Audits can lower utility bills.
Sometimes, even fixed costs need fixing. Leases can be renegotiated, pensions restructured and supplier contracts modified, but utility costs, which usually fall into the category of a “given,” are often overlooked.
But they should not be, because municipalities have many offices containing high-energy appliances such as refrigerators and air conditioners. Other municipal buildings, including schools, have cafeterias with ovens, meat lockers and other units using significant amounts of energy.
Many factors, including term discounts, rider applications and reactive charges, enter into utility rates. Any one factor, if calculated incorrectly or misapplied, can add as much as 25 percent in unnecessary charges to a monthly utility bill.
Most government officials are unaware that utility companies have no obligation to notify customers who might be eligible for special rates. But utility companies do offer various rate schedules.
The purchase of electricity has never been as simple as signing a check at the end of each month, and in the current climate of deregulation, purchase options have multiplied. Led by California, states such as North Carolina, Rhode Island, Minnesota, Wisconsin, Michigan, New Jersey, Ohio, Texas, Missouri, Kansas and Massachusetts are considering restructuring electric power regulations to place the burden of choosing a supplier on individual managers. In this confusing rate atmosphere, the best approach to fixing “given” electric costs often is a professional audit.
Poor decisions by the supplier or purchaser of electricity can lead to municipalities being billed under a specialized rate schedule that may be more expensive than standard published tariffs.
On the surface, selecting the most economical billing schedule and rate package seems elementary – usage is analyzed and the most appropriate profile program selected. However valid this approach, the sheer number of factors in the analysis and selection process make it anything but simple.
A review of electric bills to uncover usage trends that could prove beneficial when negotiating rates is a good place to begin the analysis. Some managers might be aware of obvious trends, such as large volume, that could result in special discounts. But other options such as seasonal pricing are not as evident.
Professional energy consultants have the statistical knowledge and research capabilities to keep tabs on utilities. They conduct systematic studies of utility billing structures, looking for errors, rate charges, rate discounts, regulatory changes and other related factors. This information is not available from utility companies where the prevailing attitude is “let the buyer beware.”
An energy management firm offering long-term protection instead of one-shot analysis is the best choice to perform an audit. Analysts charge an initial fee that varies according to a client’s annual utility costs and is usually recovered through refunds or savings. Thereafter, the management firm shares equally with the client in any refunds and savings.
It is important for municipal representatives to visit the office of the consulting firm being considered. They should find a database with up-to-date rates and contracts of all energy utilities; current federal, state or local regulations governing energy suppliers; and experienced rate analysts.
A good consulting firm can act as a “management intelligence” agency, saving government agencies time, worry and money. Effective energy management programs represent one of the most crucial functions of a successful operation – effective control over energy costs and elimination of wasted revenues.
Sean Dougherty is a representative of National Utility Service Inc., Park Ridge, N.J.