Why Your Utility Wants You to Use Less Energy
Your electric company wants you to use less electricity – and you might want to participate in this, as it really is in your company’s best interest from a competitive perspective.
As you may have noticed, many utilities are offering businesses significant incentives on energy conservation measures that are designed to help reduce energy usage – and spending.
It is hard, in this jaded culture of ours, to not be a little suspicious. If you are a business that has been repeatedly contacted by your utility company — or its representative vendors — to sign up for a particular program that promises to save energy, you may wonder what is going on. After all, if you cut your electric bill, you’re paying the electric company less money. It seems counter-intuitive, almost like an airline encouraging you to fly less. So why then would a utility company want to encourage energy efficiency?
Regulation and Generation Asset Cost
Is this a trick? In a word, no. Many utilities have been mandated by regulators to help businesses save energy costs. As Robert Mittelstaedt, dean emeritus of the W. P. Carey School of Business at Arizona State University, says, “Electric utilities find themselves in an awkward position where they make money by selling power, but are required by regulators, and increasingly by consumers, to help customers find ways to save power or use renewable sources. The collision of new technology, social good, business strategy and politics will make the next decade the most interesting in the century-long history of the industry.”
In addition to regulatory pressures, it is very costly to permit, construct, and operate a new power plant or to build a new distribution substation, it can be far more cost-effective to promote conservation as a means to reduce usage. Especially for utilities that are nearing capacity in a given area, a reduction in demand can save ratepayers thousands of dollars in costs. In this way, programs devoted to utility energy efficiency can save a utility (or city) a significant amount.
Ignoring Energy Efficiency Programs Is Putting Your Business At A Competitive Disadvantage
Unfortunately, utility energy efficiency programs that offer incentives for deploying conservation measures are often underutilized by businesses, despite being around for a while. Consider the multiple reasons why you really should make efficiency program participation a priority for your business:
- You’re Already Paying For It: Businesses that don’t take full advantage of these programs – perhaps due to wrestling with “more pressing issues” — may actually be helping their competitors by not doing so. The fact is that wherever there is a program, nearly every company in that area pays into an efficiency fund through a surcharge on their bill, which can be as high as 5% of your total utility bill. If you’re one of the businesses that is not taking advantage of the fund, while your competitor is leveraging these incentives, you’re actually increasing their profitability, while boosting their competitiveness and sustainability.
- Fantastic ROIs and Cash Flow Propositions: Many energy efficiency measures have really quick, unsubsidized paybacks but when factoring in utility incentives, ROIs are often extraordinary. Some utilities even offer on-bill financing for qualifying businesses, which will pay for the measures out of the savings, making the measure cash-flow-positive on day one and eliminating a capital expense.
- Sustainability: Maximizing the efficiency benefits that you can derive from these programs help your business improve your overall sustainability — which is becoming more and more important to consumers, marketing departments, corporate supply chain managers, and investors.
Request a complimentary energy efficiency assessment to find out how Artis Energy’s RTIS® energy analytics platform can provide you with the visibility and insight to transform energy from a fixed cost into a distinct competitive advantage. Request a complimentary energy efficiency assessment to find out how Artis Energy’s RTIS® energy analytics platform can provide you with the visibility and insight to transform energy from a fixed cost into a distinct competitive advantage.