Concerned About Inflation? 5 Ways to Optimize Your Energy Spend
There’s never a bad time to save money. No one likes to pay more than they need to, but rising interest rates and inflation are shining an even brighter spotlight on CFOs to spend wisely and closely manage fixed costs.
In fact, among CFOs, controlling costs is top of mind. In a late 2022 survey of CFOs by Grant Thornton, nearly 60 percent of respondents agreed that the best way to control costs is to optimize them.
For many businesses, energy expense is an area ripe with opportunity. Whether relying on electricity, natural gas, propane, fuel oils—or all of these if you have locations across the U.S.—energy is likely one of your highest spend areas. At the same time, optimizing energy expenditures is not simple.
The Energy Dilemma: Complexity and Cost
If your business spans multiple sites and regions, getting the most bang for your energy buck and staying on top of the constantly changing regulatory energy environment becomes increasingly complicated. Even in regulated markets, there are myriad incentives, rate classifications, and renewables purchasing options to stay on top of, not to mention the day-in, day-out time it takes to manage, pay, and audit utility bills across locations. This is where an objective advisor that’s dedicated 24/7 to all things energy can provide a lot of value.
Let’s take a look at the 5 ways an energy consultant can help you save time, optimize your energy budget, and meet your sustainability goals.
- Energy procurement expertise: If you don’t have a deep understanding of energy pricing in all the markets in which you operate, you are at the mercy of the energy companies that sell you supply. An independent energy advisor should have an extensive understanding of market trends and regulatory complexities for each state and utility where you conduct business.
- Reduce complexity with confidence: Energy procurement in deregulated markets is complex, and your organization may not have the in-house expertise needed to purchase electricity, natural gas, and other fuel supplies at the best prices. An energy analyst can help you determine your vest options so you can proactively manage and source your energy-related spend without a big time and resource commitment.What about regulated markets? Isn’t energy pricing non-negotiable in states like California? That’s partly true, but those markets feature varying rate tiers and numbers options to consider. An energy analyst understands the current rates and tariffs for every state and has knowledge of each utilities’ rate tariff menu.
- Outsource time-consuming tasks: Are you acquiring or opening a new location? Establishing and terminating utility accounts is a significant investment in time—with productivity lost to making calls to suppliers and long hold times. For example, one growing national retailer went from being 4 to 5 months behind in transferring services into their name to now working ahead by 1.5 to 2 months. As a result, they are no longer dealing with disconnects and avoiding costly shut downs and loss of perishable products in store. The costs add up if your business opens and closes locations frequently. Experts who do this work every day know the right questions to ask, can juggle all the details, and can negotiate rates and deposits on your behalf.
- Avoid unnecessary fees and charges: A thorough examination of your invoices can reveal opportunities to realize refunds, negotiate a better rate, or change a rate classification. This is especially true if your invoices go to individually managed locations, or if you depend on your accounts payable staff to be skilled utility bill analysts. Even in regulated markets with public utilities, you may be paying more than you need. An energy consultant will ensure your utility bills are checked for accuracy, and processing and payment is performed on time.
- Comply with the “E” in ESG: From accurate greenhouse gas emissions to reporting to renewable energy purchases to simply finding smarter ways to use less energy, there are many paths to reach your corporate sustainability targets. Should you choose a power purchase agreement (PPA), take part in community solar, or install your own solar panels? An energy consultant can help you navigate these critical sustainability decisions and get the most out of available incentives, rebates, renewables purchasing, and technology upgrades.
What to Ask When Looking for an Energy Consultant
While there are a host of third-party vendors in the market, there are key differences worth investigating. Ask these questions to identify the right energy partner for your business.
Do you supply energy equipment?
Bigger firms have both a consultancy side of the house and a supply side. This means they may incentivize you to choose their products. If you want unbiased energy advice, it’s best to choose an independent advisor who does not benefit financially from your energy purchase.
What’s your average employee tenure?
This may seem like an odd question, but deep expertise in a constantly changing energy sector doesn’t happen overnight. It takes years of experience with knowledgeable, long-tenured teams that are dedicated to staying on top of every nuance and detail, in every market.
Is your energy procurement process automated?
While there are a lot of benefits to automation, negotiating with energy suppliers is not one of them. With so many suppliers in the marketplace, the best suppliers may not participate in automated events. A partner who engages in personal, white-glove service results in better pricing for you.
What is the breadth of energy and sustainability services?
Some vendors offer à la carte services in specific markets or regions. Some may have expertise in one area (i.e. renewable energy purchasing), but no in others (i.e. utility bill and rate management and account transition service). If your business spans multiple states and regulatory environments, you’ll get the most value from a partner who can manage your entire energy and sustainability strategy.
Optimize Every Energy Dollar Spent
By helping you to assess and evaluate your energy spend, and by providing ongoing contract management and identification of energy efficiency opportunities, an energy consultant can give you the confidence that your business is optimizing every energy dollar spent.
Find out how your business can benefit from unmatched energy expertise. Contact us.
Brandon Sisson is vice president of energy sales at Cost Control Associates. His energy management experience includes regulated rate review, strategic energy sourcing, utility bill processing and demand-side energy efficiency/sustainability initiatives. Brandon has assisted Global 1000 customers with energy spend optimization across a broad spectrum of industries. Prior to joining Cost Control Associates, he held energy-focused leadership roles for Accenture, Insight Sourcing Group and Procurian.