Can the “Negawatt Box” Help you Out-Screw Your Power Company?

by Travis Johnson, Stock Gumshoe | January 19, 2010 4:27 pm

OK, the mighty masses of the Gumshoe faithful have made it very clear: they want to know what the heck a “Negawatt Box” is, and whether we can profit from the company that makes them.

Here’s what the ad says, from Jeff Siegel[1] and the folks at Alternative Energy Speculator[2]:

“Reduce your monthly energy bill by 44%…

“Have the opportunity to double — even triple — your money within the next 12 months…

“And, finally, stick it to your energy company—once and for all.

“FULL DISCLOSURE: We’ve saved thousands using this new device in our office.

“The company that makes this revolutionary energy-saving device currently trades about 50 cents. That changes today.”

The ad goes on to say that this publisher, which if they’re like most of the Agora[3] offspring runs out of a restored mansion in downtown Baltimore, was able to cut their electric bill by 44% in three months, using this “Negawatt Box” that was installed by their friendly neighborhood electrician.

Here’s how they pitch it:

“This past summer, when Joe showed up at our midtown Baltimore office to fix our broken air handler, my colleagues and I paid little attention. We just wanted the AC back on. Frankly, I was getting tired of wiping the sweat off my brow every few minutes.

“Little did I know then that by the time he would leave, we’d have a new energy bill-busting device that would ultimately end up saving my office hundreds — every month.

“And more importantly, we’d have a lead on the tiny publicly-traded company that makes it.

“You see, after doing a bit of digging, I found that this simple “Negawatt Box” isn’t something you can pick up just anywhere. In fact, this thing is completely controlled and distributed by a single company. And there’s ZERO competition.

“Now here’s the best part…

“Thanks to Congressional bill H.R 6, the U.S. Government is going to pay up to $2,000 to households and businesses just to try out this new ‘negawatt’ technology.

“But wait, it gets even better…

“Every time the government ponies up $2,000 to try this technology, the company makes $6,600!”

So what are we talking about here?

Well, they do go on to make clear that yes, “Negawatt” technology is just conservation — and some of the teasing in the letter seems to be more broadly about this general move to conserve energy as the “fifth fuel.” This is pretty widely accepted, there is still a lot of fairly low hanging fruit in energy efficiency, and investments in efficiency are likely to do more for the environment (and your electric bill) in the near future than putting a windmill in your yard or solar[4] panels on your roof. Not to say you can’t do both, of course.

But they also make quite clear that there is this magical box that can be installed at your home or business, which can cut your electric bill by roughly 25% … here’s how they describe it:

“And, while America has increased its energy efficiency 46% since 1975, that’s frankly a dull story.

“Not to mention, there’s no money in it. Not the way it’s been done to date…

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“But this one company is changing all that.

“No longer will Negawatts come from turning off lights… shutting down unused power strips… or upgrading old appliances to Energy Star versions. And no longer will the savings come together piecemeal, a millionth of a percent at a time.

“Instead… with this new technology… Negawatts come without users having to change their behavior at all. No more guilt from leaving the back porch light on.

“And the savings are so colossal, soon no one will be able to afford not having one.

“Here’s how it works:

“Most modern appliances don’t use energy in a fluid stream. Instead, they ‘pulse’ their use.

“By aligning this pulse use across every appliance, this company’s box is able to greatly reduce the energy needed to run them.

“Meanwhile, when energy flows in between pulses, this box stores it for later use — again, reducing the electricity you need to draw.

“Simple, right? Actually, while the concept is simple, the behind-the-scenes technology is quite difficult. That’s why this company doesn’t have competitors — and likely won’t for a long time.

“It’s easy to see why we expect short-term gains of 144%. In fact, you may think we’re underplaying the potential of this company — and I’m inclined to agree with you.”

And they go on to include several testimonials from other people who’ve also cut their electric bills:

“Forrest S. of Ellicott City, Maryland, had this to say: ‘Last month I saved almost 25% off my electric bill… this month I have saved just over 20%… My (negawatt box) should pay for itself in four months at the current rate of savings. Thank you so much for this wonderful invention.’

“John T., an electrician in San Diego was also impressed: ‘I tested everything with a motor load in my house. I was astonished at the significant reduction in amperage.’

“You’ll hear a similar tale from Robert M. of Bluffton, South Carolina: ‘I am achieving well over the projected savings of 25% and I am confident this will continue into the future.'”

OK, so we have the basic description of what this thing does, a long list of testimonials from people who have apparently used this device, and the knowledge that it’s a tiny 50-cent stock. So who is it?

Well, I’ll admit that I’m quite reluctant to mention the name of the stock here, since the stock is teensy and gives me the heebie jeebies, but I’m pretty sure we’re looking for Power-Save Energy Company (PWSV, trades over the counter and is absolutely tiny, market cap of about $15 million).

The stock was at 50 cents yesterday, though what we might presume is this new attention from Alternative Energy Speculator sent it up well over 60 cents during the day. With a tiny market cap like this, the stock could go pretty much anywhere that investors want to send it with just a little push. They sell a couple version of what I think must be this fabled “Negawatt Box” for residential and commercial use, but it basically sounds like what they’re selling is a variable capacitor.

This is a good opportunity for me to mention that I’m definitely not an electrical engineer, and once we get into amps and watts I start flashing back to High School physics — which was the last time that it mattered that I couldn’t understand amps and watts.

But this is not, if my reading is correct, a particularly revolutionary device — similar tools have been used to control the energy use of big industrial motors for some time, and from what I understand newer Energy Star appliances probably wouldn’t even benefit from this kind of control of your home’s power supply. This is not a smart grid device, it doesn’t communicate with anyone or turn down your air conditioner a bit during peak hours (though such devices do exist and could also be considered “negawatt” creators, and they do help significantly — they’re mostly made by big firms like Honeywell), it just tries to manage the inductive demand on the power supply by your electric motors, storing some power in the capacitors for when it’s needed by your air conditioning compressor or your refrigerator motor.

I really hope that last sentence made sense.

So … the way I read this company’s products — they call them the Power-Save 1200 (residential), 3200 and 3400 (commercial) — they are similar to products that factories might use to reduce their power usage from heavy machinery, and they are probably most useful in homes where there are a lot of old appliances that don’t have capacitors, and where there aren’t a lot of new Energy-Star-level appliances with other energy-management or efficiency doodads built in. Yes, I said “doodads,” just to reinforce the fact that you shouldn’t be listening to me about any of this technical stuff.

But the quotes that this teaser ad used seem to all be from the testimonials that Power-Save uses to sell their product, and the company otherwise matches, so I’m guessing these are our guys.

Unfortunately, what I see when I look at the Power-Save website is … good marketers. Maybe that’s why the Alternative Energy Speculator folks were drawn to them, perhaps they use some of the same copywriters. This firm is a direct-to-homeowner marketer of these products, though they also use distributors (perhaps like their electrician friend Joe), and I imagine the ad is telling the truth about the change in their electric bills. If they’re in an old mansion with 15-year-old air conditioning compressors and old office refrigerators, or running big ‘ol electric printing presses, perhaps the change is even due largely to this device, there’s certainly no way for me to know.

But this company has been around the block before — there was a similarly named Power-save Energy Corp. that was run by the same guy, Michael Forster (yes, Corp instead of Company), and the old Power-Save Corp (then traded OTC as well, under the ticker PWVG) seems to have sold a very similar device called the KVAR Energy Controller, which is still also sold by other companies (with the same 1200 designation) — they were apparently more focused on direct TV ads then, (ie, infomercials) but now are enjoying the lower cost world of internet advertising. I don’t know what happened to the original Power-Save company, but I’m imagining that the shareholders didn’t enjoy spectacular gains when the stock disappeared. Forster himself just filed to sell some shares of PWSV, though you can read that as you like — his official salary is $60,000, so I assume most of the management team, which includes another Forster who I assume is related, gets compensated in stock

Power-Save, by the way, is focused particularly right now on also selling solar power photovoltaic systems, so they do have a way to match folks up with federal renewable energy[5] credits, which at least gets us a toehold on some truth behind the $2,000 tax credit part of the tease. I don’t know how they get to the $6,600 bit, which is one reason why I’m hopeful that I’m wrong and this isn’t the company they’re teasing. The direct-to-homeowner version of this box is about $300, I don’t know how much the commercial ones cost but I’d imagine that the $6,600 would also involve something more dramatic — a solar installation could easily cost that much or far more, for example.

And as far as I can tell, they don’t own any patents and this is not necessarily a unique product (that’s just from a quick search of the USPTO database, it’s certainly possible that I’m wrong) — in trolling around for just a little while online I also ran across other companies that were marketing similar-sounding products, companies like KVAR itself, which does claim patents, Xedia, and Perpetual Green, and I imagine the “secret sauce” is more in the marketing than in the box. But perhaps I’m being too cynical.

When it comes to financials, there isn’t much to say, other than that Power-Save Energy is tiny and unprofitable — they have about 29 million shares issued (though they have permission to go up to 100 million), which at 50 cents means they have a market cap of $14.5 million. They reported net income in the first nine months of 2008 but a net loss for that same period last year (loss of 3 cents a share), the revenue was about $4 million for the first nine months of 2009, about half of which was gross profit before you take out the huge chunks for sales commissions and advertising, let alone the standard administrative expenses. They’re not losing buckets of money, but neither are they currently profitable — and how you feel like valuing a company that’s recently been in the neighborhood of break-even, with annual sales of about $5 million, is certainly up to you. As of the last report they had about $450,000 in cash, which is very close to what their net loss was for the first three months of 2009, so I’d imagine they’ll have to sell some more stock in 2010 unless they enjoy some profitability.

So yes, this is my guess about the company behind that secret “Negawatt box” — it’s certainly possible that Power-Save Energy is real and doing noble and wonderful things, but I confess that my skin starts feeling a little slippery the more I read about them. And it’s also possible that there’s some other company that the Alternative Energy Speculator folks are touting (I’d probably be relieved if so — occasionally it’s good to be wrong, though no more than once or twice a year, please).

If I were a homeowner looking to save big on my bills I’d rather buy a programmable thermostat and put that plastic film stuff over my windows, I’ve already got a house full of energy star appliances which apparently wouldn’t be much helped by the “Power-Save 1200,” and as far as I can tell this kind of capacitor thingamabob doesn’t do anything to cut the power use by lights, or by the mighty racks of powerful thinking machines here at Gumshoe Manor. But that’s just me.

So what do you think? Have a better surmise about this “Negawatt Box” and the company behind it, or any opinion about or experience with these kinds of devices? Let us know with a comment below!

And if you’ve any experience as a subscriber to the Alternative Energy Speculator, click here to let us know how it went by sharing your thoughts over at Stock Gumshoe Reviews[6]. Thanks!

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