K-12 schools across the country are major energy consumers. The reasons for this include the need to power a large amount of office equipment, heat and cool large spaces, and maintain proper lighting throughout the facilities. With many schools already functioning on tight budgets, they need to find ways to cut costs without impacting their resources for teaching.
Fortunately, schools can find savings on their electric bills by working through a detailed energy audit. In this article, we will explore average school electricity costs, the two different types of energy audits, and how schools can reduce spending on energy through an audit.
According to data from the U.S. Energy Information Administration (EIA), K-12 schools in America annually spend an average of $0.67 per square foot on electricity and $0.19 per square foot on natural gas. For example, a typical 1,000 student high school requires around 173,730 square feet to accommodate its students. This means that a school of this size might pay around $149,500 for energy depending on its location, consumption practices, and ratio of electricity to natural gas usage.
Schools typically use around 10 kilowatt-hours (kWh) of electricity and 50 cubic feet of natural gas per square foot on an annual basis. Furthermore, space heating, lighting, and water heating make up around 74%–86% of their total energy usage depending on a school’s location.
Even though energy spending only represents 2%–4% of a school’s total spending, it’s a great area to find savings without negatively impacting the ability to care for and educate students.
Schools can work through two different types of audits: an energy billing audit and a consumption-based energy audit. Since most schools are looking for ways to reduce spending without the need for additional investment, the information below will mostly highlight the details and benefits of an energy billing audit.
Energy billing audits are a risk-free process, whereas consumption-based audits typically require some form of capital expenditure to see the benefits.
An energy billing audit serves as a way for schools to find savings that are hidden within their energy invoices and contracts. During an energy billing audit, a team of experts will take an in-depth look at a school’s invoices to uncover a variety of errors, overcharges, and other opportunities for savings that most schools wouldn’t be able to find on their own. Expert auditors will also analyze the energy tariffs to make sure that spending is optimized in this cost category.
An energy billing audit is not used to find ways to reduce consumption or to implement energy-efficient technologies that can be costly. Rather, the team of auditors is strictly looking for financial savings found in the energy invoices and contracts.
Below, we highlight the benefits of working through an energy billing audit and how P3 Cost Analysts find savings due to overcharges or errors on electric bills.
During an energy billing audit, your team of experts will be able to compare your current energy pricing with nationwide pricing data to see if your rates are consistent with similar types of schools. This data is updated frequently but the average customer won’t know how to find or truly understand this information.
If your team of auditors thinks that you’re overspending for the level of service you receive, they can negotiate directly with your energy supplier in order to deliver you better pricing. It should be noted that these types of negotiations typically take place in deregulated energy markets where you have the chance to choose your energy supplier.
When working through an energy billing audit, your team of auditors will thoroughly analyze your current and past invoices to find many types of overcharges, errors, or additional fees that you weren’t aware of. After these discrepancies have been identified, your auditing team will bring these findings directly to your energy supplier. From there, they will work on your behalf to bring you the relevant refunds or credits that your school can receive.
For any school to optimize their spending on energy, they need to function under the proper energy tariffs. Since energy tariffs are almost impossible for the average customer to understand, it’s vital to work with a team of energy tariff experts. With their knowledge, they will be able to look at the appropriate tariff documents, understand which tariffs you do and don’t qualify for, and assist you in functioning under the tariffs that serve you best.
The other type of audit is a consumption-based energy audit which is used to help schools better understand their consumption practices and find ways to upgrade their energy technologies to improve efficiency.
There are numerous companies that conduct consumption-based energy audits and they typically recommend a wide range of different technologies used to reduce energy consumption.
Though reducing energy consumption is a good goal, implementing energy-efficient solutions is often capital intensive. For schools where budgets are already tight, working through an energy billing audit instead of a consumption-based one may be a better option.
The engagement phase is used to explain our shared savings agreement and to communicate the details of the audit process moving forward. We also use this time to describe all the materials we will need to begin the audit including invoices, authorization documents, and contracts.
During the onboarding phase, we will collect past and present invoices, typically ranging from 12–36 months. To decide how far back we can go, we have to follow your state’s statute of limitations. Once these are known, we will go back as far as we can to find your savings.
During our thorough energy billing audit, we dive into your invoices looking for any unnecessary fees, errors, and/or overcharges. We keep you consistently updated about the discrepancies we uncover so that we can deliver savings during the process instead of having to wait till the end of the audit. In most cases, it will take 4–6 weeks to release our findings and then another 4–6 weeks to implement the savings.
To make sure that your savings stay intact and no new overcharges present themselves, we will monitor your invoices on an ongoing monthly basis.
We worked with a medium-sized school district that had significant utility expenses. Since reducing these expenses would be a key factor for improving their overall operations, they wanted to have third-party experts review their invoices and contracts to see where there might be savings.
During our risk-free expense audit, we were able to find multiple errors and overcharges on their utility invoices. Through our audit, we were able to generate over $200,000 in refunds on utility expenses alone.
For schools wanting to uncover a variety of savings within their invoices and contracts, an energy billing audit is required. During an energy billing audit, a team of experts will find overcharges, errors, and other opportunities for savings in this cost category. An energy billing audit will also tell you if your school is functioning under the right tariffs, which is an important aspect of cost savings.
Schools can also conduct a consumption-based energy audit to better understand their consumption practices. But, since the solutions found within consumption-based energy audits are capital intensive, we recommend working through an energy billing audit to find savings without capital expenditure.
If you’re interested in conducting an energy billing audit for your school, our team at P3 Cost Analysts is ready and able to help. To schedule your free expense audit, contact us today!