Energy is known to be one of the biggest operating expenses for many commercial office buildings. Between having to power a large amount of office equipment and heating and cooling large spaces, electricity costs can add up quickly for these offices.
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 average office energy costs, the difference between energy billing audits and energy consumption audits, and how an energy audit can bring savings to offices.
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.
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.
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, 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.
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. In these markets, we are able to look at energy pricing and agreements for offices of all sizes. 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.
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.
To optimize your spending on energy, you need to know how to negotiate properly with your energy supplier. You also need access to the most recent pricing data in order to compare your rates to similar types of office buildings.
At P3 Cost Analysts, we check both of these boxes. With our industry knowledge and resources, we figure out if your pricing is fair and can negotiate on your behalf with your energy supplier if we think you deserve better rates. Typically, these types of negotiations take place in deregulated energy markets where you actually have the option to choose between a variety of different energy suppliers.
Overcharges and errors happen frequently within the energy billing process and our auditors know exactly how to uncover them. Without our help, most customers would never know that they were overpaying due to these overcharges. Fortunately, we can bring these findings to your energy supplier to deliver you the credits back that you are entitled to.
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.
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.
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.
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.
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.
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, email us today!