Commercial real estate utility bills are a lot like home utility bills. You look at your bill once it arrives and… wow, there’s a lot of information on a few sheets of paper. Most of us probably pay the required amount and toss the document into a folder, never to see the light of day again.
But what are your utility bills telling you? What are you missing from these documents that could ultimately save you time and money?
Smarter monitoring of utility consumption
How much electricity, gas, and water does your building consume daily, monthly, yearly? Are you using more or less than your neighbors? How big is your property compared to them?
These are all very critical pieces of information when understanding your utility data. Imagine how complex this could be for large companies with locations worldwide – and hundreds of monthly invoices. If you don’t have the answers, consider leveraging a utility data collection system to aggregate this information in one place and compare your building’s performance to like-type properties.
At the building level, individual bills seem to have minor details, but they can actually be critical money-saving opportunities for your company. Next time you receive a utility bill, take note of:
- The difference between billed usage and demand usage
- Understand your generation accounts
- Investigate spikes in consumption: they may be caused by seasonal changes, meter issues, or unknown problems like a water leak.
- Usage data for every meter; this will play into data coverage on ESG reports
These details are critical for companies and provide clear insight to how your buildings are operating so you can implement improvements effectively.
Understand the true cost of line items in utility bills
If you take a look at all the line item charges on your invoice, you will see dollar amounts associated with usage cost, demand charges, wastewater, sewer, supply, delivery, deposit, and late fees. These are all key factors in knowing where your utility charges come from so you can understand why you are being charged this way.
Let’s say your January utility bill arrived and it was $500 more than the prior month, but your usage was equivalent. Why do you have a cost increase? Through reading the individual line items, you can find it… Oh, there it is, at the bottom of the bill: a $500 deposit charge. This is significantly different that a $500 increase in your demand charges. Reading through the line items ensures you are being charged accurately and gives you the power to make effective changes.
Changes in Rates and Tariffs
Utility accounts are set up with different utility rates and tariffs. Often times, this is overlooked on utility bills. Rates and tariffs differ across, states, cities and even vary depending on the type of property you have.
In general, a utility rate consists of the value of property as used by the utility in providing service. On the other hand, a utility tariff is the pricing structure that an energy provider charges a customer for energy usage.
Each utility provider can have multiple utility rates and tariffs depending on your specific building type, location, and utility consumption. Most larger utility vendors will capture these rates and tariffs on their website or on their bills; Eversource is a good example. Confirm you have the right billing rate and tariff with your utility provider.
Tracking your utility data isn’t enough
While simply tracking your monthly utility data is a great start, it’s only the first step. Consistently reviewing and monitoring this data is essential to identify simple ways to reduce your operating expenses. Usage, cost, and the rates are all individually important, but together they paint the whole picture.
Sustainability management begins with collecting data and understanding what the information tells you. Reviewing this data at both the portfolio level and site level is key. One site could have significant cost or consumption, but if you are only looking at this data as a portfolio, you’ll have a more difficult time identifying which building caused these spikes. Property managers can make simple adjustments to their daily operating systems to help reduce monthly consumption and, therefore, operating expenses.
Follow the cycle of success: collect, review, report and improve!