[sc_fs_faq sc_id=”fs_faqqmq3mldvr” html=”true” headline=”h2″ img=”” question=”What is a budget variance?” img_alt=”” css_class=”” ]A budget variance is the difference between the amount you budgeted for and the actual amount spent. [/sc_fs_faq]
[sc_fs_faq sc_id=”fs_faqkash5qsgp” html=”true” headline=”h2″ img=”” question=”How is the pandemic affecting utility bill management?” img_alt=”” css_class=”” ]There are countless variables that can affect utility bill management during this pandemic: Consumption could drop, supply rates could increase, you could be billed for utilities that are not used, receive utility bills that are higher than what was budgeted for, and more.[/sc_fs_faq]
[sc_fs_faq sc_id=”fs_faq1g08bm8ws” html=”true” headline=”h2″ img=”” question=”What are the best ways to manage utility bills during the pandemic?” img_alt=”” css_class=”” ]To manage your utility bills during COVID-19: Use data to minimize energy lost during building vacancy, anticipate budget variances, and pay special attention to water data.[/sc_fs_faq]
Even during normal times, utility bill management can be complicated. If you manage your bills manually, you must go through the data and search for variances, inconsistencies, and inefficiencies in your water and energy use. If you use a software system to analyze your bills, it is still essential to examine the reports and take action as needed. During the COVID-19 pandemic, there are a variety of factors making utility bill management more difficult. In this article, we will explore those difficulties along with steps you can take to alleviate them.
Challenges of Utility Bill Management
Although restrictions are being lifted in some cities, a number of states are experiencing a second wave of COVID-19 cases, causing office buildings to remain closed. Meanwhile, in cities like New York, residential buildings are either below capacity (as tenants quarantine with family outside of the city) or are seeing greater energy usage (as tenants continue to work from home). The hospitality industry has been largely affected as well, with many hotels closed or empty.
Energy is the most volatile operating expense for buildings, but it is also one of the most controllable and explainable. There are countless variables that can affect utility bill management, both during normal times and during this pandemic:
- Consumption could drop due to efficiency retrofits, lease expirations, and operational changes
- Supply rates could increase three-fold due to supply contract rate structure and market movement
- Uncertainty of peak load amounts during peak load times
- Being billed for utilities (e.g. water, energy) that are not used
- Unnecessary utilities being wasted by light/appliances/monitors left on in vacant buildings
- Receiving utility bills that are higher than what was budgeted for
- The Chartered Institute of Building Services Engineers (CIBSE) has released guidelines detailing how buildings should be operated to maintain clean air during the pandemic. All these actions could result in buildings’ energy consumption increasing even if they are mostly unoccupied.
How to Make Utility Bill Management Easier
*Click on each section header to read an in-depth article on the topic.
- Forecast usage/demand based on variables that impact usage/demand
- Adjust for changes to occupancy/production, operating hours, energy conservation measures (behavioral and equipment)
- Reforecast when given the opportunity
- Track monthly budget variances and provide concise explanations
- Provide a data-driven, defensible budget
- Check with your chief engineer for any significant operational changes that may affect future usage and demand
- Project future costs based on historical costs or averages
- Forecast usage/demand without considering impacting variables (weather, production, occupancy, ECMs)
- Take last year’s numbers and apply a blanket percentage increase
- Include changes for tenants/spaces that are directly metered
As buildings slowly begin to re-open, they will likely operate at reduced hours and 50% capacity. Accurate data highlights where you can maximize the efficiency of an operational building running below usual capacity. Regular reviews of the energy data should similarly be made to identify higher than expected consumption as areas are re-occupied.
Usually, an office building’s largest energy-using systems are HVAC (40 percent), plug loads (33 percent), and lighting (20 percent). Now that buildings are experiencing lower occupancy and energy use, it is a great time to determine operational efficiencies to lower energy use and reduce operating expenses. There are several straightforward measures which commercial buildings can enact to lower energy use and costs:
- HVAC: Operate on a weekend or holiday schedule. Reduce hours, delay startup, and lower setpoints
- Lighting: Turn off the lights in areas where they are non-essential
- Plug load: Turn off and then unplug appliances like televisions, desktop computers, printers, and refrigerators
- If there are any people using the building, encourage them to turn off lights and unplug any equipment before they leave for the day
A budget variance is the difference between the amount you budgeted for and the actual amount spent. When preparing utility budgets, it is practically impossible to be “right on the money;” therefore resulting in a budget surplus or deficit. The main goal is to keep these margins slim, especially since energy is one of the leading expenses for buildings. So many factors can affect your utility budgets, especially during a pandemic. These factors can result in higher than hoped variances; however, they can be easily explainable with the right data. The most obvious factor one may look at when explaining their energy variance is usage. Some scenarios where usage could be affected are:
- Was more or less electricity, steam, gas, or water used than budgeted? Energy consumption is extremely volatile and a lot can happen between the time a budget was created and the month one is reporting. For example, no one who made their energy budgets last year could have predicted the massive impacts COVID-19 would have on energy usage in 2020.
- Were there any energy efficiency projects implemented throughout the year? Something as simple as replacing old bulbs with LED lights may decrease electricity consumption. If projected savings were not integrated into the budget, one may be looking at a budget surplus.
- Has the chief engineer made any significant operational changes that may have affected the usage or demand? This may include the HVAC, plug load, and lighting changes mentioned above.
- Manage your building’s peak load. As a business, you pay for both the energy you consume and the amount of energy necessary to service your account based on your peak load demand. This is important because your peak load can comprise more than 40 percent of your total utility bill. However, managing your peak load can be surprisingly difficult, especially right now. Utilities don’t notify you of peak load hours ahead of time, and during the pandemic, peak load hours have shifted to be later in the day, now that office workers are no longer collectively firing up their monitors at nine a.m. With proactive management, you can cap your peaks and significantly reduce your energy costs. A utility expense management provider can monitor the grid’s consumption and weather in real-time to predict when peak load hours are likely to occur, alerting you ahead of time so you can take action to save money on your utility bills.
- Offer data-driven decision support. In a process called benchmarking, utility expense management providers use data to compare your building with similar facilities, collecting valuable insights. For example, this information can determine whether you’re a low- or high-performing building, which can reveal cost-saving efficiency improvements. From there, your provider can assess the likely savings from these changes and help you determine if it’s a wise decision.
- Utilize utility bill management software. While it’s impossible to be exact with utility budgets, your energy management software should provide you with data-driven, explainable utility budgets accurately based on proprietary consumption forecasting algorithms and supply market projections. EnergyWatch’s watchwire platform acquires, audits, and consolidates utility invoice and interval data in a central web-based platform for use by you and your team. This is particularly helpful when making budget adjustments and reforecasts to compensate for the new normal during COVID-19.
Especially during the summer months, water can be a large part of your utility bill, and it is often overlooked. Here are a few ways to monitor and control your water expenses:
- Measure and verify your water savings. (Measurement and Verification (M&V) is the process of planning, measuring, collecting, and analyzing water data for the purpose of verifying and reporting your water savings within your facility resulting from the implementation of energy conservation measures.)
- Understand your rate type. There are myriad rate types used when billing customers. In some rates, customers are charged the same fee, regardless of how much water is used. With other rates, water use is metered, or the building is given a certain volume of water to consume and charged if it goes over. Thorough understanding of your rate type will help you conserve water and save money if your water usage fluctuates during the pandemic.
- Use water management software. One of the most straightforward ways to monitor your water usage and data is to use software specifically designed to do it for you – this prevents the hassle of manually going through each water bill. EnergyWatch’s watchwire software allows you to monitor your water data for inconsistencies, benchmark your buildings against each other, and align your water use with ASHRAE and ENERGY STAR guidelines.
It is still unclear how long the effects of the COVID-19 pandemic will be felt. In the meantime, if you haven’t already, begin taking steps to manage your portfolio’s utility bills. To help guide you through the process, EnergyWatch has created a number of concise e-books and tools. For more information on peak load management and how it can impact your utility bills, download the Guide to Peak Load Management. If you are currently planning your 2021 utility budget, refer to our Energy Budgeting Template, where you can enter your unique rates, taxes, and adjustments and see them translated into a comprehensive utility budget equipped with usage, demand, delivery, and supply projection graphs.