operate on Energy from Central Sou F E A T u R E

Thermal Ventures Pursues Growth Plans in , Pittsburgh, Youngstown

our years after its establishment by Under a standard business plan that is ''In each of our markets, our expan­ industry veteran Carl E. Avers and applied to all of the systems, the company sions are driven largely by the opportunities F partner Lewis Mahoney, Thermal focuses on modernization and expansion. that already exist," observes Avers. "Some Ventures Inc., based in Youngstown, Ohio, building operators are more aware than is aggressively expanding its district energy others about the bans on the R-11 and R-12 systems in three U.S. cities. " ... we 're keeping busy refrigerants, but we believe awareness is Avers, who led United Thermal En­ growing. And owners of new buildings or ergy Corp.' s purchase and expansion of six with our expansion ones that have old chillers or boilers are systems before leaving as the company's programs simply by receptive to the lower-cost alternative dis­ chairman in 1990, has quickly picked up trict energy provides. where he left off. Founded in 1990, Thermal extending service to "So we're keeping busy with our ex­ Ventures now operates steam district heat­ existing markets. pansion programs simply by extending ser­ ing systems in San Francisco, Calif., Pitts­ vice to existing markets. After acquiring burgh, Pa., and Youngstown, Ohio, as well After acquiring three three systems in as many years, our near­ as a district cooling system in Pittsburgh. systems in as many term focus is expansion of these existing Expansion plans are under way in all systems." three cities. In Youngstown, expansion plans years, our near-term Thermal Ventures' other priorities in­ include a new district cooling service. focus is expansion clude: • Improving thermal efficiencies. In all About Thermal Ventures of these existing three systems acquired to date, costs Thermal Ventures was formed in 1990 systems." were reduced by improving operational to do what Avers and Mahoney had done procedures. best at United Thermal - acquire, operate and improve district energy systems. "By 1988, United Thermal had essen­ ~ally gotten out of the business of acquiring Thermal Ventures At a Glance district heating and cooling systems," Avers recalls. Annual Revenue $21 Million "We thought there was still a lot more Assets $24Million to be done in that area so we formed a new Locations San Francisco, Pittsburgh, Youngstown company that had the technical, financial Regulation State public utility commissions and management capability to acquire and Customers 268 grow systems." Employees 60 Thermal Ventures is the general part­ Cooling Capadty 11,000tons ner of all three of the operating utilities it Heating Capadty 1,050 Mlbs per hour owns and operates. Ownership Privately held company

10 District Energy San Francisco Thermal's customers include some of San Francisco's most recognizable buildings.

Our district steam system 1. Bank of America 8. Standard Oil Buildings and the area It serves 2. Citicorp Building (3 locations) 3. Crocker Center 9. Transamerica Building > Existing service area 4. Equitable Life Building 10. 100 Pine Street Center 5. Hilton Hotel 11. Westin St. Francis > Proposed service area 6. McKesson Plaza Building 12. Mark Hopkins 7. Merldlen Hotel

Courtesy of San Francisco Thermal

• Adding district cooling service where about the projects that are under way to San Francisco it does not exist. While capital costs for improve the reliability of their energy­ Among Thermal Ventures' three loca­ new systems are high, a customer base delivery systems. tions, San Francisco offers the most growth that is accustomed to the benefits of potential. The 11-mile piping network that district heating generally appreciates now serves the city has penetrated only the benefits of district cooling. So mar­ approximately 25 percent of the market for keting costs, generally, are relatively district heating, Avers estimates. low. The [San Francisco] Steam system sales have grown at an • Operating with entrepreneurial style. system is in the process of average annual rate of approximately 6 per­ Local system managers - and plant cent per year since 1983. Thermal Ventures employees - are encouraged to act adding nine buildings acquired the system in 1993 from Pacific like owners. This gets all employees owned by the City and Gas & Electric Co., but had provided mar­ involved in carrying out the business keting and engineering services for a year plan. County of San Francisco and a half before the acquisition. • Strong customer communication pro­ and three individual "We see our growth rate accelerating grams. Customers are frequently asked as we get the message out about the eco­ to communicate their candid positive hotels through new nomics of district heating," explains Rich and negative feelings about the sys­ pipeline extensions. Mayer, president of San Francisco Ther­ tems that provide energy to them. This mal, which serves 27 million square feet of helps target capital improvement dol­ building space. lars in the way that maximizes benefits Among the buildings served by San for customers. It also identifies weak­ Francisco Thermal are several major hotels nesses and opportunities for new busi­ that use steam for heating, domestic hot ness. Customers also are kept informed

Fourth Quarter 1994 11 water and absorption air-conditioning. three-mile pipeline route. That covers ap­ "Our section of Pittsburgh has enjoyed The system is in the process of adding proximately 4,272,400 square feet of build­ substantial building activity in recent years, nine buildings owned by the City and County ing space. so many of our customers have grown with of San Francisco and three individual hotels Expansion in Pittsburgh has occurred us," says Jim Cummings, president of Pitts­ through new pipeline extensions. primarily through the extension of service burgh Thermal. to new areas. Since taking over manage­ The Carnegie Institute, for example, Pittsburgh ment of the Pittsburgh system from Equi­ opened the Carnegie Science Center in 1991 Located on the north side of down­ table Gas Energy Co. in 1990, Thermal and the Andy Warhol Museum in 1993. town, Pittsburgh Thermal' s 11,000-ton cool­ Ventures has expanded to two new areas. Both new buildings are Pittsburgh Thermal ing system and companion steam district One is served with a satellite plant, and the customers. Similarly, Allegheny Commu­ heating system serve approximately 80 per­ other is served through a $2 million pipe nity College is adding the district heating cent of the buildings located along their extension from the main plant. and cooling services to a new building un­ der construction and to two old buildings where boilers and room air conditioners are being phased out. San Francisco Thermal - Major New Customers

Added prior to: 1986 "The customer support Bank of America World Headquarters Building Crocker Center for our cooling service Hilton Hotel has been strong. Many of Equitable Life Building McKesson Plaza Building them need to replace their Standard Oil Buildings (3 locations) chillers over the next few Citicorp Building Meridien Hotel years, so there's an Pacific I Building interest in jointly solving Central Tower Building Mandarin Hotel the problem with district Added during: cooling instead of investing in new chillers." 1986 Warfield Building* 1987 Pacific Telephone * Clift Hotel * Emporium - Capwell * Milton Meyer & Co. Pittsburgh Thermal' s plant was built in Trinity Properties* the early 1960s, and had not been expanded 1988 Service Employees * since 1974. A satellite plant was installed in University Club * 1991, and the pipeline extension was com­ Central YMCA * pleted in 1994. 1989 Milton Meyer & Co. * With the approval of new tariffs by the Pacific Hospitality * Pennsylvania Public Utilities Commission 1990 Arcon,Inc. and with full customer support, Pittsburgh Ritz-Carlton Hotel Thermal is now initiating major efficiency Moscone Convention Center improvements. These include installation 1991 The * of boiler economizers, a free cooling cycle, 1992 The Metropolitan Club * in-plant cogeneration and a system water The Westin St. Francis Hotel* well. 1993 Center for the Arts Sir Francis Drake Hotel * Youngstown 1994 New City Library The Youngstown steam system serves Bedford Hotel * 55 buildings in the city's central business Bellevue Hotel * district, as well as nearby Youngstown State Grand Hyatt Hotel * University and Southside Medical Center. *Buildings that have convertedfrom natural gas boilers to San Francisco Thermal' s All together, the system serves about Steam System. 5,859,000 square feet of building space.

12 District Energy Since Youngstown Thermal has imple­ Avers, while with United Thermal's prede­ The growing interest in district energy mented much of Thermal Ventures' busi­ cessor, began buying and operating steam in Thermal Ventures' communities indi­ ness plan in the past, the company is now systems. Many other companies did so, too, cates that the message is getting across. In concentrating on the development of a dis- during the 1980s. addition to energy efficiency, increased trict cooling system. . "Before that, the electric utilities, who emphasis on environmental protection has Its first cooling customer, a two-story had been the primary operators of district given building owners and government of­ building being renovated to house a busi­ heating and cooling systems, were putting ficials another reason to explore district ness incubator, will be served beginning in them out of business or just letting them go heating and cooling. April 1995. Several other customers will without investing in them," Avers recalls. 'The key is that community leaders are join the system in early 1995. 'The industry was floundering and, as a realizing what district energy can do for 'The customer support for our cooling result, so was the industry's association. their central business districts," maintains service has been strong," reports Jim Mullen, "But once it became evident that these Avers. 'The cost and convenience advan­ Youngstown Thermal president. "Many of systems could be made to work- profit­ tages we bring to the table result in more them need to replace their chillers over the ably - commercial steam district heating downtown activity and more jobs. next few years, so there's an interest in started to grow again and district cooling "When you add to all that the fact that jointly solving the problem with district did as well. Even the utilities themselves we can now help building managers get rid cooling instead of investing in new chillers. began treating these systems as ongoing of their CFC problems, you can see why "Although the steam business here is businesses." district energy providers have a golden op­ mature, we pick up a building here and a Now, Avers says, the industry's future portunity right now to grow.". building there, and we've been able to in­ rests in large part on how well it capitalizes crease our scope beyond downtown." on its own successes. Major new steam customers include a He cites St. Paul, Minn., and new jail erected on the fringe of downtown Jamestown,N.Y.,ascommunitiesthathave and a homeless shelter just outside down­ excelled in using district energy as eco­ town. nomic development tools. "As an industry, Youngstown Thermal system is pri­ we need to highlight their stories." marily a coal-fired system. The plant can also bum oil and natural gas, and has experi­ mented with using wood waste as a low­ cost fuel. This makes the Youngstown plant different from those in San Francisco and Pittsburgh, which primarily use natural gas but can run on oil.

"The key is that community leaders are realizing what district energy can do for their central business districts. The Industry leader in the manufacture of metal The cost and convenience advantages we bring to EXPANSION JOINTS the table result in more seeks downtown activity and MANUFACTURER'S REPS more jobs." to establish clients in the District Heating Industry. Send resume and letter outlining capabilities to:

SENIOR FLEXONICS, INC. 2400 Longhorn Industrial Dr. The Future of District Energy New Braunfels, TX 78130 Looking back, Avers considers the Attn: Mr. Bob Gravis 1980s to have been a renaissance for the (800) 847-5746. district energy industry. It was then that

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