How should I manage the increase in energy costs?

06 April 2006
How should I manage the increase in energy costs?

How should I manage the increase in energy costs I am now experiencing?

Garry Felgate, the Carbon Trust UK businesses on average waste 30% of the energy they buy, and most organisations can easily cut their energy bills by up to 20% by implementing low- or no-cost energy-saving measures. Reducing the temperature by just 1°C can save 8% off heating bills, while ensuring that lights are turned off in unoccupied spaces can reduce lighting bills by 15%. Ovens and refrigerators use a lot of energy, so always ensure that any worn or damaged seals are promptly replaced in order to prevent waste. Companies that want to replace old equipment with energy-efficient alternatives should consider applying for an interest-free Carbon Trust loan. Loans of between £5,000 and £100,000 are available to small and medium businesses in the UK that are investing in energy-efficient equipment. The Hundred House hotel is a Grade II-listed building located in Norton, Shropshire. The business was incurring energy costs of nearly £13,000 a year and so decided to apply for an interest-free loan from the Carbon Trust in order to replace the boilers. Although the cost of the project was nearly £25,000, the hotel expects to reduce its annual energy expenditure by as much as £7,000 and will repay the loan in about three-and-a-half years. David Phillips, a partner in the hotel, said: "The Carbon Trust loan was ideal for us. The application process was straightforward and the decisions were quick. We will make considerable savings at a time when energy costs are soaring."

Ann Elliott, Elliott Independent Two ways: don't use as much, and don't spend as much.

The cheapest unit of energy is the one not consumed in the first place, so implement as many energy-conservation steps as possible. This includes installing low-energy lighting, turning down thermostats, checking time clocks and turning lights off when not needed. Only turn kitchen and front-of-house equipment and lights on when necessary.

Take meter readings before doing anything - and on a regular basis - so you can evaluate the impact of your measures.

You can seek expert advice from the Carbon Trust. It can fund surveys and provides a telephone support service for smaller sites.

Whatever your consumption, ensure you pay the lowest rate possible. Know your present contract position so there are no "default" surprises, and accept that the energy market is a commodity market where prices change daily, so don't negotiate a new price on the days when the market is high.

Independent businesses or small groups and chains can use energy-cost expert companies. If you do this, be very clear about how they are going to charge. Some offer a free service and recoup their costs through inflating prices from their suppliers, so check the basis for their recommendations. Some will charge a percentage fee. Others charge a flat fee.

Once you have your consumption at its lowest and the right price, check the invoicing you receive from the supplier. According to consultants Energy Cost Advisors (ECA), one in four invoices is not correct.

Finally, involve all your team in your energy-saving schemes - you cannot drive down costs on your own.

Charles Trevor-Roper, Coaching to Success So far, probably, you have not really considered the effect of energy costs on your business, but the massive hike in these costs over the past few months will certainly have a major impact on next year's budgets.

If there is a positive to take out of this situation, it is that it's about time everyone had a long, hard look at their energy costs, and developed a strategy to reduce them. This strategy would need to become embedded in the normal running of your business and not become a personal crusade that steals a disproportionate amount of your time.

There are loads of consultants out there who will charge you for telling you exactly what to do in order to reduce energy costs. However, I am sure you can write that list yourself. The real problem you face is how to actually put that list into practice without disrupting the rest of your business.

The answer is simple: ask the people who really matter, your team, who actually use all of this energy. Why not have a short team meeting, explain the problem to everyone who works in the business and ask them to come up with ideas for energy saving? Give them all a week to think about it, meet again, and from their suggestions develop your strategy.

In order to make the strategy self-regulating, why not work out your energy budget for next year based on last year's consumption and the new prices, and offer your team a percentage of the savings you make from budget? If you offered them 30%, you would still be 70% better off. A real win-win solution.

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