Are Your Utility Bills Aligned with Your Operational Needs?
Too many businesses miss opportunities to reduce their energy spend simply because they don’t have any insight into how their utility costs are calculated. Taking a deeper look at the charges that make up your organization’s utility bills could reveal opportunities to cut costs, and can help your organization incorporate energy strategy into your key long-term decision-making.
Let’s take a look at an example.
When working with a UK company that produces cement, concrete, aggregates, and asphalt with utility bills for more than 952 accounts spread out across 255 sites, we found opportunities to save money by aligning certain aspects of their utility bills with their facilities’ actual operational needs.
Specifically, we worked to reduce their Authorised Supply Capacity (ASC) charges. The ASC, also known as the Agreed Capacity, is an agreed amount of electrical load for a property, as stated in the property’s Connection Agreement with the local Distribution Network Operator. Every UK Half Hourly Metered electricity bill factors in the ASC charge based on the estimated load for the facility, and will charge a penalty fee if the customer’s load exceeds this limit. This is becoming an increasingly important concern, as legislation that will come into effect in April 2018 will result in an increase in penalty charges—potentially up to three times the standard rates for ASC penalties being imposed today.
Businesses face two opportunities to reduce their ASC charges. With visibility into their facilities’ energy demand, they can compare the ASC established for their facilities against their regular demand. The ASC charges imposed by your supplier may actually be much higher than your facilities’ peak load, causing you to pay for load your sites never use. Conversely, you can also look for buildings that exceed ASC levels frequently and drive up costs as a result of penalty charges. With this information in hand, you can re-negotiate your Connection Agreements with the local Distribution Network Operator to better align ASC levels with each facility’s actual load requirements.
However, it’s not always that simple. Your organization’s facilities aren’t going to stay the same forever, and any changes you make need to factor in how your facilities’ energy needs could evolve. If you were to reduce your ASC today but install new, energy-intensive equipment in six months, that facility is likely to exceed the lower ASC level and incur penalty charges. This is where insight into your energy needs can play a role in your organization’s forward-looking strategy.
For this customer in particular, we found 66 accounts with demand that was considerably lower than their ASC levels, which would save the company as much as £110,844 per year if they were adjusted to align with their operational needs. Another 20 accounts were found to have exceeded the maximum electricity demand, which could also be reviewed to keep costs down.
However, the company will see the full value of this kind of visibility as they incorporate it into their plans for the future. When planning to install new equipment, for example, understanding how it might impact their ASC charges could keep their ensuing operational costs low and maximize return on investment in new facilities and equipment.
Understanding how your utility bills are aligned with your organization’s energy needs could uncover some quick fixes to bring down energy costs. But integrating that understanding into your organization’s decision making is the key to a successful energy management strategy.