Reducing Energy Costs for Small Businesses: Know Your Rates!

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November 18, 2020

For many small businesses, establishing policies to reduce energy costs often involves developing simple routines around the office, such as:

  • Switching out older light bulbs to more energy-efficient LED lights.
  • Turning off the lights in unoccupied rooms.
  • Having an updated HVAC system to ensure a comfortable temperature throughout the building.
  • Avoiding the use of energy-consuming space heaters or air conditioning units in individual offices.
  • Making sure unused gadgets and appliances are unplugged to avoid phantom loads that keep using energy even if you turn off the power.

Improving energy efficiency should be a priority of any business because of the economic and environmental impacts. The two are often intertwined and can ultimately influence profitability.

In a global consumer confidence survey by Nielsen, 80 percent of consumers expect companies to implement programs to improve the environment. The sentiment crosses generations, meaning any business can earn—or lose—consumer loyalty based on their energy policies.

But a significant energy policy begins before the first light is turned on in the morning and the last one is turned off at night. A thorough energy strategy should start by knowing how much you are paying for your energy.

“Ninety-nine percent of small business owners get their bill and pay it,” says Danny Weatherby, New England Regional Manager for PowerPlay Energy Group. “And they don’t know why their rates are changing.”

Common factors that can cause rates to fluctuate include:

  • What type of fuel generates electricity (fossil fuels, nuclear, biomass, geothermal, solar). Since natural gas is the largest electricity source in the United States (39 percent in 2019), a natural disaster, such as a hurricane or flood, can unexpectedly threaten pipelines and affect distribution.
  • The type of business you run and your hours of operation.
  • Time of the year.
  • Size of the building.
  • Location.

New Hampshire is a deregulated state, meaning there is an open marketplace to buy electricity. While utility providers Eversource, Liberty, New Hampshire Electric Cooperative, and Unitil still transmit and service the lines that deliver electricity, businesses and homeowners can buy their electricity from them or alternative sources. One bill is still delivered to homeowners and businesses, but it has two parts: transmission costs and supply costs.

Alternative energy providers can offer a longer fixed rate than the six-month fixed rate offered by the utilities for the supply portion of the monthly bill.

"Savings and budget certainty" are the biggest reasons to explore alternative energy options, says Kevin Dargin, a Freedom Energy Logistics consultant.

Energy brokers work with small businesses in New Hampshire to help them save money on their energy costs by finding the right rate for their needs. Consultants such as Weatherby and Dargin review your most recent energy bills from your existing supplier and look for better rates through a third-party energy provider.

According to the New Hampshire Public Utilities Commission, there are currently 31 third-party suppliers operating in the state.

“Anyone can get a fixed rate, but that doesn’t mean it’s the best thing for their business,” Weatherby says, adding that the market changes daily, so the ability to forecast changes in that market factors into the commitment a business wants to make.

Considering New Hampshire ranks among the top ten most expensive states in the country for electric rates, having options can be critical to a business’s budget.

“Understanding your energy costs and what you can do to lower them is critical for the sustainability of any business,” says Andrea O’Brien, an advisor and director of the SBDC’s Business Sustainability Program.

SBDC advisors work with business owners to identify the necessary resources to make sound decisions. And you don’t have to wait for Energy Awareness Month next October to start saving.

For more information about how to start putting together a sustainable business plan, go to nhsbdc.org to get paired with an advisor.

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