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Connected

Taking advantage of a January thaw, a team from Vermont Gas Systems taps into their transmission pipe to connect the first NG Advantage LLC compressor station in Milton, Vermont. Deliveries by truck of compressed natural gas to commercial and industrial customers located beyond the reach of natural gas pipelines is scheduled to begin before winter ends.

It's exciting (to vastly understate it) to see our new business get so real.

Related posts:

What Vermont Employers Are Telling Us (about the need for natural gas beyond the pipeline)

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What Vermont Employers Are Telling Us (about the need for natural gas beyond the pipeline)

"Every day we wait costs us $7,000!" the CEO emailed to my new company, NG Advantage. Turns out that trucking compressed natural gas (CNG) to his factory and using it to replace dirty #6 oil will reduce his fuel costs by almost half – more than two million dollars a year. His company spends as much on fuel as it does on raw materials. Some of his competitors are located on natural gas pipelines; they are undercutting him in the marketplace.

"My company is putting new machinery into facilities located on the pipeline," a CFO told us. Unless we can cut the amount we're paying for energy, no new investment is going into our Vermont plant. "When are you going to be able to start delivering?"

"Beginning of 2013," we told him. He wishes it were sooner; so do we.

"We'll pay back the cost of the burner upgrades in the first three months of using natural gas," the plant engineer said. "Our boiler people are all over it. This is something we need to do."

"Our hospital can save about one million a year, half our fuel bill. We were going to have to stop burning #6 oil anyway; it's too dirty."

"It's good to be able to save money and reduce pollutants. We don't think well have much trouble getting our Act 250 permit revised to allow us to reduce our emissions." Our prospects are looking at replacing oil products with much cleaner – and cheaper - natural gas.

"You have competition." The emergence of a competitor selling trucked natural gas from New Hampshire has made our job both easier and harder. When we were the only company planning to deliver this new product, prospects were more skeptical even though they were eager for the cost benefits. Now the question is more whom to buy from than whether to buy. Competition also reassures customers that they will pay reasonable prices and have options if one company doesn't give them good service. That's the way it should be.

"Food processing businesses want a Vermont seal, but they won't open new plants anywhere that doesn't have a supply of natural gas." That quote came from a Regional Development Council which has been bringing us together with their members and helping introduce them to the concept of natural gas.

"We need you to start service ASAP. Why are you beginning with a compressor station in Vermont where everything is hard to permit?" That's a good question. We are also looking at a compressor site in New Hampshire to better serve eastern Vermont, New Hampshire, and Maine. Adjacent territories provide backup for each other and better service for our customers.

One reason we started in Vermont is because we're Vermonters. Another reason is that our planned site in Milton, Vermont is the best place we could find from which to serve customers in Addison, Rutland, Lamoille, and Washington counties as well as adjacent New York State. Even though the pipeline will eventually come to Addison and probably Rutland and will then be the cheapest source of natural gas, businesses in those counties tell us that they need to do something about the high price and uncertain supply of oil products now.

Our CEO, Neale Lunderville, led the state's surprisingly speedy and effective recovery efforts from Tropical Storm Irene. We know that Vermonters, Vermont businesses, Vermont communities, and Vermont state government can move quickly in an emergency. If alternatives to oil for industrial use aren't delivered quickly, our economy will suffer much longer lasting damage than it did from Irene. New energy-dependent companies won't locate beyond the pipeline (which is most of Vermont). Companies which have a choice will shift investment and production to plants located on natural gas pipelines; other companies will simply be unable to compete and have to close. We have to move quickly.

That's what Vermont employers are telling us.

Related post:

Back to Business

Switchboard in the Cloud

Several decades and companies ago Solutions Inc. was on the 4th floor of Vermont National Bank building in Montpelier. We'd grown so we needed a switchboard that the receptionist (remember receptionists?) could use to route calls to support, sales, spouses who needed to pick up the kids, or whomever. The device we needed cost – I think - $6000 which was more money in 1984 than it is now. We didn't have it and the bank wouldn't lend it to us; they had a hard time evaluating our software as an asset. They weren't swayed by the argument that they could always repossess the switchboard since it was right there in their building.

No big deal. Some customer paid a big bill and we bought the thing and switched happily ever after – or at least until we grew some more and needed more lines and extensions.

Fast forward to 2012. Our new company NG Advantage LLC doesn't really have an office yet; that'll come when we have permits and a physical plant. We take calls on our cell phones as often as we do on our landline phones. We each want to have our own voice mail message; we need a dial by name directory; we need voicemail, obviously. Receptionists are a thing of the past and so is the person who reprograms the switchboard when you get a new employee. Sometimes I want my extension to ring wherever I am – like on my home phone or mobile phone; sometimes I want it to go right to voicemail – and I want an email with the content of every voicemail that I get.

So what does the switchboard cost that does all this? Don't know; don't have one. A switchboard is a kind of server and NG Advantage doesn't buy servers; we rent them in the cloud. For this application we use phone.com. This doesn't mean we did a full evaluation of all the alternatives; it means we googled; looked at a few websites; read some reviews; signed up for a free trial; and we're sold. There may be better alternatives we haven't tried; but phone.com so far does what we want.

For $14.88/month ($9.88 if paid annually) we get two incoming numbers (actually one would do). Even though we have only two numbers, we can handle an unlimited number of simultaneous calls! In the old days we would have needed to have enough physical lines from the phone company, each at about what this full service costs, for each simultaneous call we wanted to be able to handle.

We get an UNLIMITED number of virtual extensions. "What's a virtual extension?" you ask. It's something or somebody a caller might want to reach. "Sales" is a virtual extension; general voicemail is one; I'm an extension; Mary is one; so is each other real or virtual employee. We put our virtual extensions on business cards and in our email signatures and they're in the dial by name directory.

If you call NG Advantage and dial (dial?) my virtual extension, 502, the IP phone on my desk might ring; you might go right to voice mail; my cell phone or my home phone might ring. I can program this to fit where I'm working, put it on autopilot by time of day, or even make it depend on who's calling. (I could make this so complicated that I do nothing else but reprogram my virtual extension but I don't).

We can get more incoming numbers for $4.88/month if we want to have a virtual presence in more places. We get "free" IP phones to put on our desks for $4.88/month and can plug them in wherever we have IP. My phone rings whether I'm at home or plugged into an Ethernet port somewhere else. However, you can also buy and use your own IP phone by paying a one-time set-up fee of less than $10.

We get 300 minutes of free domestic outbound calling and pay $.049 for each extra minute. We don't sit around at our desks much and usually call from our cell phones so this doesn't matter much; other businesses are much more sensitive to the cost of outbound calling than we are and they can buy more bulk minutes or unlimited plans. We also get free conference calling.

Our business of trucking natural gas is capital intensive. We have to buy lots of expensive trailers and other equipment. But just BEING in business isn't nearly as capital intensive as it used to be. You don't have to go out and buy a bunch of servers (and pay people to keep them running); you don't need specialized servers like switchboards; you just rent what you need from the cloud and it grows with you.

Related posts:

A New Business Belongs in the Cloud

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Back to Business

Retirement's over; I've been working on a new business. That's why I haven't been blogging for a while; startups are all-consuming.

NG Advantage LLC delivers natural gas "beyond the pipeline." Starting in early 2013 we'll truck compressed natural gas (CNG) from a compressor site we plan to build in Milton, Vermont to commercial users within a two and a half hour driving radius (see service area in VT, NH, and NY below). Large users of fuel will save 30 to 40% or more of what they're paying now for oil and propane while reducing CO2 emissions by 26% and practically eliminating sulfur and nitrous oxide from their stacks. Businesses which are not on pipelines need these savings to compete with those who are served by pipeline gas. Energy intensive businesses also need protection against the global uncertainty in oil prices.

So, if the savings are so great and it's good for the environment as well, why don't businesses like NG Advantage already exist?

Good question and there's a good answer. Until 2008 the prices of natural gas and oil products moved pretty much in lock step. If one or the other got a little out of line, there were enough users that were dual fuel – primarily power plants – to switch and bring prices back to parity on a per BTU basis. But new technology has come into the gas fields: horizontal drilling and hydraulic fracturing (unfortunately called fracking). America's recoverable reserves are an order of magnitude larger than they were originally thought to be. Production is increasing rapidly.

This is disruptive innovation in the same sense that the Internet was: it changes all the rules in the energy business. It no longer makes economic sense to build a new nuclear or coal plant in the US; electric rates are remaining stable or going down because the marginal cost of electricity depends on natural gas prices. Energy-intensive businesses are being built in the US again. And it now makes economic sense to truck natural gas to major consumers who can't get it from a pipe.

The US benefits especially from natural gas because it is NOT easy to transport – it must be either liquefied or compressed and must be carried in special vehicles (although it is safer to transport than oil or propane because it is lighter than air). It was only practical to use natural gas directly from a pipeline; it is now practical to truck it short distances as well. But the market for natural gas –unlike oil - is more local than global because pipelines don't go under oceans. Europe is stretching for new supplies and increasingly dependent on Russia for natural gas. North America has an abundant supply – President Obama says 100 years' worth; so natural gas prices are much lower here than in Europe or Asia. Our reindustrialization benefits from this energy price disparity. So does our effort to reduce our dependence on foreign oil.

Fifteen years ago I founded ITXC, which became a big company and went public, because it was clear that the invention of the Internet would take most of the cost out of telephone calls and the big telephone companies – including AT&T where I then worked - were in no hurry to crater their revenues for the benefit of their customers. There was an opportunity for new companies looking for new customers and willing to offer radically lower prices to succeed. This is another such opportunity since existing oil companies won't be in a hurry to turn natural into a competitor beyond the pipeline. We won't be the only ones to take advantage of the opportunity, but it's important to be first or among the first

Unfortunately current trucking technology doesn't support the economics of serving residences or businesses which use less than 150,000 gallons of oil or propane annually or 100,000 gallons in a six month period. We may be able to move downscale some; others will need pipelines before they can take advantage of natural gas.

Vermont Gas Systems is planning an expansion southward of their line in northwestern Vermont; that's a good thing for those residences and businesses along the path of the expansion. Since it'll be several years before the expansion is built, NG Advantage will serve major businesses along the route until the pipeline gets to them. And we'll serve businesses in Vermont and parts of New York and New Hampshire which have no immediate prospect of pipeline connections. I'd be surprised, though, if we don't end up developing markets which will then be served by pipelines faster than they would have been otherwise. That's fine with us, a measure of success; we just move our trucks out further to new areas.

We're starting to hire so we are creating jobs. But many more jobs will be created and retained because energy-intensive businesses in rural areas, where many costs are low but the price of energy is high, will be able to compete in an irreversibly globalized economy. In Vermont both food processors and manufacturers fit that definition.

Anyway, it's good to be back in the private sector. I'll blog when I can, not just about natural gas but also about how starting a business now is the same and how it is different than it was 15 years ago – not to mention lessons learned.

Related posts (while I was talking myself into doing this):

Natural Gas Disrupts the Energy Industry

The Pickens Plan Bill: The Wrong Way to Get the Right Result

Ending Tax Giveaways Isn't Raising Taxes

Good and Bad News about the Safety of Natural Gas Fracking

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