How to Control Your Company's Energy Costs: 3 Key Steps
They say that if you can't measure something you can't improve it....
A very simple model will allow us to properly diagnose whether our money spent on electricity and natural gas is being spent correctly.
If you want to optimise your company's energy spending, you need effective tools to monitor your electricity and natural gas consumption. In the following article, you will learn how to control your company's energy costs, how to easily take care of your expenses and control your energy supplier and distributor.
I assume you know all your consumption points and have your 'paperwork in order'. All your energy invoices in one place is our starting point. With us in the Enerace.online energy procurement app, we have this information in one place. This way, you know for which consumption point you have a complete set of data and for which energy invoices from which month are missing, and you can complete the missing data.
There are many components on your energy invoices, energy tariff prices change, and when buying energy based on a price formula or price index, the rate every month or even every decade will often be different too.
To effectively control your company's energy costs, you need to begin by monitoring elements you can measure:
- electricity consumption in each zone, gas consumption,
- reactive power,
- energy consumption for the capacity market fee,
- contracted capacity/power vs performed power,
- excess contracted capacity,
- network fee fixed, variable, transitional, quality, RES fee, co-generation fee, capacity market factor per decade.
- rates for a given tariff group at a given distributor,
- the rate at the electricity, natural gas supplier.
With full knowledge of each electricity and gas invoice, points of consumption, rates and energy consumption, we can move on to the second step.
Benchmark calculations as to prices and costs of individual price components.
A model invoice is one that results from your contract with the supplier and the distribution tariffs. It allows us to easily compare your actual electricity and/or natural gas consumption, prices and costs with what you have agreed with your supplier and based on the approved current distribution tariffs.
When preparing a model invoice, simply substitute the actual energy consumption from the invoice and the cost resulting from the calculation should agree with the invoice amount.
This approach makes the energy cost budgeting process much easier later on. Energy budgeting and planning for the following year's energy costs and estimated cost increases or decreases will be much more accurate if you have a ready-made template. Remember that, for example, a 50% increase in the network variable rate does not mean that the price of electricity for its distribution will increase by 50% 'in total’.
General overview of energy cost
Detailed information of energy cost
We move to the next step when we have the prices, consumption and costs for electricity/natural gas shown in detail and have calculated the energy costs from the model invoice. This is a crucial assessment of whether and where there are differences, how big they are and whether they are due to our incorrect calculations or whether the error lies with the supplier/distribution system operator (DSO).
There are quite a few places where inaccuracies can appear on energy invoices. These include:
- incorrect price on the supplier invoice,
- incorrect rates on a distribution invoice,
- incorrect consumption on a sales or distribution invoice,
- excesses of contracted capacity,
- costs for reactive energy,
- capacity charge factor.
- no included discount / exemption to your company.
Monitoring electricity consumption and controlling a company's energy costs are crucial, as these costs can represent a significant expense for businesses. Implementing tools and controls not only facilitates energy procurement, but also ensures that we are properly accounted for. If you have already sorted out the monitoring of your company's energy consumption and are wondering how to avoid drastic increases in energy prices, check out our experts' advice.
If you need help controlling energy costs in your company, we will help you! Our invoice control service is an additional module in the Enerace.online application, so you can be sure to find all the most important information regarding your electricity and natural gas procurement in one place.
Our offer is a comprehensive service that allows you to better monitor your energy costs and includes:
- Collection of invoices, contracts, consumptions - directly from a supplier and distributor if possible.
- Prices, consumption, costs are imported into the Enerace.online procurement system, which creates both a model invoice and shows the differences to the prices as they appear on the energy invoices.
- Budgeting your energy costs and preparing the relevant statements is very easy because you have all the information and our experts estimate possible percentage changes and trends for each invoice component.
- Reporting on energy costs with accurate data on distribution rates is a major added value.
- The actual electricity and natural gas consumption is set against the predicted one, so you can check whether certain contractual assumptions (e.g. regarding minimum or maximum tolerance bandwidth agreed with your energy supplier) are or will be met - so that you can take possible countermeasures in advance and negotiate your energy contract.
- In the event of discrepancies, our experts will be happy to explain the reason for the discrepancy and, if necessary, contact your supplier or distribution company to resolve the matter.
- Your invoices will also keep you informed of any overruns, surcharges or penalties. You will therefore receive an alert in the event of any abnormal readings.
- Thanks to better monitoring of energy consumption, your company will be better able to optimise the operation of machinery and equipment to achieve additional benefits such as 'flattening the profile' or shifting the profile to the cheapest hours of the day.
Author: Bartosz Palusiński