Massachusetts suffers from some of the highest electricity prices in the country – nearly double those of competitor states like North Carolina. There are lots of reasons, but the reality is that there is no end in sight for rising electricity costs.
At a 5 percent profit margin, every $1 increase in electric rates requires additional sales of $20 just to cover the increase. For employers who also struggle with the cost of health insurance, taxes and wages, it is easy to see why controlling the energy line item is important.
The good news is that there are at least two effective strategies employers can use not only to reduce energy costs, but also to shrink their environmental footprint and drive operational efficiency.
The first strategy is to use less electricity through energy efficiency and on-site generation (including solar or even combined heat and power). Reducing electricity use not only cuts costs, but also shrinks your environmental footprint. Massachusetts has many programs that will help with technical assistance and rebates. Take advantage of these programs since you are paying for them through surcharges on your electric bill.
The second strategy is to change the way you use electricity.
Shift your use of electricity to avoid demand charges, which are assessed at times when the electricity grid is stressed – usually on hot summer days. The utility imposes a demand charge based upon your usage on the peak day of the year. At that point you “own” that amount on the grid, even if you never reach that amount for another year.
The key, then is to reduce your power demand on these days, so you “own” less of the grid going forward. Knowing when to shift your usage through sometimes small operational changes can cut your costs dramatically, with no restrictions on future use.
And shifting use helps the environment too, even though you are using the same amount of total energy. High demand on hot days often causes ISO New England to call upon inefficient oil plants to provide power. All ratepayers chip in to keep these rarely used plants at the ready. Reduce the need for these plants and you reduce costs and emissions – without using less electricity.
There is no one size fits all – each company’s operations are different and strategies for improving your company’s energy management system are available, no matter what the size of your organization.
Begin to understand your energy needs and trends. Don’t focus exclusively on how much energy you are using per day, but where it is used and what times. Look at demand side management alternatives such as energy efficiency and demand response, or on-site generation, but be sure to understand the incentives your utility has available before you commit to a capital project.
At the AIM Sustainability Roundtable meeting scheduled for March 17 you can hear from experts who will share their experiences with power-purchase agreements, energy conservation, metering, and other topics.