How Safeway turned energy management into a competitive edge

By taking a centralized approach to managing energy sourcing -- just like any other enterprise process -- companies can identify real savings and reduce operational risks, according to the energy management team at grocery giant Safeway.

Over the past 14 years, Safeway has completely overhauled the way energy is procured and managed throughout roughly 2,220 facilities—a transformation detailed during a recent GreenBiz Group webcast titled "Turning Energy Data Into Dollars.”

Along the way, the company cut costs by aggregating electricity purchases across certain parts of the Northeast (Maryland, Delaware, New Jersey, Pennsylvania, Illinois and the District of Columbia) and forging long-term agreements with generators in California and Texas, among other strategies.  

To do this, it actually applied with the Federal Energy Regulatory Commission in order to act as a wholesale purchaser, which moved Safeway beyond spreadsheets to investment in energy management software and services.

"We discovered it is better to control our own destiny rather than allow an organization such as a utility to make decisions on our behalf," said Doug Condon, a member of the Safeway energy operations team, during the webcast.

One great example of how Safeway treats energy management as a strategic function involves its approach to the California market.

Concerned about long-term risks to depending on a supply out of its control, the company opted to enter into a contract under which one company provides another with a fuel supply so that it can be converted into another fuel on its behalf. Under this agreement, Safeway purchases natural gas in lieu of electricity, then leases capacity with a generator to turn it into power and deliver it to the grid, Condon said. It also forged a long-term agreement with a generator in Texas.

The result of both relationships has been a risk-managed approach that allows Safeway to procure the electricity it needs at multiple fixed prices, Condon said.

In the Northeast, Safeway focuses on buying from two delivery points, which simplifies the number of relationships it must manage, eliminates retail markups and cuts out unnecessary risk premiums, he said.

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