesses that have not yet enrolled in the program can do so by contacting the ARA at (800) 888-0701.

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