Retail store owners and managers face significant operating expenses, with energy costs often ranking among the highest. This article explores the average electric bill for retail stores, the main factors that affect these costs, and actionable strategies to reduce them. Understanding your store’s average electric bill is crucial because it directly impacts your bottom line—controlling these expenses can lead to substantial savings and improved profitability.
Introduction to Energy Costs
For small businesses, keeping a close eye on energy costs is essential to maintaining a healthy bottom line. Energy expenses can make up a significant portion of monthly utility bills, especially for businesses that rely heavily on lighting, heating, cooling, or specialized equipment. The Energy Information Administration (EIA) offers valuable data and insights into energy usage and consumption trends, empowering business owners to make informed decisions about their energy management.
By understanding the factors that drive energy costs and regularly reviewing their energy consumption, small businesses can identify opportunities to save money, reduce unnecessary expenses, and improve overall efficiency. Taking a proactive approach to monitoring energy usage not only helps control costs but also supports long-term financial stability.
Next, let’s examine the key factors that influence electricity bills for retail stores.
Factors Affecting Electricity Bills
Electricity bills for retail stores and other small businesses can vary widely based on several key factors. The type of business, its location, and how and when energy is used all play a role in determining electricity costs. For example, businesses operating in deregulated markets like Texas or New York often have access to multiple retail electricity suppliers, which can lead to more competitive retail electricity prices compared to regulated markets such as North Dakota or Rhode Island, where rates are set by the local utility.
The amount of electricity a business consumes, measured in kilowatt hours (kWh), is another major factor—higher usage typically means higher expenses. Additionally, electricity prices can fluctuate depending on the time of day and season, with peak demand hours often resulting in increased electricity expenses.
By understanding these factors and adjusting their energy usage patterns, small businesses can take steps to cut costs and lower their average electric bill, making a noticeable difference in their monthly expenses.
Now that we’ve covered the main factors influencing electricity costs, let’s look at what retail stores typically pay.
Average Retail Store Electricity Costs
Average electric bills vary across industries and different types of businesses due to many important factors, including geographical location and energy usage. The term “average electric bill” refers to the typical monthly or annual amount paid by retail stores for electricity, and this figure can fluctuate significantly depending on the store’s size, type, and location.
Key Average Electric Bill Figures for Retail Stores
Here’s a quick summary of average electric bill figures for retail stores and small businesses:
National average monthly bill for commercial properties: $647.61 (2019)
Small retail store (700 sq ft): $200–$1,150/month
Small business average: $500–$2,000/month
National average monthly bill for small business owners: ~$2.14 per sq ft
Clothing/general merchandise stores: $1.21 per sq ft/year
Convenience stores: $6–$14 per sq ft/year
Grocery store (40,000 sq ft): ~$160,000/year
Average-sized retail (50,000 sq ft): ~$90,000/year
These averages provide a useful benchmark for retail store owners and managers evaluating their own energy expenses.
What Is the Average Electric Bill for a Retail Store?
According to the Energy Information Administration (EIA), retail stores use around 14.3 kilowatt-hours (kWh) of electricity and 30.9 cubic feet of natural gas per square foot each year. This leads retail stores in the U.S. to spend an annual average of $1.47 per square foot on electricity and $0.29 per square foot on natural gas.
In a typical retail building, lighting, cooling, and heating make up roughly 69–84 percent of their total energy usage depending on the climate they operate in.
Example: Average Electric Bill for Different Retail Store Sizes
Small retail stores (e.g., 700 sq ft): Monthly utility costs range from $200 to $1,150.
Small businesses: Typically allocate between $500 and $2,000 monthly for electricity expenses.
National average monthly bill for small business owners: About $2.14 per square foot.
Clothing and general merchandise stores: Average $1.21 per square foot annually on electricity.
Convenience stores: Annual energy costs range from $6 to $14 per square foot due to higher refrigeration needs.
Grocery stores (40,000 sq ft): May have an annual electric bill around $160,000.
Retailers with high refrigeration needs: Can pay up to $4 per square foot annually.
Average-sized retail (50,000 sq ft): May spend around $90,000 per year on energy.
Electricity Cost Examples by Store Type
Average annual spending on electrical energy for retail stores can vary based on business type and operations:
Clothing and general merchandise stores: $1.21 per square foot annually on electricity.
Convenience stores: $6 to $14 per square foot annually, primarily due to refrigeration.
Grocery stores (40,000 sq ft): ~$160,000 per year.
Retailers with high refrigeration needs: Up to $4 per square foot annually.
These costs vary based on how much energy is used, the supply and demand for power, and the energy price set in the wholesale market, which ultimately impacts retail rates and what businesses are paying on their monthly bills.
The average commercial electricity rate is approximately 12.75 cents per kilowatt hour (kWh) as of 2024, but rates can vary significantly by state—businesses in Texas may pay as little as 9.0 cents per kWh, while those in California can face rates as high as 24.4 cents per kWh. New Mexico is an example of a state with some of the lowest utility bills for small businesses.
Average electric bills for small businesses are higher in some states than in others and can vary based on industry, business type, location, and energy usage. Retail rates for commercial customers are typically different from residential rates, reflecting differences in supply costs and operations.
With a clear understanding of average electric bills for retail stores, let’s explore how energy use and consumption patterns can further impact your costs.
Energy Use and Consumption Patterns
Energy use and consumption patterns can differ greatly depending on the industry and the specific needs of a business. Retail stores, for instance, often have higher total energy consumption due to extensive lighting, heating, and cooling requirements, while other industries like office spaces may have lower energy usage.
Key Factors in Retail Store Energy Consumption
Type of equipment used: Refrigeration, lighting, and HVAC systems are major contributors.
Operating hours: Longer hours mean higher energy consumption.
Location: Climate and regional energy rates affect overall expenses.
By closely monitoring their energy usage and identifying areas where consumption can be reduced, small businesses can implement energy-efficient solutions—like upgrading to LED lighting or optimizing heating and cooling systems—to lower their monthly utility bills.
Strategies for Reducing Energy Consumption
Adopting efficient practices not only helps save money but also reduces the overall environmental impact of the business. With a strategic approach to energy management, businesses can keep their energy expenses in check and improve their bottom line.
Now that you know how energy is used in retail stores, let’s look at the types of energy audits available to help you find savings.
Types of Retail Store Energy Audits
Retail stores have two different types of energy audits they can choose from—energy billing audits and consumption-based energy audits.
Consumption-based audits focus on helping retail stores better manage their usage while energy billing audits are used to uncover savings that are found within a retail store’s energy contracts, invoices, and tariffs. Additionally, an energy billing audit is a risk-free process that doesn’t require any investment, while the solutions recommended during a consumption-based audit require capital expenditure.
For retail stores looking to cut costs without impacting their bottom line, an energy billing audit is the best choice.
Retail Energy Billing Audit
There are many savings hidden within a retail store’s energy invoices and contracts that are uncovered during an energy billing audit.
At P3 Cost Analysts, our team is proficient at this type of utility audit. During an energy billing audit, our professionals will take a close look at a retail store’s invoices and contracts in order to uncover a variety of different errors or overcharges that can occur. These overcharges largely go unnoticed by retail stores and it’s not until we take a look under the hood that they become aware of how much money is going to waste. Additionally, our experts are able to understand a retail store’s tariff options and help it qualify for the proper tariffs. This ultimately leads to optimized energy spending.
At no point during the process will we recommend new energy management technologies or products that require investment from your retail store. Our strict aim is to bring you financial savings.
Typically, we find retail stores the best savings in deregulated energy markets because we are able to compare energy pricing between different sized retail locations. However, for large retail locations in regulated markets that spend approximately ($5,000-$10,000/month) on energy, savings can also be found.
Tariff options are limited for retail stores in regulated markets, therefore, savings are also more limited. But, since there can be riders or other fees that retail stores can get out of in regulated markets, an energy billing audit can still be useful.
In the section below, we take a look at the benefits of working through an energy billing audit and how P3 Cost Analysts find savings due to overcharges or errors on your electric bills.
Benefits of a Retail Energy Billing Audit
Negotiating Better Energy Rates
Negotiating with your energy supplier in a deregulated energy market is quite difficult if you don’t have the right expertise. At P3 Cost Analysts, we not only understand the best ways to negotiate with suppliers, but we also have access to the most relevant pricing data for the retail industry. This allows us to compare your pricing with other similar stores to see if your rates are acceptable.
If we think your rates aren’t fair, we will work directly with the energy supplier to get you the rates that serve your store best.
Correcting Overcharges and Billing Errors
During the billing process, overcharges and errors are bound to happen. Luckily, our team of experts knows how to uncover these overcharges and errors and understand what utility companies are responsible for in regards to these overcharges. Once we have our findings, we bring them directly to the utility company to get your credits back.
Qualifying for the Proper Energy Tariffs
While the tariff options in regulated markets are often limited for retail stores, if the size of the store is large enough, and expenses are high enough (approximately $5,000-$10,000/month), it can still warrant an analysis.
Energy tariffs are difficult to understand for the average customer. But, with our expertise, we can figure out which tariff options would suit your store best and get you qualified for them. Functioning under the proper tariffs is a must when considering how to reduce spending on energy costs.
To see a detailed explanation of all the possible overcharges and areas we can help, you can read our Energy Auditing white paper.
If you’re interested in a more hands-on approach to reducing energy usage, a consumption-based audit may be the next step.
Retail Store Consumption-Based Energy Audit
The other type of energy audit retail stores can conduct is a consumption-based energy audit. For most small businesses, lighting and HVAC systems are the largest contributors to energy consumption. These types of audits help retail stores better understand their electrical energy usage and are also used to figure out what types of energy-efficient technologies could benefit the store. Many companies offer this type of audit and they may recommend a wide range of products and technologies.
Though energy efficiency is a good goal, achieving it often requires a great deal of capital investment from the retail store. For this reason, many retail stores choose to conduct an energy billing audit with a team of experts.
Let’s walk through what you can expect from our energy billing audit process.
Our Energy Billing Audit Process
Engagement:
To kick off our engagement, we will hold a 20-minute meeting to explain the materials we need to start the audit and also describe our shared savings agreement. In most cases, we will need to obtain copies of invoices, contracts, and authorization documents.Onboarding:
During the onboarding phase, we will gain access to 12–36 months’ worth of your energy invoices. How far back we go depends on the statute of limitations within your state.Audit:
Our team starts analyzing your 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 4–6 weeks to bring our findings to our clients and then another 4–6 weeks to implement the savings.Ongoing Auditing:
By auditing your invoices each month following the initial audit, we make sure that no new overcharges or errors occur and ensure that your savings stay intact.
Ready to take action? Here’s how you can start reducing your retail energy bill today.
Reduce Your Retail Energy Bill Today
Retail stores are major consumers of energy for a variety of reasons. These include having to light, heat, and cool large spaces while also providing refrigeration for goods where needed.
For retail stores wanting to cut energy costs without further investment, conducting a utility billing audit is a must. By working with a team of experts, you can uncover a variety of errors, overcharges, or other opportunities for savings. Furthermore, an audit will ensure that you are qualified for the correct energy tariffs.
Retail stores can also conduct a consumption-based energy audit. This can help them better manage their energy usage and possibly encourage the implementation of energy-efficient technologies. But, since many of these recommended solutions require additional investment from your retail store, a consumption-based audit may not be the right fit for your current situation.
If you’re interested in conducting an energy billing audit for your retail store, our team at P3 Cost Analysts is ready and able to help. To schedule your free expense audit, contact us today!
