Retail stores are known to be major energy consumers due to lighting, heating, and cooling large spaces. Furthermore, for retail stores that sell a large amount of refrigerated or frozen goods, these electrical costs can add up even quicker.
The good news is that retail stores can cut costs on energy and improve their bottom line by working through an energy audit with a team of experts.
While our most successful cost reduction categories for retail clients are waste/recycling, telecom, and managed print services, in this article, we will take a look at average retail energy costs, the difference between energy billing audits and energy consumption audits, and why an energy audit can bring savings to retail stores.
Average Retail Store Electricity Costs
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.
An average-sized 50,000 square foot retail building may spend around $90,000 per year on energy. For most U.S. retailers, this is one of their largest in-store operating costs. Though the average electric bill will vary depending on the size of the retail store, its consumption practices, and the ratio of electricity to natural gas, these numbers serve as a good estimate.
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.
Retail Store Consumption-Based Energy Audit
The other type of energy audit retail stores can conduct is a consumption-based energy audit. These types of audits help retail stores better understand their 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.
Our Energy Billing Audit Process
Step 1: 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.
Step 2: 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.
Step 3: 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.
Step 4: 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.
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!