SALISBURY, N.C. -- Food Lion here plans to expand the use of store-level electricity generators next year to take advantage of electric rates one-third lower than normal.
The generators, which kick in when the retailer's electricity supplier takes a store off its power grid, are already in use at three Food Lion stores in North Carolina.
"On average we have saved $30,000 to $40,000 annually per store from having a generator," said Jerry Copeland, research development and energy manager at Food Lion. "These savings essentially pay for the generators."
A utility company can take a retailer off the power grid when its system is overloaded. The utility does this by sending a radio frequency signal to the retailer's generator. When this occurs, the energy rate changes to what is known as an interruptable rate, which is lower than the normal rate.
The three generators at Food Lion stores are five, three and one years old, respectively. They are powered by diesel engines and are located behind the store. Food Lion will explore the use of natural gas generators in the future.
"Our payback on generators is four to five years, and after that we really benefit," Copeland said. "We're already seeing results on the one generator that is five years old."
Uncertainty about the impact of energy deregulation has many retailers looking for ways to cut costs in this area. Energy costs are traditionally a retailer's second-highest operations expense after labor.