Contrary to what it may feel like when you open your monthly utility bill, energy utilities are not always at odds with your business.
Unlike typical operating models where selling more products or services tends to equate to more profit, energy utilities do not always come out further ahead by delivering more energy. In fact, utilities are increasingly incentivized to improve energy efficiency, and therefore businesses can create win-win alignment by working with their utilities to improve energy management.
As a result of this alignment, businesses can lower their monthly utility bills while increasing sustainability.
Why Utilities Want Businesses to Be More Energy Efficient
More than half of the states in the U.S. have adopted at least some form of decoupling for electric and natural gas utilities. That means certain regulated energy utilities in states like California, Connecticut and New York make a profit based on a fixed rate of return on capital spent to deliver energy to customers, rather than earning a profit based on the amount of kilowatt hours consumed.
Thus, utilities are incentivized to invest in infrastructure like power lines so they can earn a return on that investment. Since that return is decoupled from energy sales, utilities do not earn less profit on that investment if you use less energy.
Moreover, many utilities are incentivized to go one step further and actually help customers increase energy efficiency. In Connecticut, for example, electric and natural gas utilities can earn an additional performance fee for doing so, as the American Council for an Energy-Efficient Economy explains.
Similarly, many utilities face regulation requiring a portion of their energy sales to come from renewable sources.
In other cases, even when regulation is not a factor, a utility may still want you to use less energy to avoid peak periods that put a lot of strain on existing infrastructure.
What Businesses Should Do
Since many utilities want to help you use less energy or use it more sustainably, businesses should start to create alignment by more closely analyzing this situation. See if your utility can provide equipment or financial incentives like rebates that help you use less energy and lower your monthly bill.
Beyond this analysis, it’s important to take advantage of technology that can help you increase efficiency. Whether it’s through equipment such as smart devices or energy analytics software (EAS) that provides insights into how to reduce cost and greenhouse gas emissions, there are multiple means of creating better alignment with your utilities.
Even with the advent of microgrids and distributed generation assets, this does not necessarily need to put businesses in opposition with utilities. In many cases, utilities want to have a financial stake in this new energy trend, so they might operate the microgrid for customers who want the benefits of a microgrid without having to manage it.
And all of these technologies can work in coordination, such as with a business using EAS to know when it’s cost effective to switch from the main grid to the microgrid. Doing so might be welcomed by the utility, as they can then avoid overloading their infrastructure during peak periods.
Since there are many ways in which utilities and businesses have the same goals, it’s important to take advantage of these incentives and even reach out to your utility companies to find out more about how you can increase alignment.
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.