(Newswire.net — December 30, 2014) — Businesses, nonprofits, and government organizations will experience uncertainty in utility rates in 2015 and beyond, creating cost management challenges for those with higher utility costs.
At no other time has there been as many variable factors at play for natural gas, electric, water, telecom, and waste disposal utilities. Driven by changes in environmental regulations, court rulings, global energy markets, and energy technologies, nearly every state and utility commission is facing important decisions that will affect the future cost of utilities. These uncertainties are forcing businesses to take additional steps to manage their utility costs.
Here are just a few examples:
- Electricity rate changes across the country are a mix of decreases and increases depending on the state and the utility. For example, the Delaware Public Service Commission announced gas rate decreases, and the Florida Public Service Commission announced electric rate decreases. Meanwhile, Connecticut Power and light is considering significant price increases.
- Most experts believe that the US electric grid of the future will be a low carbon emitting, smart grid, requiring replacement of current power plants by 2050, and new approaches by utilities embracing more renewables and distributed power generation. How this affects future rates is unclear.
- Based on crude oil supply growth and smaller global demand, the US Energy Information Office forecasts an average oil price of $68/bbl, $48 below the 2014 peak reached in late June. Prices are expected to be lower than average towards the end of 2015. Current natural gas prices are predicted to hold steady through 2015 driven by new domestic supplies.
- Competition in wireless services is creating a confusing array of plan options with various levels of features, prices, compatibility and security capabilities.
- The cost of renewable energy installations, including solar and wind technologies continue to drop. In some cases the installed cost of these systems is half of what was originally predicted. In some cases, utilities are lobbying to charge customers to offset revenue decreases from renewables.
- New EPA carbon emissions regulations are predicted by some authorities, like the Virginia’s State Corporation Commission, to raise utility rates to cover the cost of controls. Other experts believe that those predictions of added costs are overstated.
- Utility “overearning” billing errors continue to occur, many without being noticed by customers who don’t pay attention to invoice details. A few recent additions to an already long list of utility overcharges are: Appalachian Power, Duke Energy in Florida, Madison Gas and Electric in Wisconsin, New Orleans Entergy and the Los Angeles Department of Water and Power.
In spite of this unpredictability businesses can take simple steps to insulate themselves as much as possible from pricing changes. Here are the top three things that can be done:
- Continuously optimize commercial and industrial processes and building energy usage to reduce energy consumption. Energy is the third biggest budget item for most U.S. companies and for some, it can be even higher. Michael Chesser, former Chairman and CEO of Great Plains Energy, said in a recent panel discussion: There are still huge untapped potential for improving the energy efficiencie of new buildings…it should be our first fuel of choice”. There are many opportunities available to reduce BTU’s and KWHR’s – from LED lighting to variable speed drives and energy management systems. Watch this example of a Minnesota School District that recently achieved $2.6M in energy savings:
- Elevate the priority of an all-utility invoice audit to equal the priority of financial, safety, and other audits routinely performed by businesses everywhere. A utility invoice audit will not reduce consumption, but when done correctly and thoroughly, does find utility overcharge errors that can amount to significant savings and refunds. Vince DiMaio, President of the National Utility Refund Company near Allentown, Pa., commented on the errors they find when reviewing their client’s bills: “Statistically, our national average for findings errors has remained the same, 80%…40% of these billing discrepancies are refundable errors that the customer can recover within the statute of limitations”. Even if overcharges are not refundable, finding and correcting these errors results in ongoing savings. Click here to find out more about these audits.
- Investigate alternative suppliers. Deregulation has opened an opportunity to use a gas or electricity supplier and lock in favorable rates. In this case the distribution supplier does not change, so customer service and maintenance remains as it was originally. The only difference is that the monthly bill is lower. There are also opportunities to contract for lower cost wireless telecom while improving security and service.
2014 was a year that exposed a number of unpredictable utility pricing factors for most businesses. As we move forward into 2015, each business can and should take control of the things that they can to reduce their energy costs. It’s the right thing to do for the planet and the bottom line.