If you are like most organizations you think that there’s not much that you can do about your electric bill. Sure, in open markets you may be able to get a better price but in most places around the country your electric bill just is what it is right?
Wrong…While electric charges are highly regulated and governed by tariffs, there are a myriad of errors and inefficiencies that can cost your company or organization valuable dollars.
Below are 5 ways you could be overspending on your electric bills.
1. Estimated Meter Reading – An estimated meter reading occurs on your bill when the utility does not give an actual reading. In this case, they are simply estimating what your usage was that month based on historical averages. The reason for the supplier not reading the actual meter can range wildly. It could be as simple as they did want not send someone out to read the meter that month, or it could be because a dog was blocking the path to the meter. As you can imagine, estimated meter readings can be rife with errors or overcharges. They are relatively obscure on your invoices too, often only designated by a tiny ‘e‘ near the reading.
2. Key Punch errors – People make simple errors in data entry all the time. We often find key punch errors that resulted in the incorrect rates, fees, and taxes being applied for our clients. These can result in large refunds if you know where to find them.
3. Incorrect Application of Tariff – As we outlined in our article on tariffs, if you are on the wrong one it could cost you money. Most utilities have between 5-50 tariffs that govern everything they can charge you. There are a host of factors that go into determining which tariff you qualify for, and calculating which one is best from a financial standpoint is a daunting task.
4. Demand Ratchet – Ratchet clauses in a tariff can also have significant effects on your bill each month. A ratchet clause is something suppliers have written into their tariffs to help them recoup expenses they incur during high demand times (i.e. summer). The ratchet is typically based off the peak demand you use (kW) during a particular set of time. The nasty part about a ratchet is that whatever ‘peak’ you hit, may be applied for up to 12 months across subsequent bills. This results in you being billed as if you were ‘demanding’ that same ‘peak’ amount of energy. When in reality, you were using much less. Understanding these clauses in the tariffs, and knowing how to avoid them will go a long way to keeping your costs down.
5. Multiplier/Constant – Most electrical meters only have the capacity to read up to a certain voltage or current. When the actual usage is higher than the meter can read, a ‘multiplier’ is used to determine the actual amount of usage. This directly impacts the amount of the bill as a result. The multiplier is made up of internal (customer) and external (determined by the tariff) factors. Sometimes the multiplier can simply be input wrong by the vendor (key punch error), resulting in errors and overcharges. And other times it’s necessary to look at all the variable factors that make up the multiplier to see if there is an opportunity for improvement.
The above are just 5 of the 15 things we look for when we do electrical audits for our clients. If we are able to uncover errors, overcharges, or deliver cost reductions we simply share in the savings 50/50 each month with our clients. If our expertise does not uncover any savings there is no fee. Contact us today to begin your risk-free, shared savings utility audit.