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How Businesses Can Insulate Themselves from Utility Price Changes

January 9, 2015 By Karen Henry

price variation energy manageChanges in environmental regulations, court rulings, global energy markets and energy technologies are creating an environment in which nearly every US state and utility commission will have to make decisions that will affect the future cost of utilities.

As a result, businesses, nonprofits and government organizations will experience uncertainty in utility rates in 2015 and beyond, according to a Newswire.net article. Here are some of the factors contributing to price volatility:

  • Electricity rate changes—up and down—vary depending on the state and the utility.
  • The US electric grid of the future will likely be a low carbon emitting, smart grid, requiring replacement of current power plants by 2050 and new approaches by utilities.
  • The average oil price is forecasted at $68/bbl, $48 below the 2014 peak. Prices are expected to be lower than average toward the end of 2015. Current natural gas prices are predicted to hold steady through 2015.
  • The cost of renewable energy installations continues to drop, and in some cases utilities are lobbying to charge customers to offset revenue decreases from renewables.
  • Some experts predict that new EPA carbon emissions regulations will cause utilities to raise rates to cover the cost of controls. Others say this prediction is overstated.

These uncertainties are forcing businesses to take additional steps to manage their utility costs. Here are the top three things that business managers can do to help insulate their organizations from utility price changes, according to Newswire.net:

  1. Continuously optimize commercial and industrial processes and building energy use to reduce energy consumption. Energy is the third biggest budget item for most US companies and for some, it ranks even higher. LED lighting, variable speed drives and energy management systems can all help reduce BTUs and kWhs.
  2. Elevate the priority of an all-utility invoice audit to equal the priority of financial, safety and other routine audits. A utility invoice audit will not reduce consumption, but when done correctly, it can identify utility overcharge errors that can amount to significant savings and refunds.
  3. Investigate alternative suppliers. Deregulation has opened an opportunity to use a gas or electricity supplier and lock in favorable rates. In this case the distribution supplier does not change, so customer service and maintenance remains consistent, but the monthly bill is lower.

To help consumers with the most costly energy bills budget effectively in 2014, WalletHub identified the states with the least expensive energy and the most expensive energy

One comment on “How Businesses Can Insulate Themselves from Utility Price Changes

  1. There really is no way to insulate your business from utility price changes because the rates reflect the cost of oil, gas, renewables, that they themselves have to spend. We are entering our 22nd year in business and I don’t ever remember experiencing dramatic spikes in the price of our youth electricity in all that time. Nevertheless, our industrial complex’s tenant Association is currently looking into the feasibility of adding solar panels as a way of reducing electricity costs as well as reduce the cost of our hot water.

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