Top Ten Tips: How to relieve the pain of rising energy prices

The market volatility of 2011, during which  most businesses renewing their energy contracts faced increases above, 20%, shows every sign of continuing through 2012 and beyond.  The government’s own highly conservative estimates are for a 26% energy price rise over a decade, with other industry experts predicting a 100% hike by 2020. So how do businesses mitigate continued price rises in order to remain competitive?  What’s to be done to relieve their concerns about carbon performance, security of supply and increasing regulation and tax changes?

 Mark Alston, general manager for ENER-G Procurement (www.energ.co.uk) ,   proposes ten effective energy pain relief remedies:

  Make energy a board room agenda.  Energy must be part of your strategic planning and you should set financial plans based on 15% plus year-on-year increases in power and gas unit costs through to 2020.  Consider how these increases will be mitigated and make energy procurement and efficiency a much higher priority, otherwise the impact on bottom line profits could be substantial.  All organisations should have an energy and carbon strategy.  This should focus on how your business is going to reduce CO2 emissions and improve energy efficiency in the short, medium and long term, and provide security of supply while the UK awaits the arrival of new generation capacity.  

1. Develop a robust procurement strategy for your business to buy at the best possible price.  Consider which contract suits your business, whether it’s a fixed, flexible or multi-site agreement, or a flexible capped-price product. The volatility in wholesale energy prices presents opportunities to buy when prices dip, but equally a substantial risk of paying a premium during a peak, especially if purchasing is left until the last minute and falls within the months leading up to the busy April or October contract renewal buying periods.  Consider using an independent energy consultant, such as ENER-G,  to monitor the wholesale market place for you and either find opportunities to lock into prices at a market trough, or manage a flexible purchasing approach within a clearly defined and highly robust risk management strategy. If using an independent broker, ensure that they are a member of the Utilities Intermediaries Association.
2. Ensure that financial plans are based on the most up to-date consumption and cost information so the right decisions can be made. Knowing how you use your energy is key to saving it.  Smart meters provide frequent and accurate energy consumption data.  Automatic monitoring and targeting (aM&T) software can collate, analyse and transform this data into meaningful information, allowing you to  monitor energy consumption, identify waste,  highlight areas for improvement and benchmark your consumption against other similar buildings or organisations.
3. Conduct  a thorough energy survey and audit to examine where unnecessary energy consumption is taking place. This can be an eye opening experience and should cover the basics, such as heating, ventilation and air conditioning, systems; boilers; lighting; electrical usage and control. It should also examine the building fabric, such as standards of insulation and repair and provide a costed implementation plan to indentify the best returns on investment.  Always look out for ways to shift necessary power consumption away from peak priced periods.
4. Reappraise investment in energy efficiency measures on the basis of consistently rising unit costs for energy.  The best way to reduce costs is to avoid consuming energy in the first place. With the advent of the Green Deal and the availability of Enhanced Capital Allowances, energy saving technologies are even more attractive. Start with the quick wins such as Building energy management systems (BEMS), such as the new generation           E-MAGINE system, which will frequently reduce consumption by 25% to deliver rapid payback on investment. This has the dual benefit of assisting with carbon reporting, and will help reduce taxes on carbon emissions.  Energy efficient lighting is another excellent starting point, and when you incorporate a lighting strategy into your BEMS, the savings are multiplied.
5. Implement behavioural and cultural change to involve your people in saving energy. Appoint energy champions to drive change and consider training initiatives. This is one of the most cost effective measures for optimising energy consumption. Engage cross-departmental teams to challenge existing processes, behaviours and infrastructure and identify and evaluate opportunities to rapidly improve energy performance.
6. Don’t get locked into expensive ‘out of contract’ electricity tariffs. Many businesses fail to meet the deadline for terminating their energy contract, with some suppliers requiring as much as 90 days' notice. Businesses can easily find themselves locked into over-inflated ‘out-of-contract’ tariffs for as long as 12 months, paying more than 50% above current rates. Clearly, this can be an expensive, yet preventable mistake.   Link in to a contract renewal reminder service, such as the service provided by ENER-G, and consider your options well in advance of your contract end date to provide ample time to research the market and find the most competitive contract. It is sometimes best to serve notice on your existing contract whilst considering alternative offers, even if the best deal at the end of the day is to re-contract with the existing supplier. You can, therefore, test the market without fear of being locked into an uncompetitive price. 
7. Check your utility bills for errors. Utility invoices are well known for containing inaccurate data, due to estimated billing, meter faults and the incorrect application of tariffs. It is important to validate and approve invoices to ensure they conform with relevant supply contracts and actual consumption. This can be undertaken using analytical software, linked to smart metering to save time or the role can be undertaken by a good independent energy broker often as part of the procurement service.
8. Think about using on-site generation or load management. On-site generation can provide some cost certainty and protection from volatile market rates. The new Renewable Heat Incentive and Feed in Tariff can make microgeneration an attractive option. A guaranteed, tax-free, index linked payment is worth serious consideration. If you already have on-site generation and/or have some flexibility to shift the time of consumption, make sure you optimise it to avoid peak prices as much as possible, but also make sure your supply contract will reward you for this action.
9.  Don’t forget water! Many organisations fail to realise the savings that can be made by simply reviewing their water charges and consumption.  Consider working with a specialist water consultant, to highlight invoice inaccuracies, such as incorrect tariffs or further charges, such as trade effluent disposal, that do not accurately reflect the services being provided.  Limiting waste water is also of optimum importance to reducing costs and improving efficiency, especially in the manufacturing sector.  It is important to map exactly where water is being used across your site, identify usage and areas of waste and by making simple changes you can bring about significant and sustainable reductions in water usage and costs. 

ENER-G (www.energ.co.uk), a UK business, designs, develops, operates and finances energy efficient, sustainable and renewable solutions on a business-to-business basis globally. 

 For help and advice in reducing your energy costs and carbon emissions, contact: www.energ.co.uk;  email em@energ.co.uk or call 01527 855088.

Top Ten Tips:  How to relieve the pain of rising energy prices

The market volatility of 2011, during which  most businesses renewing their energy contracts faced increases above, 20%, shows every sign of continuing through 2012 and beyond.  The government’s own highly conservative estimates are for a 26% energy price rise over a decade, with other industry experts predicting a 100% hike by 2020. So how do businesses mitigate continued price rises in order to remain competitive?  What’s to be done to relieve their concerns about carbon performance, security of supply and increasing regulation and tax changes?

Mark Alston, general manager for ENER-G Procurement (www.energ.co.uk) ,   proposes ten effective energy pain relief remedies:

1.  Make energy a board room agenda.  Energy must be part of your strategic planning and you should set financial plans based on 15% plus year-on-year increases in power and gas unit costs through to 2020.  Consider how these increases will be mitigated and make energy procurement and efficiency a much higher priority, otherwise the impact on bottom line profits could be substantial.  All organisations should have an energy and carbon strategy.  This should focus on how your business is going to reduce CO2 emissions and improve energy efficiency in the short, medium and long term, and provide security of supply while the UK awaits the arrival of new generation capacity.  

1. Develop a robust procurement strategy for your business to buy at the best possible price.  Consider which contract suits your business, whether it’s a fixed, flexible or multi-site agreement, or a flexible capped-price product. The volatility in wholesale energy prices presents opportunities to buy when prices dip, but equally a substantial risk of paying a premium during a peak, especially if purchasing is left until the last minute and falls within the months leading up to the busy April or October contract renewal buying periods.  Consider using an independent energy consultant, such as ENER-G,  to monitor the wholesale market place for you and either find opportunities to lock into prices at a market trough, or manage a flexible purchasing approach within a clearly defined and highly robust risk management strategy. If using an independent broker, ensure that they are a member of the Utilities Intermediaries Association.

1. Ensure that financial plans are based on the most up to-date consumption and cost information so the right decisions can be made. Knowing how you use your energy is key to saving it.  Smart meters provide frequent and accurate energy consumption data.  Automatic monitoring and targeting (aM&T) software can collate, analyse and transform this data into meaningful information, allowing you to  monitor energy consumption, identify waste,  highlight areas for improvement and benchmark your consumption against other similar buildings or organisations.

1. Conduct  a thorough energy survey and audit to examine where unnecessary energy consumption is taking place. This can be an eye opening experience and should cover the basics, such as heating, ventilation and air conditioning, systems; boilers; lighting; electrical usage and control. It should also examine the building fabric, such as standards of insulation and repair and provide a costed implementation plan to indentify the best returns on investment.  Always look out for ways to shift necessary power consumption away from peak priced periods.

1. Reappraise investment in energy efficiency measures on the basis of consistently rising unit costs for energy.  The best way to reduce costs is to avoid consuming energy in the first place. With the advent of the Green Deal and the availability of Enhanced Capital Allowances, energy saving technologies are even more attractive. Start with the quick wins such as Building energy management systems (BEMS), such as the new generation           E-MAGINE system, which will frequently reduce consumption by 25% to deliver rapid payback on investment. This has the dual benefit of assisting with carbon reporting, and will help reduce taxes on carbon emissions.  Energy efficient lighting is another excellent starting point, and when you incorporate a lighting strategy into your BEMS, the savings are multiplied.

1. Implement behavioural and cultural change to involve your people in saving energy. Appoint energy champions to drive change and consider training initiatives. This is one of the most cost effective measures for optimising energy consumption. Engage cross-departmental teams to challenge existing processes, behaviours and infrastructure and identify and evaluate opportunities to rapidly improve energy performance.

1. 7.     Don’t get locked into expensive ‘out of contract’ electricity tariffs. Many businesses fail to meet the deadline for terminating their energy contract, with some suppliers requiring as much as 90 days' notice. Businesses can easily find themselves locked into over-inflated ‘out-of-contract’ tariffs for as long as 12 months, paying more than 50% above current rates. Clearly, this can be an expensive, yet preventable mistake.   Link in to a contract renewal reminder service, such as the service provided by ENER-G, and consider your options well in advance of your contract end date to provide ample time to research the market and find the most competitive contract. It is sometimes best to serve notice on your existing contract whilst considering alternative offers, even if the best deal at the end of the day is to re-contract with the existing supplier. You can, therefore, test the market without fear of being locked into an uncompetitive price. 

1.  Check your utility bills for errors. Utility invoices are well known for containing inaccurate data, due to estimated billing, meter faults and the incorrect application of tariffs. It is important to validate and approve invoices to ensure they conform with relevant supply contracts and actual consumption. This can be undertaken using analytical software, linked to smart metering to save time or the role can be undertaken by a good independent energy broker often as part of the procurement service.

1. Think about using on-site generation or load management. On-site generation can provide some cost certainty and protection from volatile market rates. The new Renewable Heat Incentive and Feed in Tariff can make microgeneration an attractive option. A guaranteed, tax-free, index linked payment is worth serious consideration. If you already have on-site generation and/or have some flexibility to shift the time of consumption, make sure you optimise it to avoid peak prices as much as possible, but also make sure your supply contract will reward you for this action.

1. Don’t forget water! Many organisations fail to realise the savings that can be made by simply reviewing their water charges and consumption.  Consider working with a specialist water consultant, to highlight invoice inaccuracies, such as incorrect tariffs or further charges, such as trade effluent disposal, that do not accurately reflect the services being provided.  Limiting waste water is also of optimum importance to reducing costs and improving efficiency, especially in the manufacturing sector.  It is important to map exactly where water is being used across your site, identify usage and areas of waste and by making simple changes you can bring about significant and sustainable reductions in water usage and costs. 

ENER-G (www.energ.co.uk), a UK business, designs, develops, operates and finances energy efficient, sustainable and renewable solutions on a business-to-business basis globally. 

For help and advice in reducing your energy costs and carbon emissions, contact: www.energ.co.uk;  email em@energ.co.uk or call 01527 855088.

Ends.

Media information:  Janet Kilpatrick, email: jk@janetkilpatrick.co.uk, phone: 0161 487 3830, mobile: 07794 192 677.