What is a Utility Tariff? And Why Does It Matters to Your Business?

What is a utility tariff? 

A utility tariff is how an energy provider (electric or natural gas) charges the customer for their energy and natural gas usage. 

Electric and natural gas vendors must submit their tariffs to the government for approval. 

There are many different types of tariffs and they can range from 2-10 pages in length.

Here’s a link to an example electric tariff

Why does an energy or utility tariff matter to your business?

It matters because ALL of your charges are governed by it.  It is THE document that determines exactly what you will pay and when you will pay it.  If you think there’s been a billing error, you must refer to the tariff.   If you think there’s an opportunity to get rebates on new energy-efficient purchases, you must refer to the tariff.  If you think there may be a way to reduce your kWh charge or demand charges, you must refer to the tariff.

This is how the energy and gas markets work.  The tariff is the governing document. 

The different types of Tariffs

Fixed rate
Variable rate
Simple large
General usage
Small general usage
3 Part flat rate block rate
Power factor
Maximum demand
Time of use
Economy 7
Economy 10
Green tariff
Duel fuel
 
And many more….

What tariff do you qualify for?

Knowing which tariff you qualify for is paramount for knowing your options, and how they will financially impact your business. Each of the above tariff types can have numerous variations each. 

For example, in one supplier market, you might qualify for a large general usage tariff if you use over 500,000 kWh per year AND generate over 100 Kw in demand each month. 

But if you drop under that amount for even one month, you don’t qualify.  In other markets, if your heating costs are funded by 30%natural gas (for example) and 70% electric, and you are a manufacturer, you might qualify for a different tariff.  The list goes on as far as variances and qualifications are concerned.   

In most markets we see about 75 different variations and qualifications. 

Calculating the tariff

Beyond reading through all the tariffs the provider has (which can range from 10-100 different varieties), you must be able to then calculate which tariff will be right for you. 

It’s not as simple as finding a tariff with a better kWh rate.  The amount of demand you generate, when you generate it, ratchets, on-peak/off-peak, historical usage, load factor, maximum demand, etc. all factor in. 

The scary part is, if you change your tariff, in some cases you can NOT change it back for 12 months.  We’ve seen this result in large additional costs for clients in the past who attempted to implement a change on their own without doing the calculations correctly.

Here is an example of a simple electric bill and tariff: https://costanalysts.com/can-you-calculate-an-electric-bill/

Figuring out what the costs should be is quite complex on your own (we’ve yet to see someone get this math problem correct).  

Some tariffs can result in significant savings but in some months it results in net losses.   The net gain over 12 months might be substantially positive or it might inadvertently be net negative.  So, again, you must be confident in your math and ability to interpret the tariffs.  

Summary

The tariffs in the utility industry are critical in determining the costs that affect your business and are only one of dozens of factors our highly trained experts review.  

If you would like our industry experts to help you out on a risk free/shared savings basis simply call us at 1-877-843-7579 or send us an email at info@costanalysts.com. 

What is a waste and recycling cost reduction audit? And why it’s important to your business

Let’s face it. Unless you are an industry guru or are dealing with waste and recycling day in and day out, you probably have no clue what a waste and recycling cost reduction audit really is.

This is article is intended to shed some light on the process and how it could be of benefit to your organization.

So what is it?

To answer this succinctly, a waste and recycling audit is where we apply industry expertise to audit your waste and recycling expenses for errors, overcharges, and opportunities for savings. We apply all of our decades of industry expertise on our clients’ behalf. If we can find them savings, we share in them 50/50 each month. If we can’t, it does not cost them a thing.

Why would you need a waste and recycling audit?

The waste and recycling market is worth over $100,000,000,000 nationwide. In our experience our clients are overspending, on average, about 30-40%. 

So why do you need a waste and recycling audit? Simply put, there could be substantial financial benefit to your organization.

How does it work?

An audit is conducted by getting 1-2 recent invoices for each location and a letter of authorization. From there, we conduct the following series of steps:

• We review all the invoices and associated vendor contracts for accuracy and compliance
• We conduct a thorough market analysis of options, providers, and regulatory requirements and compliance.
• We conduct a thorough needs-based analysis to determine exactly what your organizational service needs are. (Occasionally, haulers will claim to provide this service for customers. But there is an obvious conflict of interest when they provide it as they have no incentive to reduce your costs.) Depending upon organizational complexity this may involve site visits and dumpster audits. We get as dirty as we need to, to help our clients save money.
• After 4-6 weeks we deliver our findings to our client for their approval.
• Once our findings are approved, we spend the next 4 weeks implementing the savings measures outlined
• Only once savings begin hitting our client’s bottom line to we begin to share in the savings
• We monitor the invoices every month for accuracy and overcharges, ensuring savings stay intact and remain in place.
• Furthermore, for clients’ that wish to take advantage of it, we offer our ongoing waste service. This allows managers and supervisors to call our 1-800 number or email us for support issues. This saves valuable employee time instead of waiting on hold and hoping the issues get resolved. One call to us and we handle it on our clients’ behalf.

Summary

Verifying the accuracy of these expenses is difficult and complex.  And managing this expense category is a full-time job that requires decades of industry expertise to do it properly.

If you value the money you are spending in this expense category you should have it reviewed by industry professionals. 

If you are spending over $1,000/month on your waste/recycling expenses you qualify for our audit service.  Having been in the auditing business since 1991 we’d love the opportunity to perform our risk free/shared savings audit and see what we can do for you.

If you are interested please reach out to us at info@costanalysts.com and we will put you in touch with one of our local franchise experts to get started.   

5 Ways you could be overspending on your Businesses Waste and Recycling Costs

                                  It All Adds Up

Waste and recycling is not one of those expense categories that usually ranks at the top of the list. Like most businesses or organizations you have plenty to worry about so keeping a lid on waste and recycling costs is not a priority.

If you look at what you spend each month you might be surprised to see that it can add up to substantial costs.

The waste and recycling industry in the U.S. alone is over $100 billion dollars. In our experience clients are overspending on average by 30-40%.

Your waste and recycling expenses deserve an extra look. Below we’ve outlined just five of the ways you might be overspending on your waste and recycling bills.

1.  Overage fees and extra ‘yards’

Overage fees and extra yards are charged when a customer has extra trash overflowing from the dumpster or on the ground. Since the waste industry measures off of ‘volume,’ the extra ‘yard’ implies an extra cubic yard of trash on the ground (or overflowing from the dumpster). Overage fees and extra yardage are used interchangeably amongst many vendors.

In the past few years waste haulers have begun charging overage fees and extra yards at an alarming rate. These charges often show up on invoices with zero documentation supporting them. The charges can range from $10-$250 as well (plus taxes and fees).

The logic behind why the haulers charge them is not unfounded. No one wants trash on the ground or spilling out of dumpsters. In application though it has turned into a charge that is frequently abused or results in erroneous charges.

There are a couple obvious ways to combat this. One is to make sure your employees keep the lids shut, so the trash does not go above a certain level in the dumpster (many haulers will penalize you now if the level of trash prevents the lids from shutting). The other is to make sure you are on the right service level and pick-up frequency so you do not run into overflow issues. 

Many haulers now consider this an ‘overage’ and charge high fees for lids that are not completely shut.

Even with these two things correct we see time and time again clients getting hit with large overage charges that are either not valid, or not charged at the correct rate, or overages that were a result of a missed pick up by the hauler (i.e. not the client’s fault).  There have even been times overage charges have appeared on client invoices, where once investigated, were determined to be completely unrelated to the location in question and should have been applied to another customer in a different part of the country!

These errors and overcharges are not intentional but they occur frequently.  Keeping a close eye on these charges will help ensure you get what you are paying for and your bottom line stays healthy.   

2.  Contract applied incorrectly

Almost every client in an open market for waste is under a contract with their vendor. These contracts often range from three-five years. The contracts are in place to specify the charges, and how they are supposed to be charged. Often in the waste and recycling industry these agreements are interpreted incorrectly.

Loosely interpreted fine print can lead to ambiguous charges and fees down the road. Furthermore, simple errors can multiply as price increases on top of price increases compound.

It’s incredibly important to make sure the contracts are being applied and adhered to correctly to keep your costs as low as possible.

3. Fees and surcharges

There are countless fees and surcharges that apply to your waste and recycling costs. From vendor fees and surcharges to government franchisee fees and regulatory charges, the list is very long. Additionally, they can factor in as much as 50% of the overall costs that have been incurred. Below are just a few of the charges our clients often face:

  • Fuel fee
  • Environmental fee
  • Regulatory cost recovery charge
  • Container maintenance fee
  • Overage fees
  • Extra yardage charges
  • Franchise fees
  • Removal charges
  • Exchange fees
  • Delivery fees
  • Liner charges
  • Contamination fees
  • Recyclable material offset charge
  • Lock charges

Knowing which of these fees are valid, and which of these are reasonable as well, is a big factor in managing this expense area.

4.  Different equipment needs

Depending upon your organization you may have some widely varying equipment needs.

With dumpsters there are quite a few combinations – rear load, front load, 2, 4, 6, 8, or 10 cubic yards, apartment style, slant top, and side load dumpsters are all types you can choose from depending upon your needs.

There are also roll-off dumpster and compactors. These are generally used for higher volume use cases and the expenses range wildly. You can find roll offs generally ranging between 10, 20, 30, and 40 cubic yards.

Compactors are generally 2 or 4 cubic yards and can be attached to various size ‘receiver boxes’ where the compacted trash is deposited.

Compactors are also generally found in two varieties; self contained and stationary.

All of the above, and their associated rental, lease fees and use cases can play a big factor in your overall expenses.

Just one example to illustrate this occurred with a client of ours.  We discovered during the audit that their compactor was not working properly. The hydraulic ram was not compacting at the pressure specified by the manufacturer. As a result, the compactor was indicating it was full when it was not. This resulted in this client paying 2x as much as they should have. Unfortunately we were not able to recoup the lost money for the years the equipment had been operating inefficiently, but we were able to save them over $20,000/year by fixing this issue.

5. Recycling programs

To recycle or not to recycle? That is a question many of our clients debate.  In todays market, recycling programs can be very expensive if not implemented correctly, and many businesses abandon even trying as a result.   We’ve helped thousands of client locations across the country begin or improve their recycling programs, and save money in the process.  

The recycling market is constantly changing though. As you may have heard a large source of recyclable materials is China. They have drastically changed what they will and will not accept in recent years.

This has had a profound effect on recycle programs across the country and commodity prices on recyclables have fluctuated drastically as a result.

These changes have also resulted in many vendors charging incredible ‘contamination fees.’ As with some of the fees mentioned earlier, the logic for this is sound. No one wants trash mixed in the recyclables, aka contamination. The amount and frequency of these charges, as well as documentation can be a grey and costly area though for people who have recycle programs.

Unfortunately this change in the market has resulted in the ‘baby being thrown out with the bathwater.’ Many people have abandoned their recycle programs all together.

There are still plenty of ways to set up recycling programs that are both good for the planet and good for your wallet. It just requires a lot more care, attention, and guidance.

We hope you’ve learned some helpful tips and areas that need to be focused on. The above are just 5 of the 14 things we look for when conducting a waste and recycling cost reduction audit. If you would like professional help, on a risk-free shared savings basis, we’d love to help.  Simply call us at 1-877-843-7579 or email us at info@costanalysts.com.

 

Why our clients love our ongoing Waste Service

At P3 Cost Analysts it’s our job to audit our client’s expenses to verify they are accurate, free from overcharges, eliminate inefficiencies and save them money where possible.

On top of providing professional audit and cost reduction services we pride ourselves on building long-term relationships and providing unparalleled service.

Our ongoing waste service is an example of just that. On top of saving our client’s money, our waste service saves our clients valuable time.

What is our ongoing waste service?

As our clients with substantial waste and recycling needs know there are often a myriad of issues that can occur with your waste and recycling service.  This is just the nature of the beast with the waste industry.  Instead of calling the waste haulers anytime there is a service issue our clients simply call us, and we handle it. In the past, our client’s managers and supervisors would spend hours each week dealing with waste and recycling vendors. The issues can range from leaky dumpsters, missing lids, blocked dumpsters, missed trash pickups, overflow, enclosures getting damaged, trucks leaking on the lots, and government compliance issues.  The list goes on and we’ve seen it all. 

So instead of spending valuable time on hold with the haulers, dealing with issues outside of their expertise, and having to follow up, our client’s employees simply call, email, or text and we handle it from there.

What our clients are saying

 

 

 

 

 

 

 

 

Give us a try

Instead of having your employees spend their valuable time and energy following up with and fixing waste issues they can simply let us handle it.  And the best part of our service is it’s included absolutely free with our waste audit. So not only are we saving you money each month but we are saving your employees valuable time and energy.  As we’ve said before, our waste audit clients come for the savings we produce but they stay with us for the service.   Give us a call or shoot us an email today at info@costanalysts.com and let us see what we can do for you.