Controlling Facility Energy Costs > Combining Approaches to Energy Cost Control > Supply Side (Utility Account) Cost Control

Excerpted from ENERGY ACCOUNTING: A Key Tool in Managing Energy Costs; California Energy Commission; 2000

Energy accounting can help your organization understand how energy is used and can help motivate people to take actions that can result in significant utility cost savings. However, many organizations do not realize the full benefit of tracking energy consumption and cost.

The biggest pitfalls that keep organizations from effectively using energy accounting data are:

•	Lack of staff time and commitment in maintaining the system.

•	Failure to communicate the results to the right people.

To make the most of energy accounting, it is crucial to allocate sufficient staff time for setting up and maintaining the system, and to develop a system of communication with administrators, facilities staff, and others whose decisions affect energy use. Another option is to retain an outside service provider to set up, maintain, and operate the system, using the internet as the communication medium. (our words inserted)

Energy accounting by itself will not save energy. But when used as a tool of energy management, it can help you make changes in operations or equipment that save energy dollars. Energy accounting can also help in budgeting, allocating resources for capital investment, and verifying the results of all of your energy management activities. Before you can manage energy costs, you have to know what they are! Energy accounting provides feedback on how much energy your organization uses, and how much it costs. It also provides a means to effectively communicate energy data that facility staff, building occupants and managers can use to improve cost management.

Energy accounting will help your organization:

Record and attribute energy consumption and costs.

Energy costs depend on the amount consumed and it’s price. In an organization with many facilities, energy accounting makes it possible to compare energy use and cost among facilities and to monitor how energy use changes over time.

Troubleshoot energy problems and billing errors.

By consistently tracking energy use, you can identify problems. A sudden unexplained increase in consumption, for instance, means it’s time to investigate the site for the cause.

Provide a basis for prioritizing energy capital investments.

Find out which facilities have the highest energy costs, and consider targeting them for energy retrofits or other energy management efforts.

Evaluate energy program success and communicate results.

Did you save what you thought you would from your energy management efforts? How did the actual dollar savings from your lighting or HVAC retrofit compare to the savings predicted by your vendor or contractor? Without energy accounting, it’s virtually impossible to answer these questions. Once you determine the results of energy management activities, it’s important to communicate this information to decision makers and implementers who were responsible for the activities. Energy accounting reports and graphs are the tools for this important feedback.

Create incentives for energy management.

It’s often difficult to get anyone in an organization to take the time and responsibility required for carrying out energy management activities because there is little incentive to take on the task. A maintenance director or site manager may not see much benefit in reducing energy costs if all of the savings revert to the general fund, or if lower energy bills only result in smaller allocations for utility costs in next year’s budget.

Budget more accurately.

Energy accounting gives a historical look at costs that will help you budget more realistically for the future.

Position your organization to shop for lower prices for energy in changing energy markets.

The markets for electricity and fuel are changing rapidly due to regulatory reforms and increased competition between suppliers. Significantly lower prices are possible for knowledgeable consumers.

In order for your organization to take advantage of the potential for lower energy prices, you will need to understand how the commodity is priced, and you will need to know your electric load profile. This means knowing how much electricity your organization consumes during different times of the day and different seasons of the year.

By setting up an energy accounting system and understanding the details of how energy is priced, you will be better prepared to negotiate for the best electricity deals in a changing market. If you are a large user, you may be able to negotiate directly with wholesale producers. If you are a small user, you may want to pool with other consumers. An aggregator may be able to help small users get a better deal by pooling commodity purchases.