According to a study conducted by the Government Finance Officers Association, one of the top challenges faced by public finance officials is the struggle to balance decreasing revenues with increasing costs of services. Entities are continually searching for ways to stabilize or reduce expenditures, including utility costs which can make up 15% or more of the overall budget. When it comes to these vital services, you’ve likely implemented a number of well-known strategies in lowering costs like installing more efficient lighting, investing in programmable thermostats and encouraging staff to minimize wasteful usage. But you don’t know what you don’t know. Following are some of the most common oversights that, when corrected, can lead to significant utility cost savings.
1. OVERLOOKING EASY FIXES
Public agencies have made great strides in recent years to become more energy efficient and reduce consumption of electricity, water and natural gas. These measures, while at times costly and time-consuming up front, can result in substantial cost reductions years into the future. The funny thing is, sometimes you can make significant bill reductions with some fairly easy steps.
What some public agencies don’t stop to look at is to see if they’re being charged for taxes and other line items they’re exempt from. Local, County, and State sales tax can add up to hundreds of dollars a month on just one utility account. There are other charges your accounts may be exempt from depending on the geographic location of service.
Are you paying on accounts that show no consumption month after month? These are likely abandoned facilities whose utility accounts could be disconnected with a quick call to your vendors, easily cutting hundreds to thousands of dollars in unnecessary costs.
2. NOT FULLY INVESTIGATING ABNORMALITIES
Was there an unusual spike in usage at one of your facilities? Did a new charge suddenly appear on your account that you don’t understand? In spite of efficiency measures, are your energy costs not going down? When changes (or lack thereof) in your accounts raise a red flag, you or an assigned staff member will investigate. However, lack of expertise with these types of irregularities typically result in you throwing your hands up because you aren’t getting answers from the utility vendor, or, the vendor’s customer service rep explains away the anomaly. If your instincts tell you something doesn’t seem right, it often
takes persistence and Sherlock Holmes-level detective work to uncover the source – and validity – of abnormal billings. Ask your Facilities or Maintenance Manager if changes in operational characteristics of a building could’ve resulted in higher-than-normal usage. For new charges on your account, ask to speak with your utility vendor’s rate department for an explanation – customer service reps don’t receive the training needed to provide this information. If efforts to reduce energy consumption haven’t yielded the savings you expected, talk with all parties involved in implementing these strategies to figure out what’s going on.
Some questionable bills may not seem worth the effort needed to get to the bottom of the problem. But the more time you take to ask questions, the more you’ll understand the nuances of your facilities’ consumption and vendor billing practices, enabling you to better address discrepancies when they appear in the future.
3. FAILING TO AUDIT YOUR OUTDOOR LIGHTING
In most parts of the U.S., energy for street and security lights isn’t billed off meter readings; instead, lights are billed on a flat rate depending on a number of factors – lamp wattage, fixture type, pole type, ownership, and maintenance responsibility are some of the variants that determine the monthly cost for each light. It’s vital that the owner of the lights – usually the electric utility – keep an accurate inventory of these details and update their records each time a change is made. Customers have a right to review the utility’s inventory and should do so annually to identify any errors.
Are there lights that have been converted from older technologies like Mercury Vapor and Incandescent to newer more efficient High Pressure Sodium or LED lamps? If the utility isn’t recording these changes in their inventory, the monthly billing won’t be accurate. Are there areas in your City where light poles have been removed for construction or revitalization projects? If you don’t check the accuracy of the streetlight inventory, there’s a good chance you’ll still be paying for some of these lights long after they’ve been taken down. With streetlights being one of largest electric expenses for cities, correcting errors in the inventory – and in turn the billing – could eliminate thousands of dollars a year in wasted funds.
4. NOT LOOKING AT ALTERNATE ENERGY PROVIDERS
If you live in an area where energy is deregulated, you have the opportunity to select your electric or gas supplier from dozens of options. While most government entities have taken advantage of retail competition, once choosing a supplier many customers fail to shop around and simply renew with the same company each time their contract is nearing expiration. It’s great to remain loyal to a vendor who has served you well, but if you’re looking for ways to reduce costs you can often save money by switching to a different supplier. Much like shopping for insurance rates, there are plenty of reputable companies out there who will offer and provide the same level of service for varying prices. Switching to a supplier who proposes to charge a half-cent less per kilowatthour than your current provider doesn’t sound worth the trouble, but that half-cent can save your organization tens of thousands of dollars per year – just think of the projects those funds could be used for!
5. FAILING TO REACH OUT TO UTILITY VENDORS
Although not often advertised, many utility companies have programs available to assist customers in reducing their costs. Some offer free audits to identify find ways to cut consumption, while others offer rebates or discounts for installing more efficient HVAC, lighting, windows, or water fixtures. Utility providers regard energy conservation as an important resource – it reduces greenhouse gases, saves money for customers, and creates jobs. Search each of your utility vendor’s websites to uncover what programs exist or call for details.
6. NOT USING BENCHMARKING PROCESSES TO EVALUATE USAGE AND COSTS
Public finance officers use benchmarking when evaluating project performance and investments, developing budgets and in a variety of other areas. Why not use benchmarking processes to evaluate your energy performance? According to the U.S. Environmental Protection Agency, businesses can reduce their energy costs by up to 30% by assessing energy usage, setting energy-savings goals and regularly evaluating progress. Benchmarking serves as a diagnostic tool, allowing you to analyze current and past usage, compare similar buildings and identify areas where cost reductions can be made.
There are plenty of options available for benchmarking your facilities’ utility data – depending on the number of buildings you need to benchmark, you can use anything from a basic Excel spreadsheet, to complex energy management software, or even free online benchmarking tools offered by the federal government. Whatever you decide to use, expect to reap returns by uncovering savings opportunities.
7. FAILING TO LOOK OUTSIDE YOUR ORGANIZATION FOR HELP
A great way to reduce utility costs and remove the burden of doing the work yourself is to seek help from organizations who specialize in the very goal you want to achieve. Energy Audit firms conduct a thorough analysis of your buildings’ equipment and controls, then provide a comprehensive report on upgrades and maintenance that can reduce usage. Energy Service Companies (commonly known as ESCOs) plan, implement and monitor projects recommended by Energy Audit firms. Energy Brokers help you procure energy in deregulated markets at the best possible price. Utility Bill Audit firms analyze the utility vendor invoices, focusing on billing corrections and other changes on your accounts that can save you money.
Whether you focus on correcting one, a few, or all seven of these “mistakes”, your actions will pay dividends in the form of lower utility expenditures and in some cases even refunds. Now that you know more about ways to reduce your utility costs, what are you waiting for? Take action and see what it can do for your bottom line.
Trisha Menchu is President of TriStem, Ltd., a firm specializing in utility cost recovery and savings for public agencies through audits of their electric, gas, streetlight, telecom, water and waste expenses. To learn more, contact Trisha at: firstname.lastname@example.org or visit www.tristem.com.