Overhead costs are aptly named, as they not only put a roof over our heads, but they also hang a question mark over our heads in our financial planning efforts. That’s particularly true of electricity bills, which can fluctuate widely depending on several factors. Budgeting for energy use can be challenging for small businesses. According to the U.S. Environmental Protection Agency’s Energy Star, the nation’s small businesses spend more than $60 billion a year on energy.
Here are seven factors that help determine what a typical electricity bill will look like, how it will vary and even easy ways to lower it.
1. Find the best electricity rate. Energy use (how much electricity a business consumes each month) is measured in kilowatt-hours (kWh). To calculate a bill, the electricity provider will multiply the energy use by the electricity rate. For example, if the rate is 10 cents per kWh and the business uses 500 kWh in a month, the bill would be $50 that month, plus any fixed transmission and distribution charges.As of March 2019, the average rate in the United States was 12.83 cents per kWh. But that average varies depending on a number of factors—including your location. Louisiana, for example, has the lowest rate at 9.29 cents per kWh and Hawaii has the highest, at 33.99 cents. Even within a state, costs can vary, making it worthwhile to shop around for the best rates in your region if you have multiple options for energy providers.
2. Consider the nature of the business. Generally speaking, small businesses might commonly use 1,000 kWh per month. But this can differ drastically depending on the type of company. Food service businesses, for instance, require huge quantities of energy. The cost of running refrigerators, walk-in freezers, dishwashers, ovens, fryers and so forth is far more expensive than, say, the equipment needed to run a small accounting firm.
3. Account for seasonal fluctuations.Cold winters and hot summers can drive up heating and cooling costs. You can average out those costs with the energy use for more temperate months to discover what a typical bill across the year would be.
4. Replace incandescent and fluorescent lights with LED bulbs. The number—and type—of lights in your business also affects your bill. LED lights use about one-sixth the wattage of 60 W incandescent bulbs. They also are more energy efficient than compact fluorescent lamps, requiring almost 50 percent less wattage in some cases. By swapping in LED bulbs, you can save big on costs for the same brightness. For example, a business open 40 hours a week could save 5,252 kWh of energy per year by replacing 50 bulbs in the office. With the average U.S. electricity rate of 12.83 cents per kWh, that would add up to an annual savings of about $684. If your business uses security lighting, investigate whether you can replace high-intensity discharge lights, which are power guzzlers (up to 2,000 watts each) with more moderate 360-watt lights to illuminate your exterior.
5. Check the age of your central cooling systems. Although installing a new HVAC system is a large cash outlay and must be carefully considered, it can save businesses a lot in the long run. Replacing a 1970s HVAC system with a modern energy-efficient model, for instance, can cut cooling costs in half.
6. Desktop computers or laptops? Most businesses depend on computers to some degree these days, but desktop computers with monitors can guzzle about 290 watts per hour. That equates to more than $325 annually under the average rate. Turning computers off at night can lower energy use, as can switching to laptops. Designed to work off batteries, laptops are more energy efficient, typically using about 15 to 60 watts per hour. Other office equipment, such as printers and copy machines, also consume lots of energy. Putting them in sleep or standby mode can help conserve energy, but they still require significant power in those “rest” states. The average copier, for example, uses 310 watts while in standby mode and 200 watts while in sleep mode, though that’s still much less than the 2,400 watts it uses while printing.
7. Switch to energy-efficient exit signs. The ubiquitous, traditional exit sign is a hidden energy drain for businesses, using about 40 watts per sign. In comparison ENERGY STAR certified signs use as low as 12 watts. Switching to the latter can save almost 250 kWh per sign over a year, or about $32 using standard electricity rates. Multiply that by the number of exit signs in your office, and that can add up to significant extra cash in the coffers.These are some of the principal factors that determine an electricity bill. By accounting for these factors and also investing in greater energy performance, small businesses can better predict a typical bill while, according to Energy Star, strategically cutting utility costs 10 to 30 percent overall.