How To Spot a $120,000 Saving in 30 Minutes!
Most procurement professionals are at least somewhat familiar with the energy procurement process and how diabolical it can be. Procurement folk are not electricity experts and we dread going through the procurement process. But when its all done, we celebrate when the process is complete and forget about the management of the electricity accounts. So what happens after the contract is signed? Unfortunately, the answer is often “nothing.” Many organisations seem to feel that once the actual “energy procurement” part of the job is done there’s nothing else to do.
In reality, nothing could be further from the truth: Even after the contract is signed, there are several things your organisation can do to ensure that you don’t end up paying more than you should for energy.
I had the pleasure of working with a forward thinking progressive council recently, however I found that their small sites electricity bills were the standard pricing. Meaning I was getting better rates at my home address than an organisation with 150 small sites. To put a dollar sign to my little find, I conducted an analysis which showed that with a conservative discount applied to the account, I could save that one site $800 per annum. Multiply this by 150 sites provided us with an estimate saving of $120,000 per annum.
Here are some handy tips on what you can do after the contract is signed:
- Utility Bill Auditing – In general, the more complicated something is, the greater the opportunity for errors. This is especially true in the case of energy suppliers who manage and invoice thousands of customers a month, with numerous rates and levels of complexity. When it comes to billing, there’s a lot of room for human error – and that’s why it pays to invest in utility bill auditing services.
- Tariff Rate Analysis – In regulated areas, utility companies take many items into account when developing rate structures and tariffs. These items include energy usage, energy demand, purpose of usage, and type of meter. This means that electricity rates can vary based on the size, usage characteristics, and diverse electrical needs of their service territory, as well as many other factors.
- Energy Data Management – Accurate data helps you build your organisations energy budget; evaluate energy price forecasts; and plan and execute successful energy procurement contracts, which all lead to increased efficiency and long-term energy savings.
Improved energy data management can help your organisation’s energy procurement professionals with data critical to a wide range of tasks, including:
– Developing energy budgets and forecasts
– Analysing trends and variances
– Assessing contract performance
– Managing multi-site utility information
What’s more, accurate data will provide your organisation’s financial coordinators with the numbers they need to monitor and analyse the budget, and energy managers will have the data they need to evaluate your organisation’s energy efficiency. Having good data is a win-win for everyone involved in energy management.
- Check the contract! Many times, have I seen organisations throw the contract in their drawers or e-document management systems and not refer to it until it is up for renewal. I suggest a spot audit of 10% of the accounts you manage throughout the year against the contract. Seriously, it took me 30 minutes to pick up a $120,000 saving!
Cutting Electricity Costs – A Job that Never Ends
While it’s true that much of the focus on energy savings falls on procuring the actual commodity and securing a low rate, there are a host of additional services and strategies that can be employed to provide additional savings. But the number one recommendation is to hire a specialist energy procurement professional or analyst.