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CONFEDERATION FREEZERS |
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Confederation Freezers is one of the largest public refrigerated warehousing, cold storage and blast freezing companies in Southern Ontario. To keep its 19 million cubic feet of warehousing space cold – sometimes as low as - 40 ºC – requires significant amounts of electricity, and operating the plant’s refrigeration systems efficiently is critical. In this highly competitive business, the company’s biggest challenge since the electricity market opened in 2002 has been to develop a plan to deal with volatile spot market prices – costs that cannot be passed on to customers. Fred Leonenko, Chief Operating Engineer, at Confederation Freezers in Brampton, Ontario, says that as the market opened, the senior management team knew there would be new complexities and dynamics at play, and that to stay competitive they would need to understand the new rules of the game. Prior to May 2002, when the Government of Ontario opened the electricity market to competition, Fred’s job consisted of managing Confederation Freezers’ four warehousing facilities, ensuring the equipment was keeping customers’ frozen products at the right temperature for storage. However, overnight, his job description expanded. He had to start learning how the new electricity market worked, how electricity was priced, who sold it and how it was produced, so that he would be able to help his company to weather the price spikes that were having a significant impact on the bottom line. After teaching himself the basics, Fred contacted several electricity retailers for advice. “It was a bit like the Wild West out there, in the early days of retail contracts. I wanted someone who would partner with us, understand our business, recognize how competitive it is and recommend a solution that was tailored to our needs. I remember it being really confusing.” After careful consideration of its load profile – the amount of electricity used at certain times of the day and at specific times of the year – Confederation Freezers’ solution was to purchase a short-term retail contract. The fixed-price contract was designed to cover 60 per cent of Confederation’s electricity requirements. Fred reasoned that if the bulk of Confederation’s electricity needs were locked into a fixed-price contract – much like purchasing a fixed mortgage – the company would have peace of mind most of the time. For the remainder, he knew that as an engineer, he could keep costs down by ensuring his equipment ran as smoothly and as efficiently as possible. It was cost containment based on his philosophy of not being wasteful. “I couldn’t have made a decision about which retail contract was better than the next if I hadn’t done my homework first,” says Fred. “I needed to know how our business operated – when we used more electricity, when we used less. With that information in hand, I went to retailers to see if they had the type of contracts we needed. There is no way I would have been able to evaluate their offerings – whether simple or structured blocks of power – had I not become an informed consumer first.” Fred says Confederation Freezers is encouraged by the results of its decision to manage its electricity costs with retail contracts. “We didn’t go into this to save money. We signed these contracts so we would be able to forecast and plan better. I’m very happy with the results so far.” |
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