How Did This 40-Year-Old Building In Houston Cut Its Electric Bill in Half?

This post is sponsored by Constellation.

Built in the 1970s, Pennzoil Place is a dramatic part of the Houston skyline. It's definitely unusual. Picture two 36-story angular towers, spaced 10 feet apart, joined together on the ground floor by a soaring 115-foot-high atrium filled with shops and eateries.

Keeping the lights on and the air-conditioning running in this 1975 classic eventually became very expensive. In 2009, the building owners, Metropolis Investment Holdings (along with Transwestern, Pennzoil Place's property-management company), realized they had to lower operating costs if they were going to stay competitive with newer office buildings in the Houston area. First, they got the building LEED Gold certified - no easy feat for a structure almost 40 years old. Then Pennzoil Place called in Constellation to help with the effort.

We recently asked Roger Vasquez, director of engineering and property management at Transwestern, to explain how the property was able to cut its electric bill in half.

This conversation has been edited for length.

Business Insider: How long have you been at Pennzoil Place and what's your role?

Roger Vasquez: I've been here for five years. April was my anniversary. I oversee all operations and capital improvements for the building.

BI: Tell us about the history and background of Pennzoil Place.

RV: The building is all glass and aluminum, and it doesn't have a traditional roofing system - both tower roofs are sloped. We have offices on the North Tower that are right under that slope. It's sort of like an aquarium. Glass-and-aluminum buildings have unique challenges, because Houston gets very hot. Houston can also get cold at night, and glass isn't the best insulator. In the end, our building doesn't have a thermally efficient design because it was built in the 1970s when power was cheap, and Texas was the energy capital of the world.

BI: What were your goals for Pennzoil Place?

RV: To save money. We needed to make the building fall in line with the others in its class, as far as operating costs. And we wanted to get LEED certified, because that shows that you care about these things, and that you're energy-efficient.

BI: How did you start working with Constellation?

RV: Houston has a restructured energy market. It's very competitive, but we went with Constellation because they had a genuine interest in working with us on an energy strategy that fit. We spend millions on electricity, so we don't make those decisions based on emotion. Constellation had a lot of options, too, like letting us segment our purchases into 25% increments. We ended up locking in some of our rate for a set contract period, and paying the rest at a floating rate. After a while, we started buying gas from them as well.

BI: Aside from building upgrades, how else did you save?

RV: We participate in programs such as Constellation Peak Response and Price Response to cut back on electricity use when demand is high. We also have modern digital equipment that lets us be precise and flexible, so we can reduce consumption when we need to. But it's kind of rare for an office building to get involved in these kinds of programs, because they think they can't do it. They worry about tenants getting upset. But with Constellation, we found more ways to shed non-essential load. Also, our tenants know we're looking out for their best interests.

BI: Your building upgrades must have been expensive. Are they cost-effective?

RV: Definitely. Major companies have told us they won't have offices in our space unless we're LEED certified, so we attract tenants with our upgrades. Also, the upgrades pay for themselves through savings. When I took over the building in 2009, I saw the electricity bill for the year before. In round numbers, it was something like $4.3 million. I finished last year with a bill of $2.1 million. We made these changes because we want to be competitive. Say our rent is the same as another one down the block. If it's cheaper for someone to operate in our building, then we're competitive.

BI: Was there any one thing that cut your bill in half?

RV: I'd say being more strategic about purchasing energy and finding ways to manage it helped the most. Replacing the older equipment made us more flexible and efficient. We replaced our lighting system. And to do that, we had to take out the old bulbs and ballasts. We must have touched 25,000 lights. We also put in more efficient chillers for our air-conditioning and digital controls. But I'd add that participating in the Constellation load response programs - along with grid and utility-operated programs - are revenue streams for us. All in all, we've saved $5 million since 2008. And that's a pretty important number.

Watch this video to see Roger Vasquez explain more about how Pennzoil Place cut its energy costs:

Get more information on Constellation's website.

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