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Greening your building toward the bottom line

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On May 16 the California Commercial Real Estate Energy Symposium was held in Sacramento to discuss California's energy market outlook, regulatory issues and opportunities for the California real estate industry to take an active role in reducing California's energy use to save money, protect the environment, enhance our economy and promote energy security.

California is still vulnerable to rising prices and disrupted energy supplies, both of which would have a tremendous impact on the state's economy and tenants that occupy the thousands of commercial properties throughout the state. Because of this threat, the California Business Properties Association (CBPA), National Association of Industrial and Office Properties (NAIOP), International Council of Shopping Centers (ICSC), Building Owners and Managers Association (BOMA) and the Institute for Real Estate Management (IREM) organized the California Commercial Real Estate Energy Symposium to educate the commercial real estate industry about new opportunities to ensure that reliable, affordable energy is available to support the economic viability of California.

"Our industry understands that it can play a major role in keeping the lights on in California by learning how our properties can become more energy efficient in a cost-effective way," commented Rex S. Hime, president and CEO of the California Business Properties Association. "By educating our members about how they can become more energy efficient as part of this call to action, we hope to assist Governor Schwarzenegger in reaching his goal of voluntarily reducing energy consumption over time in privately-owned buildings by an average of 20 percent."

Why is energy efficiency worth it to you?

Energy represents the single largest and most controllable operating expense for office building, representing approximately 1/3 of variable expenses. According to Brenna Walraven, executive director of the USAA Real Estate Co., the commercial office building industry spends approximately $24 billion in energy costs annually.

There are significant financial benefits for ratepayers that take the initiative to implement no risk energy efficiency building improvements. According to Flex Your Power, California's statewide energy efficiency marketing and outreach campaign, a 30 percent reduction in energy consumption can lower operating costs by $25,000 per year for every 50,000 square feet of office space. These energy savings can directly affect the bottom line, allow for longer-lived systems and create a green or sustainable reputation to be noticed by investors and tenants.

Gene Rodrigues, director of energy efficiency for Southern California Edison Co., noted that the projected total resources savings to ratepayers from avoided utility generation and electric power and natural gas purchases, transmission and distribution costs are over $5.4 billion over the life of SCE's 2006-2008 Energy Efficiency measures. With total costs, including customers' out-of-pocket expenditures for energy efficiency measures/equipment, estimated at $2.7 billion, the total investment in energy efficiency during 2006-2008 is projected to produce $2.8 billion in net resource benefits.

In California, commercial office buildings use 28 percent of the state's electricity, consuming nearly 23 million megawatt-hours (MWh) of electricity each year. By implementing strategic energy management programs, it is estimated that approximately 9,000 megawatts (MV) of energy have been saved over the past 25 years, which is the equivalent to the output of 18 giant 500 MW power plants. The utilities project new ratepayer investment in energy efficiency programs will be capable of avoiding three giant 500 MW power plants over the next three years.

Make the commitment to TAKE ACTION NOW

A number of resources currently exist that will help your company take the first steps towards implementing energy efficiency programs, including Flex Your Power, the U.S. Environmental Protection Agency and BOMA's Energy Efficiency Programs.

First and foremost, your company's executive leadership must make a commitment to develop and implement an energy management plan. CBPA, NAIOP, BOMA CAL, ICSC and IREM are asking their members to TAKE ACTION NOW and be part of the solution by signing Flex Your Power's California Energy Pledge (www.fypower.org). The pledge emphasizes our industry's voluntary commitment toward ensuring reliable, affordable energy to support the economic health of California. Some prominent commercial real estate property owners and management firms that have already signed the pledge include: Douglas, Emmett and Co., Equity Office, Lowe Enterprises, PM Realty Group, The Irvine Co., Thomas Properties Group and USAA Realty.

The voluntary U.S. Environmental Protection Agency Energy Star Program (www.energystar.gov) is another tremendous resource that will provide your company with necessary tools and resources. One specific program that received high praise at the May 16 symposium is the EPA's Energy Performance Rating benchmarking tool, which provides companies with a straightforward method for measuring, tracking and quantifying a building's energy performance.

Lastly, BOMA's Energy Efficiency Program (BEEP) is a series of six Web-assisted audio seminars that teaches commercial real estate professionals how to reduce energy consumption and costs with proven no- and low-cost strategies for optimizing equipment, people and practices. For more information on this program visit: www.boma.org/aboutboma/BEEP.

Honored 2005 Flex Your Power Award winners

Annual Flex Your Power Award winners honored at the California Commercial Real Estate Energy Symposium were CalPERS, Davis Energy Group, Del Monte Foods, El Dorado Irrigation District, Fetzer Vineyards, Lawrence Berkeley National Laboratory and Grimmway Farms and Winesecrets. Peers explained how their businesses and employees are profiting from both common sense and innovative approaches to energy efficiency.

Curtin is the manager of legislative affairs for the National Association of Industrial and Office Properties San Diego Chapter. This article contains research from Flex Your Power, USAA Realty Company, the Southern California Edison Company and Pacific Gas & Electric Company.

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