Energy is known to be one of the biggest operating expenses for many commercial office buildings, making the average office electricity bill a critical metric for office managers and business owners to understand. This article is designed specifically for office managers and business owners who want to get a clear picture of the average office electricity bill, the main factors that drive these costs, and actionable strategies to reduce them. Understanding your office electricity bill matters because it represents a major operating expense, but also offers significant potential for savings. On this page, you’ll find typical cost figures for office electricity bills and practical savings strategies to help your business control energy expenses.
Fortunately, offices in commercial buildings can find savings in this cost category by working through a utility audit.
While our most successful cost reduction categories for office clients are waste management, telecom, and managed print services, in this article, we will take a look at the average office electricity bill, the difference between energy billing audits and energy consumption audits, and how an energy audit can bring savings to offices.
Introduction to Commercial Electricity
Commercial electricity is the backbone of modern businesses, powering everything from essential lighting and climate control to computers and specialized equipment. For offices and commercial buildings, understanding how much electricity is used—and how it’s billed—is key to managing expenses and improving profitability.
Key Definitions:
Commercial electricity rate: A commercial electricity rate is the price per kilowatt-hour (kWh) that businesses pay for electricity, which averaged 12.55 cents per kWh in 2022 but varies by region.
Peak demand charges: Peak demand charges are fees based on the highest level of electricity your business draws during a billing cycle, not just total consumption.
Energy audit: An energy audit is a process that reviews your office’s energy usage or billing to identify savings opportunities.
The average electricity cost for businesses can vary widely based on several factors, including location, industry, and overall energy usage. According to the Energy Information Administration (EIA), the national average commercial electricity rate is about 14.12 cents per kilowatt hour (kWh). However, this average masks significant regional differences: for example, businesses in North Dakota benefit from some of the lowest rates in the country at just 7.44 cents per kWh, while those in Rhode Island face rates as high as 24.45 cents per kWh. These differences highlight the importance of understanding your local electricity rates and the factors that influence your office’s energy costs, especially when lighting and other high-usage systems are involved.
Types of Office Energy Audits
Offices can conduct two different types of energy audits: energy billing audits and energy consumption audits. One key difference between these audits is that energy billing audits focus on finding offices savings within their energy invoices and contracts, including reviewing the current contract to optimize rates, whereas consumption-based audits seek to help businesses better understand their energy usage.
Another key difference is that energy billing audits don’t require any capital investment to uncover savings, whereas the energy management solutions recommended during a consumption-based audit can be quite costly. For this reason, we will focus most of our attention on energy billing audits as they don’t require additional capital expenditure on the part of an office. When analyzing tariff documents, it is also important to review the rate schedule to ensure the office is on the most suitable plan for its needs.
Now that you know the main types of energy audits available, let’s explore what typical office electricity costs look like and the factors that influence them.
Average Office Electricity Costs
The primary factor affecting office electricity costs is total square footage, but other important factors include the age of the building, insulation quality, and the use of energy-efficient technologies. Commercial electricity rates averaged 12.55 cents per kWh in 2022, but can vary widely by region. The average U.S. commercial electricity bill is approximately $862 per month, though this can differ significantly based on usage and location.
Summary of Average Office Electricity Bill Figures
Average U.S. commercial electricity bill: $862/month
Average electricity cost for small commercial spaces: $2.10–$2.14 per square foot annually
Average electricity cost for private-sector office buildings: $1.69 per square foot (2016)
Average commercial electricity rate: 12.55 cents per kWh (2022)
Annual Electricity Cost per Square Foot
According to data from the Commercial Building Energy Consumption Survey, office buildings in the U.S. spend on average $1.44 per square foot on electricity and $0.30 per square foot on natural gas annually. For the typical office building, heating, cooling, and lighting represent 54%–71% of an office’s total energy use, depending on the climate. Additionally, energy costs make up about 19% of an office’s total expenditure. Compared to other industries, office buildings often have different energy usage patterns and costs, making it important to benchmark against industry-specific data to identify potential savings.
For example, a mid-sized office building of 20,000 square feet which fits the needs of around 100 employees, the annual energy costs would be approximately $34,800 per year. This is simply an estimate and offices will pay much more or much less for electricity depending on their size, location, and type of operation. Commercial electricity rates for offices are generally lower than residential rates, and the billing structure differs from what residential customers typically experience.
Energy Use Breakdown
For the typical office building, heating, cooling, and lighting represent 54%–71% of an office’s total energy use, depending on the climate. Additionally, energy costs make up about 19% of an office’s total expenditure. Compared to other industries, office buildings often have different energy usage patterns and costs, making it important to benchmark against industry-specific data to identify potential savings.
Now that we’ve covered typical office electricity expenses, let’s look at the main factors that influence these costs.
Factors Affecting Electricity Bills
Several key factors determine how much your business pays on its electricity bill each month. Understanding these factors can help you make informed decisions when comparing commercial electricity rates.
Overall energy usage: Offices that use more electricity, especially during peak demand hours (typically 9am to 5pm), will see higher costs.
Peak demand charges: These are based on the highest level of electricity your business draws during a billing cycle, and can significantly increase your expenses if your operations require a lot of power at once.
Lighting choices: The type of lighting you use also plays a role. Switching from traditional incandescent bulbs to energy-efficient LED lighting can reduce energy consumption and lower costs.
Solar panels and renewable energy: Investing in solar panels can help offset your energy usage from the grid, further reducing your electricity expenses.
Energy provider selection: The choice of energy provider and the structure of your electricity plan can also impact your bill, as some providers offer incentives for using less energy during peak times or for adopting renewable energy solutions.
Peak Demand Charges
Peak demand charges are a major component of commercial electricity bills. These charges are based on the highest level of electricity your business draws during a billing cycle, not just your total consumption. Managing peak demand can help reduce these costs.
Lighting Choices
Lighting is a significant contributor to office energy use. Upgrading to energy-efficient LED lighting can lower your electricity consumption and reduce your bill.
Energy Provider Selection
The energy provider you choose and the type of plan you select (fixed-rate vs. variable-rate) can have a big impact on your monthly costs. Shopping around for the best rates and considering providers that offer renewable energy options can help you save.
Understanding these factors can help you make informed decisions when comparing commercial electricity rates.
Commercial Electricity Rates
Commercial electricity rates are not uniform across the country—they can vary dramatically depending on your state, region, and whether your market is regulated or deregulated. In deregulated states like Texas and New York, businesses can choose from many providers and shop around for better rates, sometimes securing electricity for as little as 8 cents per kWh. In contrast, regulated states such as California and Florida often have higher average prices, sometimes exceeding 20 cents per kWh, due to limited provider options and less competition. The average price your business pays per kWh will depend on these local factors, as well as your specific energy needs and usage patterns. Comparing plans and providers is essential for finding lower rates and keeping your electricity costs in check.
As you consider your options for electricity providers, it’s important to understand how to select the right plan for your office’s needs.
Choosing an Energy Provider
Selecting the right energy provider is a crucial step in managing your business’s electricity costs. When evaluating providers, consider factors such as their reputation, customer service, and the types of electricity plans they offer. Fixed-rate plans can provide stability and predictability for your monthly bill, while variable-rate plans may offer flexibility but come with the risk of price fluctuations. It’s also wise to look at a provider’s commitment to renewable energy and energy efficiency—many providers now offer plans that include a portion of power from renewable sources, helping your business reduce its environmental impact. By carefully comparing providers and plans, you can find services that align with your business’s energy needs and sustainability goals, while also securing better rates and terms.
Now that you know how to choose an energy provider, let’s revisit the two main types of energy audits and how they can help you save.
Types of Office Energy Audits
Offices can conduct two different types of energy audits: energy billing audits and energy consumption audits. One key difference between these audits is that energy billing audits focus on finding offices savings within their energy invoices and contracts, including reviewing the current contract to optimize rates, whereas consumption-based audits seek to help businesses better understand their energy usage.
Another key difference is that energy billing audits don’t require any capital investment to uncover savings, whereas the energy management solutions recommended during a consumption-based audit can be quite costly. For this reason, we will focus most of our attention on energy billing audits as they don’t require additional capital expenditure on the part of an office. When analyzing tariff documents, it is also important to review the rate schedule to ensure the office is on the most suitable plan for its needs.
Office Energy Billing Audit
Conducted by a team of expert auditors, energy billing audits help offices uncover savings that are hidden within energy invoices and contracts.
At P3 Cost Analysts, our professionals are skilled in and focus on this type of energy audit. Through the energy audit process, our auditors will deeply analyze an office’s invoices to find many types of overcharges and errors that can happen within the billing process. In most cases, the average customer would be paying for these overcharges without knowing it. With our industry knowledge, we also understand how to work through your energy tariff documents to make sure that you are functioning under the correct ones, leading to optimized spending on energy.
The whole point of an energy billing audit is to deliver financial savings without the need for additional capital expenditure. We won’t spend any time recommending energy-efficient technologies or products that focus on managing your consumption.
In most cases, deregulated energy markets provide the best opportunity for savings. A deregulated market is a system where electricity generation and supply are separated from delivery, allowing businesses to choose among multiple providers for competitive energy prices, while the local utility still manages the physical grid and delivery services under regulated rates. In these markets, we are able to look at energy pricing and agreements for offices of all sizes. Small businesses can particularly benefit from shopping for competitive energy plans in deregulated markets. But, if an office’s energy expenses exceed roughly $5,000/month, we may be able to find savings for these clients in regulated markets, too.
In a deregulated state, businesses have more options and can shop for better rates, increasing their chances of reducing energy costs.
Savings are harder to come by in regulated markets since there aren’t as many tariff options that offices can qualify for. In comparison, other businesses that use a high volume of electricity, such as factories and hospitals, tend to have a variety of tariff options we can analyze.
If there are other riders or fees that offices can opt-out of to find additional savings, an audit could still be worthwhile in regulated markets.
Benefits of an Office Energy Billing Audit
The main benefits of an office energy billing audit include:
Negotiation with your energy supplier: We can negotiate on your behalf to secure better rates, especially in deregulated markets.
Access to the most recent pricing data: We compare your rates to similar types of office buildings to ensure your pricing is fair.
Uncovering overcharges and errors: Our auditors are experts at finding billing errors and overcharges that most customers would never notice.
Securing credits for overpayments: We bring our findings to your energy supplier to deliver you the credits back that you are entitled to.
Ensuring qualification for proper energy tariffs: We analyze your tariff documents and make necessary changes so your spending is optimized.
Qualifying for the Proper Energy Tariffs
While the tariff options in regulated markets are often limited for offices, if the size of the office is large enough and expenses are high enough (approximately $5,000/month), it can still warrant an analysis.
To save the most money possible on energy, offices need to be qualified for the proper energy tariffs. In most cases, offices don’t know whether or not they are functioning under the proper tariffs. With our expertise, we can analyze your tariff documents and make the necessary changes so that your spending is optimized.
To see a detailed explanation of all the possible overcharges and areas where we can help, you can read our energy auditing white paper.
Office Energy Consumption Audit
The second type of energy audit that offices can have is a consumption-based energy audit. A consumption-based audit is used to help offices track their consumption practices while also highlighting ways to implement energy-efficient technologies. There’s a wide range of products and technologies that consumption-based auditing firms may recommend.
Reducing energy consumption not only saves money but also benefits the environment.
While better management of energy usage is valuable, most of the recommended products or technologies will require capital investment from the office. To find savings on energy without any additional capital expenditure, offices will have to work through an energy billing audit with a professional team.
Understanding and managing peak usage can help offices avoid demand charges and reduce strain on grid capacity.
Renewable Energy Options
Benefits of Renewable Energy for Offices
Renewable energy is becoming an increasingly attractive option for businesses looking to lower their electricity bills and reduce their carbon footprint. Installing solar panels, for example, allows offices to generate their own power, decreasing reliance on the grid and cutting overall energy consumption. Many energy providers now offer renewable energy plans, which can lock in a fixed price for clean power and help businesses manage costs more effectively. Utilizing renewable energy can also help reduce peak demand charges, as on-site generation can offset high usage periods. According to the Energy Information Administration, businesses that invest in renewable energy can reduce their energy consumption by up to 20% and lower their electricity bills by as much as 15%. By exploring solar and other renewable options, businesses can not only save money but also demonstrate a commitment to sustainability and environmental responsibility.
Now that you know how renewable energy can benefit your office, let’s look at how the energy billing audit process works.
P3's Energy Billing Audit Process
Our client relationship begins with a 20-minute meeting, where we explain our shared savings agreement and describe the materials we will need to begin the audit. These materials typically include copies of contracts, invoices, and authorization documents.
Utilities play a crucial role in delivering electricity to your office and maintaining the electrical grid. The rates and services provided by utility companies can significantly impact your average office electricity bill, as utility rate structures and service fees vary by provider and region.
Onboarding consists of us gaining access to 12 – 36 months’ worth of your energy invoices. How far back we go depends on the statute of limitations within your state.
Our team begins thoroughly analyzing these invoices, looking for any overcharges, unnecessary fees, and other billing errors. Typically, we will update our clients on a weekly or bi-weekly basis, to share our findings and deliver savings as we go. On average, it can take four to six weeks to bring our findings to our clients and then another four to six weeks to implement the savings.
Ongoing auditing consists of us managing your invoices every month to make sure your savings stay intact and to keep an eye out for any further errors or overcharges.
Save on Commercial Building Energy Costs
Offices are major consumers of energy due to having to power a lot of office equipment and heating and cooling large spaces.
For offices looking for savings within their energy invoices, conducting an energy billing audit is a must. By working with a team of energy auditing experts, you can uncover a variety of different errors, overcharges, or other opportunities for savings. Furthermore, an energy billing audit will ensure that you are qualified for the correct energy tariffs.
Offices can also conduct a consumption-based energy audit. This can help them better understand their energy usage and figure out what types of technology they could implement to reduce energy waste. But, since many of these recommended solutions require additional investment from your office, a consumption-based audit may not be a good fit for your current situation.
If you’re interested in conducting an energy billing audit for your office, our team at P3 Cost Analysts is ready and able to help. To schedule your free expense audit, contact us today!
