Slash Your Utility Costs, Part 1

By Bob Nieman | Sep 03, 2010

(This is the first of a two-part feature on utility-saving steps for coin laundry owners.)

When Jack Bailey was building Jack’s Express Laundry in Dumas, Texas, last year, he decided – against popular opinion – that he would vent each one of his dryers separately.

“We didn’t tie anything together,” Bailey said. “Most people don’t do it that way, but it is the most efficient way to do an install. We feel we get a good flow of air through, and there isn’t any machine that will interfere with the one next to it. I feel like we gain some efficiency there.”

He also took energy efficiency to its highest level with an R40-rated roof for reduced heating and cooling costs, upgraded wall insulation, and the most miserly water heaters and HVAC system he could purchase.

“I feel that pays us back every day,” said Bailey, who also owns five car washes. “It’s hard to go wrong on efficiency of buildings. It kills you to pay for that stuff. However, I’ve learned from my car wash business, where some of my stuff is getting older now, you just can’t spend too much money. It’s tough to overspend on energy savings, because energy is just going to continue to climb for all of us.”

Budgeting Your Natural Gas Costs

Although it may definitely be difficult to overspend on energy efficiency, as Bailey pointed out, it’s also not wise to spend more than is required to power your self-service laundry.

When trying to budget yearly natural gas costs, laundry owners need to know, with as much accuracy as possible, what the future holds. Your natural gas bill features two basic sections:

• The actual cost of the natural gas and the cost to transport that gas from the gas-producing areas of North America and Canada to your region of the country.

• The cost for your local gas distribution company to distribute the gas through the streets of your city or town to your laundromat.

When monitoring utility costs, it is important to look at the bill as a percentage of total gross income and as a percentage of your wash and dry income.

An energy audit can be helpful when trying to determine where all your hard-earned cash is going. This is something you can either do yourself, or you can hire an independent company. Also, you may be able to get your utility company to perform the audit.

Contacting the marketing department of your utility company can even lead you to various programs aimed at energy conservation. Furthermore, rebates are sometimes available to those who install new water heating systems or purchase more efficient washers. Take advantage of any such program that seems to suit your needs.

One thing that many people don’t realize is that gas distribution companies don’t mark up the cost of natural gas. Whatever they pay for the gas is what the customer pays for the gas. The customer reimburses the utility for the service of transporting the gas. But the gas commodity itself is not marked up.

Buying Natural Gas

There has been a trend toward commercial customers purchasing gas from sources other than the gas distribution utility. In fact, today, about 35 percent of the total volume of the commercial sector is purchased from entities other than the gas distribution utility.

Of course, a small, residential customer may not be able to purchase gas on his own. But, for the most part, large industrial and commercial customers can purchase gas on their own in almost all states. Laundry owners should check with their specific local utility to see what rules apply to their particular operations.

If you have a number of outlets in certain jurisdictions, you can link those together. For the most part, if you can’t do it on your own, you can often get together with other natural gas customers to buy it as a group.

In fact, several of the Coin Laundry Association’s affiliate organizations have been running successful gas and/or propane buying programs for a number of years.

“Last year, we had 137 stores participate in the program, and this year we are just in the process of getting people to join up,” said Michael Viviano, a laundry owner and the president of the New York Coin Laundry Association. “What’s happened is that the price of gas has come down, so people aren’t as focused on it as in the past. This year, we have about 50 stores participating so far.

“The idea is to bring together a bunch of different users and see if we can get a better price,” he added. “And, most times, we can. I pay $160,000 to $180,000 in utilities, so if I can pick up 10 percent, that’s great. A couple of years ago, when the price of gas was through the roof, I saved 22 percent. That was a big hit.”

In Illinois, the ILCLA offers its members a menu of different natural gas buying options from Integrys Energy Group.

“We went with what they call a managed gas program,” explained ILCLA President Karl Keefer. “It’s more along the lines of an investment portfolio.

“We have one program option that will buy a certain percentage of you gas load as the prices go down and will buy out two or three months’ worth of your gas allotment, based on a statistical model. If at some point it starts to go back up, it buys in at a greater proportion, which is a great program right now because prices are low now; it would allow you to lock in at a fairly good rate, should prices spike up.”

Another popular option with the Illinois program is a dollar cost averaging program, which is a 12-month program where, every month, member are purchasing 1/12 of their natural gas needs.

“With public utilities, if they need a billion therms that month, they buy a billion therms, no matter what the market is,” Keefer said. “With these private companies, they try to beat the market as best they can. With the dollar cost averaging program, they try to do that on a monthly basis. They’re just buying 1/12 of your load. Rather than getting hit with a bill for $1.40 a therm, perhaps you’re getting a bill for 90 cents a therm, because it averages and blends with all of the purchases to date. It takes out the peaks and the valleys and evens it out.”

ILCLA also offers its members a more proactive gas purchasing option, which Keefer compared to “day trading,” where the participant can attempt to beat the market on a daily basis. He added that one of his members is enrolled in that program.

“Overall, the entire program is a flexible program,” said Keefer, who has 50 members participating. “Rather than one size fits all, the members can decide for themselves what that want to do – most of them are going with the dollar cost averaging program.

“The challenge for us as an association is finding an organization that is willing to support us,” he added. “Integrys only deals with large corporations, and the threshold for doing business with them is 15,000 therms a month. Most laundromats don’t need that type of volume. However, by aggregating our membership, they treat us as one corporation, with several smaller branches or outlets. This type of program is not available to just anybody. There is strength in numbers.”

How Efficient is Your Water Heater?

Another key to saving money on your natural gas bill each month is conservation. And your water heater is the first place to begin your conservation effort.

Water heating systems are available in many different designs, and design is one of the biggest determinants of efficiency. Age and system conditions are the other determining factors. To begin this part of your evaluation, go to your heater room. When opening the door, does the heat knock you down? Does the room feel hot and stuffy?

The next thing you need to look for are the two air openings into the room. There should be one near the floor and one near the ceiling. Do not close them up at all, not even partially. These two openings provide the air supply and movement for your water heater to combust the gas properly. In fact, be sure that these holes are large enough. Most water heaters require one square inch of free area for every 1,000 BTUs of input for your water heater — half near the ceiling and half near the floor. If you have a 670,000 BTU heater, you should have two openings approximately 18 inches by 24 inches. Without these openings for the water heater to “breathe,” your energy bills will go up; not to mention, the life of the water heater will decrease.
 
Another cause for that hot and stuffy feeling is the fact that your storage tank and hot water piping should be insulated. A non-insulated storage tank can add $2 per gallon to your gas bill, and typically you can insulate a 350-gallon tank in just a few hours for less than $100.

Next, be sure to review your water heater setting. Anything greater than 120 degrees in a coin laundry is a waste of energy. Also, note that setting your water heater below 115 degrees can cause problems with condensation and potentially cause much greater problems than high energy bills. Therefore, 120 is the most widely accepted – and energy efficient – setting.

Another possibility for further conservation regarding your water heating system is to shut the system off at night, thus eliminating the possible cycling that would occur to keep the system at a certain temperature when not in use. This type of conservation typically requires a time clock and a separate thermostat attached to the control system of the water heater. A word of warning: If your store is in a colder climate, don’t try this without some sort of freeze protection. Otherwise, the water in your heater can freeze and burst the tank.

The final aspect to consider regarding water heaters is total replacement, especially if your system is more than 10 years old. As a general rule, be sure that your payments (if financed) are less than your energy savings per month.

Combined with other savings, such as tax benefits and depreciation, buying new, energy-efficient equipment can add up to substantial savings.

Also, keep in mind that proper sizing is key to long life and high efficiency. Installing an undersized water heating system will cut your fuel usage; however, you’ll no doubt lose customers due to cold water at peak times.

Tankless water systems are another possible money-saving option.

“These seem to be saving me on utility costs, because I’m not heating water in this big tank,” said Michael Finkelstein of Associated Services Corp., a large laundry chain headquartered in Danville, Va. “As my tanks age, I’m just going to simply retrofit with tankless systems.

“If you’re looking at a store that’s doing under $100,000 a year, two units should easily be sufficient,” he added. “If you’re doing $150,000 and up, maybe you’ll need three or four. It’s worked out extremely well for us. I’ve been there on Saturdays when the place is packed and all of the washers are running – just to see if there’s an issue with hot water, and there is none. It’s not an issue.”

How Efficient Are Your Dryers?

Age is the biggest clue to the energy efficiency of dryers. The older they are, the less efficient they will be, as the advancements in dryer technology have been quite dramatic in recent years. The BTU/hour input for a 30-pound dryer has dropped from 125,000 or more to less than 80,000 to dry clothes in the same or less time. If the BTU input of your dryers is greater than 100,000 BTUs for a 30-pound dryer or if you have a standing pilot light (as opposed to spark ignition or a “glow bar” style ignition), it might be time for new equipment. And this could reduce your total gas bill by 25 percent to 30 percent.

If you can’t afford to replace all of your dryers, replace some of them and vend them for less than your older ones. At a minimum, you can charge more to help offset their extremely high operating cost. Reduce the amount of time given per quarter. If you have to keep some of the older models, at least make sure the ignition systems have been updated and that there are no standing pilots.

Above all, be diligent when it comes to dryer cleaning and maintenance. Nothing increases gas consumption more than plugged airflow passages.

(The second part of this feature will cover water, sewer and electrical savings, as well as some helpful maintenance tips to consider.)