Feature

Beating Natural Gas Prices

by Graham Parker

Natural Gas Prices Are On the Rise
Many apartment building laundry operations across the country are—or will be—facing significant price increases in natural gas for heating water and drying clothes. According to the Department of Energy, the nationwide demand for natural gas has risen almost 3 percent this year with wholesale prices rising even more. The average nationwide wholesale price for delivery of gas in July 2003 was two-and-a half times the price a year earlier.

According to Allen Greenspan, speaking of wholesale natural gas prices “…market expectations reflected in option prices imply a 25 percent probability that the peak price will exceed $7.50 per million Btu” (75 cents/therm). And, due to the lack of significant new supplies and storage capacity in North America, if we experience a normal-to-severe winter, wholesale prices could rise to as much as $2/therm.

On a retail-commercial level, many in the self-service laundry industry are now paying over $1/therm compared to about 60-75 cents/therm for natural gas less than a year ago. To counter this price increase, many owners/operators are either raising washer and dryer vend prices—by up to 25 percent—or reducing the amount of vend time per coin for dryers. However, neither of these strategies will help attract or retain customers and tenants.Whatstepscananowner/operator do to mitigate the impacts of energy price volatility and long-term increases short of raising vend prices? Consider switching to high-efficiency washers.

Efficient Washers
High-efficiency clothes washers (e.g. Energy Star labeled commercial washers) provide a cost-effective solution and immediate fuel savings, without necessitating vend price changes. These high- performance clothes washers use about 50 percent less energythanstandardtop-loading washers—mostly due to a reduced need for hot water. In addition, high-efficiency washers extract more moisture during the spin cycle, thus saving drying time and dryer energy use.

For example, based on independent field data taken in laundry rooms at a senior citizens community in Laguna Woods, CA,natural gas savings of nearly $60/year/machine could be realized by replacing standard top-loading clothes washers with high-performance clothes washers. This savings in natural gas cost would totally offset a price rise in natural gas rates from 75 cents/therm to $1.20/therm. Thus, efficient washers can substantially reduce the bottom-line financial impacts of sudden utility rate changes.

Additional Utility Savings
If these natural gas savings are combined with the additional water/sewer savings, total utility savings per commercial washer in the Laguna Woods example above would be nearly $160 per washer per year compared to standard top-loading machines. The above analysis does not factor in the additional savings in natural gas that may also be realized through reduced dryer energy use when using high-efficiency commercial washers. These additional savings are now under investigation and will only further improve your bottom line.

For a limited time, these large annual utilities’ savings may be complemented with publicly funded rebates such as the California LightWash program’s rebates of up to $450. When combining such rebates with utilities savings, the payback of the additional cost for a high performance clothes washer can easily be less than a year. That is a great investment return, and it will allow you to hold your vend rates flat where you might otherwise need to raise them.

The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the San Francisco Apartment Magazine. Graham Parker is a Senior Research Engineer at Battelle Memorial Institute. Many California utility customers may qualify for the limited-time rebate available from the LightWash program (866-307-9274) or visit www.lightwash.com for more information. Other related rebates in California may be found on the Web at www.consumerenergycenter.org or by contacting your local energy and water utilities. Copyright © 2003.