Can you reduce Operational Costs by scrutinizing your Utility Bills?

By Wayne Beamish posted 11-08-2019 10:39


With 20 plus years in the energy management industry and looking at countless utility bills, I can honestly tell you there is quite a bit of money left on the table if companies are not aggressively reviewing their utility bills. These days most companies have moved from “rubber-stamping” payments through their accounting departments and automatically paying what is requested of them. However, even with the most methodical companies who have put measures in place internally or perhaps looked to a third party to assist with this aspect of their operational costs, can more be done? We say empathically "yes"!

Capturing usage data is a great first step in the analytics required to identify “Bad Apple” sites and justifying the ROI on energy efficiency projects that have been undertaken, however, there is so much more that can and should be audited when it comes to these costs.

For the bills that you receive directly from your local utility (LDC), there can be 15 – 20 line items that are calculated based on various formulas. These calculations generally begin based on a rate category that the meter is listed under. Would you know if you are in the correct rate category? The cost variance could be dramatic from one rate to another and these categories could fluctuate especially if you have completed energy retrofits that would reduce your onsite usage.

Many utilities offer rebates or adjustments applicable to certain rate categories and some of these can be as much as 8% of your total bill. For several of our clients this meant an annual reduction of $20K on their electric bill. With rising operational costs year over year, this type of savings would have a very positive effect on your budget.

As well, many companies assume they are paying the bill for their location, when in fact there are many cases of cross-meter situations whereby the incorrect meter was originally provided when the account was first established. How certain are you that you are only paying for your utilities and not your neighbors?

If you don’t receive a utility bill directly from your local utility for any of your locations, then you most likely pay these costs to your Landlord through the CAM costs. This would occur in the case where separate meters were never installed for individual tenants or the cost is for a shared space such as exterior lighting, irrigation or pylon signage. Generally, these bills are processed as chargebacks through your leasing department and are not handled as “normal” utility bills. It is our experience that many errors can be found on these chargebacks and these can range from incorrect readings of the sub-meters to miscalculation of the pro-share cost to each Tenant. Just recently, one of our clients was able to negotiate a recovery amount of $700K with one of their Landlords related to over billing.

Similar to how many companies will bring in a Chartered Accountant to review their accounting records; this has become a normal course of business. We suggest the same level of diligence be focused on your utility accounts and while most companies would not have this level of expertise internally, there is unforeseen value if you put your utility bills under the microscope.