Power to cut costs

The deregulation of the gas and electricity industries has not been without critics, but a positive result has been the abolition of single-source providers. There are now dozens of gas and electricity supply companies to choose from, and the number keeps on growing.

The freeing of the gas supply market is coupled with the continuing deregulation of gas-buying on the open market. Until this month, the minimum gas consumption required before being allowed to purchase gas was £1,100, a figure larger than the average annual consumption of small hotels and restaurants.

This is changing with the introduction of a pilot scheme in Devon, Somerset and Cornwall, where no minimum purchase level is required. Following this one-year trial, counties including Dorset, Sussex and Kent will give it a try, leading to nationwide deregulation in April 1998.

Although smaller businesses will have to wait for the opportunity to buy cheaper gas, a fresh approach to the wider issues of energy consumption and environmental awareness is needed.

One energy cost-saving area of interest is the use of combined heat and power (CHP) units. These on-site generators create the electricity needed and can also use the same energy to heat water. Independent hotels and chains are starting to install them to cut energy costs.

An example of this approach to energy management is at the Derwentwater Hotel in the Lake District town of Keswick.

In the past three years, this hotel has embraced energy cost-saving principles that have not only reduced energy costs but also made a contribution to environmental awareness.

Comparing this year's annual energy bills with those of three years ago shows a saving of 14% on electricity, amounting to £2,300, and 15% on gas costs, a saving of £1,400.

In 1993, this 52-bedroom hotel took a careful look at its energy buying and consumption policy. This was part of a wide-ranging energy and waste-management study which resulted in purchasing changes, use and saving of energy, and the related issues of waste-cutting and recycling. According to managing director Ian Aston, this "provided a springboard for us to do other things and look at our business a little closer".

Aston saw that a greater awareness of energy costs would not be an expensive operation, and provided an opportunity to save money in the long run. During refurbishment, he switched to low-energy lighting, using compact fluorescent bulbs and low-energy spotlights. "This resulted in a 75% saving on bedroom lighting," he says.

The new competitive spirit in the gas industry has also helped. "Because of our high level of gas consumption we have been able to get a very good deal," says Aston. "We are now paying half what we were paying three years ago. I rang around from supplier to supplier and when I got a better tariff, I'd ring the same suppliers again, quoting the latest figure. I kept playing one off against the other."

The Derwentwater is an old building and water heating systems are fragmented. There are four separate boilers, in different locations around the hotel, that supply hot water and central heating.

It would not be economically feasible to completely rationalise the heating system because of the plumbing costs involved, but the hotel is looking at ways to update the central heating and hot water services. "We were recommended to use two separate systems and we will have substantial savings doing that.

"We will replace the old hot-water producing boilers and central heating with a boiler dedicated to central heating and another gas-fired water storage heater, but with 60% less capacity than at present. This will still produce the same quantity just as quickly, savings will be made when we don't need heat and that boiler can be turned off."

As part of the energy-use controls, Aston bought devices that are attached to electrical equipment and show how much energy is being used. "I looked at the restaurant's white wine and mineral water refrigerator. We only need it for lunch and dinner, but it was running all the time. We now have it on a time clock, it switches off at the end of service and switches back on at lunchtime the following day. That saved 40% of the energy," he says.

Staff are encouraged to reduce energy waste wherever possible. This includes simple things such as turning lights off when not needed, closing windows and doors, turning heating down, ensuring taps aren't dripping - especially important in the kitchen where water is often wasted - and the dishwasher is only run when full.

"We keep staff aware of basic things all the time. And we have an incentive scheme to encourage them to come up with ideas - any suggestions we take up are rewarded with a £50 bonus plus a proportion of any savings that are made."

The Old Bell in Malmesbury, Wiltshire, is a 15th century hotel with 31 bedrooms and a 70-seat dining room, as well as conference and banqueting facilities. As part of a drive towards more effective energy use they employed an energy buying consultant to scrutinise bills and advise on buying from alternative sources. The result has been an overall saving of £1,800.

"I prepare management accounts every month. In September last year I noticed that our power figures were higher than budget by quite some way," says Jonathan Line, the hotel's accountant.

He called in the energy consultant to find out what was going wrong. "They monitored our energy use, looked at past bills and found a fault with readings on our electricity meter.

"I was sceptical about real savings at first, but when a refund of £2,715 came back we were pleased. The consultants advised us to get better gas prices, so we moved to a supplier they recommended."

Len Guilliford is a consultant with Pro-Eco Energy Economists, who undertook the Old Bell energy audit. He claims energy consultants should be able to achieve savings for 95% of hotels, restaurants and pubs which spend at least £1,100 on gas and £2,500 on electricity. Information is analysed against known consumption figures for the specific equipment used and tariffs are checked.

Swallow Hotels' energy management programme saved more than £1m in 1993/94, a reduction of 6%.

Of this figure, £450,000 came from immediate energy savings, a further £550,000 was saved by installing CHP units in 23 hotels in 1993, following an investment of £2.1m capital expenditure scheduled to be recovered in less than four years.

Swallow set up its energy management unit in 1987. Its personnel and purchasing department was made responsible for planning the programme, the technical services department was given responsibility for day-to-day implementation.

The group sets out its policies in an Energy Management Guide, which includes information for staff on energy consumption, costs and measures to be taken. Staff are highly motivated as every permanent member of staff with more than two years' service is a shareholder.

Meter readings are taken monthly (weekly at the larger hotels) and energy costs are analysed using spreadsheets. Figures are analysed against a background of room occupancy and meals served.