According to the National Oceanicand Atmospheric Administration (NOAA) the first six months of 2010 were thehottest on record since the agency began recording temperatures in1880. Moreover, many in the Northeast have experienced a recordbreaking July. In Providence, RI, where Citizens Bank is headquartered,the average temperature at T.F. Green Airport has been 74.8 degrees since June1st, which is the highest average temperature on record for thatperiod of time, and over 4 degrees hotter than the normal average.
The 12-state operational footprintof RBS/Citizens encompasses some of the most expensive electricity markets inthe United States. According to the latest data from the Energy Information Administration (EIA) , the average priceof electricity this April was just over $0.17 per KWH in the Northeast and justunder $0.16 in the Mid-Atlantic. The prices are approximately 45% and 35%more than the national average, respectively. Furthermore, peak prices forelectricity can be 30 to 40% higher than off-peak prices in some areas. Therefore, a 2% increase in energy costs due to a prolonged period of hotweather could pose a risk to the bottom line of a company with an energy budgetof tens of millions of dollars that keeps thousands of employees and millionsof customers cool during the summer months.
In both New York and New England,the organizations that manage the regional power grids (NYISO and ISO-NE)reported near record highs of demand for electricity earlier this month. On July 6th, as thermometers spiked above 100 degrees across theeast coast, AC units snapped on and electricity meters spun faster. Thatday, New England experienced the 4th highest demand for electricityin its history and New Yorkers came within a degree or two of their ownelectricity demand record. In short, the hotter the temperature, thecloser we push the power grid to its limits. In the near term, only bylowering the consumption of electricity at peak hours can we reduce the risk ofa wide spread power outage in the region.
In order to respond to thesedramatic changes in temperature and rising energy costs, RBS/Citizens hasundertaken a number of initiatives to reduce overall electric consumption.
- The company is developing a more advanced system to budget, track and projectenergy costs and consumption at individual properties in the U.S. Withthis improved data, internal decision makers can set more accurate internaltargets for energy consumption and costs and then benchmark their performanceagainst industry standards. In addition, RBS/Citizens analyzed how tooptimize the use of office space in order to consolidate the company'soperational footprint. This resulted in more effective use of officespace, a smaller energy budget and more cohesive and geographicallyconsolidated teams of employees.
- Since the majority of the bank's energy use is concentrated at its largerfacilities, energy audits have been conducted at seven of the largestfacilities, resulting in some 4.5 GWH of identified energy savings. In onefacility alone, we will be able to reduce our peak demand by more than 100kilowatts. This is the equivalent of removing two average-sized Citizensbank branches from the grid. We are now in the process of conducting sevenmore energy audits at critical facilities in order to continue that effort.
- In order to address the energy use of smaller facilities, we are working withregional property managers to conduct free energy efficiency audits at a numberof bank branches and smaller office buildings. In order to reduce the transactioncosts of doing a large number of smaller projects, RBS/Citizens is working todevelop and enhance partnerships with electric utilities, energy efficiencyauditors and building performance contractors. In the past few weeks, I'veidentified a number of programs offered by the utilities to provide free energyaudits for smaller commercial buildings in New York and Connecticut, reachedout the program managers and energy efficiency auditors and began supervisingenergy audits at these smaller properties.
Increasing energy costs have alwaysheld the attention of leaders of the company. It is also becoming clearthat addressing the challenges associated with these costs in an effectivemanner will require the company to make investments in energy efficiency. In aworld that is hot, costly and crowded, record breaking temperatures make thereturn on those investments look even better.
--By StuartDeCew, 2010 EDF Climate CorpsFellow at RBS/ Citizens Financial Group, Jointdegree MBA/MEM candidate at Yale School of Management and Yale School of Forestry , Yale University,Member of NetImpact
This is the second post by Stuart DeCew in a series ofblogs that In Good Company will host this summer incollaboration with EDF, featuring fellows from their 2010 Climate Corps class,as they journey through their internships. With their posts, these interns willgive us a rare lens into the behind-the-scenes operations at companies who areproactively discussing corporate sustainability, one conversation at atime.
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