PPL working to reduce demand, improve reliability
There aren't many companies whose business plans include convincing their customers to use less of their product.

Imagine the cashier at your local McDonald's trying to talk you out of super-sizing your value meal.

"Sir, you could really make do with the small fries."

But for PPL Utilities, reducing customers' consumption of electricity has become a major focus as the company heads toward a May 31, 2013, deadline to achieve a net 3 percent reduction in customers' energy usage.

"I think obviously we are in the business to make a profit, but the company has from its very foundations been focused on its customers … we're about customers," said Tom Stathos, director of customer programs and services. "And energy efficiency and conservation has been a big part of the PPL culture for as long as we have been around."

Just ask Kent Foster, plant manager at Amcor Rigid Plastics North America in Allentown. PPL worked with Amcor, through its Continuous Energy Improvement Program, to reduce energy consumption by 4.5 million kilowatt hours, saving the company more than $340,000.

It was a top-to-bottom reassessment, led by PPL, that included upgrading the plant's heating and cooling system and changing the way the company installs new equipment and handles idle production lines, he said. It even got workers involved with coming up with ideas for saving energy, he said.

"We have an energy suggestion link on our work-order system and everyone in the plant has access to it from their work areas," Foster said. "From employees' suggestions that they put in the database and the energy audits that were conducted last year an action item list was created. We have an energy team that meets monthly and the action items are updated and assigned to team members for completion."

PPL's focus on saving energy comes as the venerable Allentown utility completes two years of significant growth.

The company has acquired new customers in Kentucky by buying Louisville Gas and Electric and Kentucky Utilities and in Great Britain by adding Central Networks, a division of Eon. That has added a predictable revenue stream from markets where regulators closely control prices, unlike Pennsylvania's market-driven system.

The acquisitions have broadened PPL's portfolio, reducing the possibility that the company will be a takeover target. It's also added an element of predictability. PPL's parent company announced 2011 earnings of $1.44 billion in 2011.

"In our collection of businesses, the open market or merchant-generation business has proven over time to be very volatile in the way of earnings for the company," said David DiCampli, president of PPL Electric Utilities, the PPL subsidiary that handles power delivery. "As we saw our future earnings looking somewhat volatile, we made an important decision to increase the regulated assets in the portfolio. That provides more predictable cash flow and more predictable earnings."

Over the next few years, the company will focus on improving its transmission infrastructure, hiring an estimated 400 workers a year in Pennsylvania alone to replace retiring employees, and enhancing its storm response and customer-service operations, he said.

The company is expected to invest $300 million a year in transmission and distribution systems over the next decade as it replaces aging infrastructure, a 36 percent increase.

But on the local front, encouraging energy conservation and, in many cases paying its customers to cut back on their energy use, will be right at the top of the priority list.

"We are in the energy business, but we want to be responsible stewards of these resources, so as corny as it may sound, using energy efficiently is a responsibility we want to help our customers fulfill," Stathos said.

The utility has spent $246 million over the last four years through its energy efficiency and conservation program helping customers save energy.

The company has efficiency programs for residential, business, government and nonprofit sectors that range from something as simple as providing discounted compact fluorescent light bulbs at local hardware stores, to helping businesses develop full-blown conservation plans.

Lighting is a major area where PPL can help customers save energy, Stathos said.