the advisor

Issue 1, 2014  |  Table of Contents
 

Cost Reduction Strategies: What About Utilities?
By KSM

In today’s challenging economic times, all businesses and organizations are looking for opportunities to reduce costs. As companies review expenditures, they should not overlook their utilities expense.

There are two ways to reduce the utilities expense: 1) Reduce consumption or 2) reduce rates. Ideally an organization is able to do both, thus helping reduce their expense to the lowest possible amount while still meeting the needs of their business.

To put it simply, rate reduction is reducing the price per unit for electricity, gas or water. The opportunity to reduce the unit price is impacted by utility regulation. Electric and natural gas utilities are regulated by federal, state and local agencies. This regulation impacts free competition as the determinate of prices. In Indiana, only natural gas is deregulated. In the neighboring states of Illinois, Ohio and Michigan, both gas and electricity are deregulated. Deregulation presents a host of opportunities for a company to reduce and avoid costs for utilities. The opportunities for cost reduction in regulated utilities exists, and should not be overlooked, but is limited by free competition.

To reduce costs, companies should consult an advisor who will:

  • Determine whether all services are obtained at the lowest possible cost;
  • Audit billing for tariff compliance and usage abnormalities;
  • Identify all meters and make sure they are functioning and being read properly; and
  • Research and analyze alternative rates and tariffs, interpretations and applications.
Reducing consumption is another component to the overall cost reduction strategy on utilities. Almost every business can reduce consumption through a wide variety of initiatives. Many of these initiatives can be achieved at no cost or low cost to the business. Often, simple steps will deliver excellent resultsby raising staff awareness and implementing low cost technology with a quick payback.

To reduce consumption, companies should consult an advisor who will:

  • Explore load shifting and peak shaving;
  • Evaluate the impact of lighting changes; and
  • Implement building automation systems and variable frequency drives.
Reducing the utilities expense requires a comprehensive plan. The professionals at KSM Profit Advisors have the experience and know-how to identify and maximize every opportunity to reduce a company’s utilities expense. Developing and implementing a comprehensive plan will help reduce costs and increase profits, all while making the workplace more environmentally conscious.

About KSM
KSM is a nationally recognized consulting, tax, and audit firm. Through our deep experience across multiple disciplines and industries, we leverage emerging technologies, combined with our people’s differing perspectives, ingenuity, and creativity, to help our clients solve their most difficult challenges.