Be Careful... Of Fully Bundled Energy Services

Abstract

The message is clear: Fully bundled energy services often do not
work. BUT: I do not advocate unbundling without a thorough under-
standing of all implications and ramifications.
To explain the concept, bundling combines the provision of electric
commodity with other energy-related provisions that would normally
have an out-of-pocket cost associated with them. As an example, a re-
placement chiller may be provided without initial capital outlay by vir-
tue of its acquisition cost being recovered through savings partially at-
tributable to a discount in the cost of the electric commodity.
So, perhaps you acquire a commodity discount of 5%, but you will
not actually see this discount on your monthly bill because this discount
is being collected to pay, in part, for the new chiller. A key element is
that the contract for commodity must last at least as long as the debt
recovery for the capital project. Some utility companies want this to ex-
tend even to providing all central plant services such as stationary en-
gineering, and beyond this, to the janitorial services, etc