A group of 105 school districts in central Ohio has saved more than $2 million over the last three years by buying natural gas from an independent marketer here rather than from local utilities.
A giant Honda auto assembly plant at Marysville, Ohio, reports lowering its energy costs by more than $1 million a year by purchasing gas in the same manner.
And by turning to the same source, an Indiana glassware manufacturer saved more than $1 million in the first year of a similar arrangement and avoided laying off 400 workers, and possibly shutting down its plant.
Across the country, in 28 states from coast to coast, a total of 3,500 facilities are achieving savings of 5 to 25 percent by contracting for their energy supplies with Access Energy Corp., the nation`s leading independent natural gas marketer headquartered in this suburb north of Columbus.
One of about 200 such companies spawned by the Carter administration`s 1978 Natural Gas Policy Act, the company offers an impressive example of what deregulation has accomplished in an industry long plagued by restrictive federal rules that stifled free market forces.
It also demonstrates how a small entrepreneur can create a niche for his talents by catering to smaller enterprises that might otherwise be lost in the shuffle to accommodate larger-volume users of a commodity.
And that niche was achieved by the company`s pioneering efforts in persuading state and federal regulators to permit suppliers to transport natural gas directly to consumers by using the existing facilities of interstate pipelines and local utilities.
Founded in 1982, its customers range from the 445 parishes of the Catholic Archdiocese of Chicago to major manufacturers such as steel companies and auto makers. The schools and churches of the archdiocese have been saving 15 to 20 percent on energy bills as a result, a spokesman said.
Fast food chains, large condominium and office complexes, pulp and paper mills, university campuses, hospitals, local governmental buildings and prisons also are numbered among its clients.
Only individual, private residences are not served by the independent marketer.
However, 10 local natural gas utilities around the country on occasion buy fuel from the company. Even a major energy producer like British Petroleum, which is among Access Energy`s roster of 250 gas suppliers, also doubles as a client.
British Petroleum, through a building management company, has been heating its Cleveland high rise headquarters with Access Energy gas for a year and a half.
And all this has come to pass because Lance W. Schneier, a Columbus lawyer specializing in energy clients, decided that groups of smaller natural gas users could cash in on lower energy costs by banding together.
At first, Schneier`s customers were larger, industrial users in search of the bargains to be gleaned under deregulation. However, along the way, the now 38-year-old attorney developed the concept of forming ”partnerships” with groups of gas purchasers under which his firm not only provides companies with gas supplies, but also furnishes advice on how to best manage their energy programs.
”Those guys are doing a lot of creative stuff,” said Peter Esposito, a Washington, D.C., attorney whose firm represents an ad hoc group of about 20 of the more than 200 independent gas marketers that have emerged in the U.S. since deregulation. ”They`re often ahead of the pack.”
That view was shared by Susan Insley, corporate vice president for Honda of America Manufacturing, Inc., whose Marysville, Ohio, auto assembly plant started buying gas from Schneier`s firm in 1985.
Access Energy, she said, meets Honda`s criteria in selecting reliable suppliers.
”We look at that as not unlike a marriage, a partnership, a long-term relationship,” Insley said.
”Access Energy provides us with assistance in looking at the market and helping us understand it. It provides us with steady supplies of natural gas at a reasonable price.”
Access Energy gained one of its largest customers when it won five-year agreements to supply all four of Honda`s plants in the United States at savings that now average about 20 percent annually.
It scored a similar success on a smaller scale when it became the prime supplier to the Metropolitan Education Council, a group of 105 Central Ohio school districts formed in the early 1970s to obtain better prices through cooperative purchasing.
Prior to their affiliation, the districts bought gas individually from a local utility.
During the gas shortages of the 1970s, some districts were forced to close their doors when some producers found that it cost more to bring the fuel to market than they could earn under the then-regulated prices.
Contractual arrangements with customers range from a monthly basis to as long as five years. And they are structured so that ”sometimes we advise a customer not to buy our gas at certain times when they can buy it for less from a utility,” said Scott W. Gebhardt, Access Energy`s chief operating officer for gas marketing and transportation.
In 1982, Schneier formed a fledgling company called Yankee Resources, Inc., to market locally produced gas to Ohio industries that were locked into periodic price increases under long-term contracts with utilities.
In February, 1988, Schneier and a group of nine other top managers took the company private in a management buyout from its parent company, Yankee Companies, Inc., a Boston, Mass.-based natural gas producer and drilling syndicator. They renamed the firm Access Energy.
Today, Access Energy has grown from six customers serviced by Schneier and a secretary to a firm with 65 employees, offices here and in Chicago and Houston, Tex., and a total of 3,500 customers. The company also exports some gas to Canada.
Because the company is privately held, its earnings are regarded as proprietary. However, revenues have been growing at an average of 30 percent annually, and the volume of gas it sells at an average of 60 percent.
The Natural Gas Policy Act of 1978 provided for gradual price deregulation to promote greater gas production. By the time Schneier opened the firm, increased exploration had created a surplus, he recalled.
”We could buy gas and arrange for its transportation, often for 20 percent less than the utilities were charging,” Schneier said. ”The change
(in the industry) had started because there wasn`t enough gas; now there was too much.”
Thus, Schneier`s company became the first in the U.S. to employ the concept of transporting its own gas through pipelines and distribution networks owned by other companies ”as a sole business venture,” he said.
”We also were the first to do it on a national level by 1983,” he added.
