3 Reasons Why Utility Bill Audits Work
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- Dec 10, 2020 10:39 pm GMTDec 10, 2020 6:59 pm GMT
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If energy is a substantial cost in your business, or if energy is a cost that is big enough to care about in your business, then I'm sure you've been approached at some point about doing a utility bill audit for your electricity and natural gas. Most people brush it off for a variety of reasons, but most of these reasons are misconceptions about what a utility bill audit is, what it entails, and how successful it could be. The two most common misconceptions we hear frequently are that the audit relates to doing efficiency projects that help you save energy and getting rebates from the utility for those projects. The other most common misconception is that it relates to switching your suppliers, similar to what an energy broker does in deregulated areas. Those can both be valuable services that your company needs, however, it is not in the scope of a utility bill audit. Let’s explore what a utility bill audit IS and what it is NOT, and three reasons why they work to lower your costs.
First, a utility bill audit IS NOT an energy audit. It does not address the efficiency of your motors, lights, HVAC, etc. In fact, it is pretty agnostic towards how much energy you use. It IS, however, an audit of the billing practices, charges, regulation, and costs of whatever energy you DO use. It seeks to find refunds and ongoing savings by fixing, changing, and implementing more favorable rules under the regulation. It does NOT give you suggestions of things you can buy or invest in to save energy, like LED's, solar, or VFD motors. It DOES identify errors/overcharges and low impact administrative issues that can be resolved to lower utility costs. In most cases, it does NOT require on site facility work, but can be done remotely. It should be low impact for your team to have done, without much bandwidth required.
If you're thinking about having a utility bill audit performed for your company, let me tell you three reasons why that is a good idea.
- Performance Based - Low Risk: Most utility bill audits are done on a contingency arrangement, meaning you only pay when a refund is recovered, or something is fixed to lower the bills going forward. If nothing is found, it costs you nothing. So, the time it takes to pull one months of bills, and have a findings call after the audit is what you will be investing into the project. For large companies, pulling billing can be a big deal. For small companies, it could take 5 minutes. That investment is in your court, but comparatively speaking to other projects, it is very low.
- This work is specialized consulting work: For most clients, it is fair to say that what a utility bill audit uncovers will likely go unnoticed for years and years if a formal audit is not performed. Regulatory documents and published tariffs can be hundreds of pages long, and every utility has a unique set of rules and regulations. It takes an expert to navigate these waters in a timely and efficient manner. I like to compare it to income taxes. Can you file your taxes yourself? Yes. Is the tax code publicly accessible? Yes. Should you use a CPA with experience for a large organization’s tax returns? Absolutely. Most companies do not have significant human capital sitting around willing to learn the ins and outs of utilities. The bottom line: your bills will remain unchanged unless you engage in an audit.
- 70% of audited companies had savings: In 20 years of doing audits personally, 70% of audits came back with positive findings, meaning a refund or ongoing savings could be recovered. In certain areas and in certain industries, those percentages can be even higher. For example: Steel and Asphalt/Cement industries are closer to 90% successful, mainly because of the varied usage profiles and high demand component to the energy usage. Utilities regularly set up rules for the average usage profile, if your business deviates from the norm regarding energy profiles, that’s when opportunities hide in the grass.
The reason why this auditing industry exists, is because society is trained to just pay the electric bill and natural gas bills without much thought to understanding how they are constructed. They are complicated right? And there's nothing we can do about it, is there? That mindset is turned on its head during an audit. Not only is there a great chance you recover savings, but you will be trained to understand how to look at a bill with a more curious and skeptical attitude.
Kelly Curtis is a Managing Partner of sister companies Discovery Energy and Energy Auction Exchange, a Utility Auditing firm, and Energy Advisory firm, providing energy management and consulting for industrial and manufacturing operations across the US for the last 20 years.