PES BLOG: Energy Cost Management – A simple strategy that all businesses cannot afford to ignore
Every business needs an energy cost management strategy irrespective of size. In most companies this expense ranks in the top 5 costs but is still largely unmanaged and left to the incumbent provider to ensure you get best value. Neville Snell, PES Performance’s Director of Business Cost Solutions explains the importance of such a strategy.
Commercial energy prices are still trending upwards – basically because it is a sellers’ market with diminishing supply especially in the short term. If you delay it can only cost you money; act without knowledge it could cost you more. By following the simple steps below you can start to manage your energy costs.
What do you use now?, what are you going to use in the future? How does your business operate and at what times? When are your peak demands? What are your current rates, terms and dates for your current provider? Simple questions but you would be amazed at what answers will come up when you ask the questions. If you don’t know where you are now, how can you know where you are going?
Does the information you have from above reflect what you are actually doing. Measure your performance and see what others are doing in similar organisations. Can you take simple in-house measures to alter the consumption costs now? Remember the energy costs are made up of two parts – cost and consumption. Most businesses only look at costs not the behaviours that affect consumption. Are there any practices in your work flow that can save energy? Is there an opportunity to increase the efficiency of machinery or staff?
Energy Cost Analysis / Market Review
Now you have all the usage facts at hand you can start to look at costs. What are the full costs that impact on your business – tariff, CCL, FiT, RO, STC, DuoS, TuoS, take or pay, DD. Confused? Do I get a fixed contract, flexible, semi fixed, take and pay, co terminus contracts, varied supplier, capped? Still confused?
Now you have the cost and usage facts understood ask yourself this critical question – how much time and energy will it take to ensure you get the best deal for your business? Can you undertake all of this in-house or do you need help. Do you have the expertise and the access to the market to see what the best deal for you? Remember the cheapest is not always the best – beware of the hidden charges / terms. What type of help do I need and what will the cost / benefit be?
Review and move forward
Energy costs move due to consumption and dependent on the contract you have decided upon price. What can you do internally to reduce consumption or externally to improve efficiency through the use of renewable or solar energy. Can we use alternative energy supplies – biomass, LPG?
If you need help or assistance on any of the steps above call us at PES Performance. We know we can help you as we have for others who are seeing energy costs rise with no action plan in place to manage them.
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