Should your utility be managing your energy bill?
A little time and attention to detail can produce significant savings.
Many technologies and solutions are available to help take some of the sting out of your energy bill, from variable frequency drives and high efficiency motors to sophisticated energy management systems. But many industries often leave it to their utility company to manage the bill itself which can have numerous opportunities to save energy costs.
Like any other procurement activity, there are a number of principles and best practices that can reduce your energy spend without having to set foot on your plant floor. These include:
Rate optimization – have you audited your electric bill, or does it simply get passed on to your accounts payable department? There can be many hidden costs in there including extremely high late fees and other impressed cost that can be credited or negotiated down – if you know to ask.
It’s also not uncommon for a company to pay extremely different rates at different sites, even from the same utility. Companies often focus on the total cost they are paying, but forget to look at the cost per unit of output. In certain circumstances this rate discrepancy can be a point of negotiation.
Utility management – Understanding your energy performance takes more than looking at the sum of your utility bill. Do you know how the rates you pay compare to industry benchmarks? How well are you forecasting demand and what penalties or added costs are you paying for over- or underestimating?
Infrastructure management – Any facility expansion that requires the utility to add or move something (new poles, connecting a transformer, etc.) comes with a cost. Many firms simply accept the utility charge as part of the project cost, when in fact there is often significant room for negotiation. It’s not uncommon for utilities to miscalculate or lose sight of credits for your existing infrastructure, or to add on hidden taxes for greater capacity.
Utility tax management – Often there are opportunities to reduce your utility taxes through incentives, exemption certificates and refund / credit applications. You should not always expect your utility to research or identify these for you.
ABB has taken a pro-active approach in managing its own energy costs. Through careful review of its contracts and energy procurement processes and applying some of these best practices, the company’s South Boston, Virginia facility was able to save 20 percent of its annual energy bill.