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Taking Control of Energy Costs

Posted on: Thursday, 6 October 2005, 06:00 CDT

By Armstrong, Tim

If you're looking to seriously address your business overheads, it could be time to partner with an energy advisor. Tim Armstrong explains why.

It seems that you cannot pick up the paper, listen to the radio or watch television without being confronted with a story on energy. We are constantly being reminded that New Zealand's energy resources are diminishing, we require more electricity, and yet no one wants a power plant or transmission line built near them.

The bottom line is that the costs of energy, particularly electricity and gas, are going to keep increasing. There is also the threat that the country will run out of electricity and blackouts will occur.

When you talk energy most people think only about electricity, but most businesses also have significant transport energy costs and often gas is used for heating commercial buildings. Even if it is the landlord supplying the heat, who do you think finishes up paying for it?

And what can you, as a business owner, do about it?

Many businesses regard energy costs as an overhead rather than as a variable cost they can control. The reality is that these costs can be successfully managed, often with savings of 10 to 30 percent - and any reduction in energy costs is reflected as a 100 percent saving on your bottom line, while every dollar saved in energy costs is a dollar increase in profit.

All it takes for a company to gain control over their consumption is to set up an Energy Management Plan and to make a commitment to save money. The critical success factors of a plan include; commitment by management, clear responsibility, monitoring consumption and performance, and realistic goals. Outcomes should be benchmarked against similar organisations.

Who's advising you?

It does not seem too hard and it isn't. Who on your staff can pick up this important task and make good the savings which will result? Some organisations have a person available but this is often not the case so outside help must be enlisted. This may be the time to outsource one of the non-core parts of your business.

If your organisation is spending more than $100,000 per year on electricity and gas you should consider employing an energy advisor to put a plan in place and to look after all the energy concerns,

An Energy Advisor will help you understand how your energy is used. They will examine the way energy is purchased and used and identify ways of saving money.They will ensure that the best systems are in place to protect your assets in the event of energy shortages and, in general, take responsibility for all your energy worries.

Energy management is multi-disciplined, requiring skills in technical understanding, administration, communications and information systems.

This is not a one-off activity. An on-going partnership must be developed where your energy adviser becomes your Energy Manager, consider them as a seconded member of your staff. It may only need one day a month but it is essential that if savings are to continue, monitoring and updating of the plan must continue and a commitment made by both parties to maximise the efficiencies available.

By engaging an energy management organisation and not a part time individual you are guaranteed of continual specialised service. You also gain the benefits of their experience with other consumers and their overall knowledge of the energy industry.

Funding assistance

The Government realises that to ensure a positive energy future for New Zealand some consumers may need an incentive to put energy efficiency and conservation programmes into place. Limited funds have been targeted through EECA to help meet some of the costs of implementing an energy plan. Your energy adviser will be able to tell you if funds are available and make application on your behalf.

For most businesses there are energy related savings just waiting to be identified and implemented. So why wait before making these savings? Make the move now and find a specialist to manage your energy. Every dollar you do not save now is an opportunity lost forever.

Tim Armstrong is an energy advisor at East Harbour Management Services. He was winner of the Energy Management Association Energy Manager Award at the 2004 Energy Wise Awards. Email: tim.armstrong@eastharbour.co.nz

Copyright Profile Publishing Limited Oct 2005

Source: NZ Business

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