Cost Cutters: Banish the Power Bandits

From SmartMoney

As if slumping sales and record gasoline prices weren’t enough, rising electricity costs are also taking their toll on independent businesses.

The average price that non-industrial businesses pay for electricity has surged more than 27% over the past decade. In February, those businesses paid an average $1.71 per square foot for electricity, up 2.2% from $1.68 a year earlier, according to the Department of Energy’s Energy Information Administration. That means a retail store that occupies, say, a 2,000 square foot space pays about $3,420 a month now for electricity—a hefty $60 more a month than it did a year earlier.

New energy-efficient technologies should help cut back on the demand for electricity, but prices will likely continue their ascent, say energy-market watchers. As such, now is the time to start cutting your office’s electricity costs. For guidance on pinpointing potential savings, tap an energy auditor or ask your local utility for help.

In the meantime, here are five strategies for banishing your business’ biggest power bandits.

How to cut your energy costs

1. Change a light bulb and save

Lighting alone consumes about 25% to 30% of energy in a commercial building, so consider switching to energy-efficient compact fluorescent lamps, commonly called CFLs, which cost about 75% less to operate than incandescent bulbs, according to the Environmental Protection Agency's Energy Star program. Be sure to also turn the lights off when they’re not in use, and consider using motion sensors and programmable thermostats.

In addition to the bulbs, replace older light fixtures. For example, when Mike Algazzali, owner of Gazzali’s Supermarket in Oakland, Calif., recently replaced more than 400 light fixtures in his 30,000 square foot store with new reflector-light fixtures, he lowered his electricity bill by $4,100 a month.

2. Keep your heating and cooling system in check

To keep older systems from leaking or expending more energy than necessary, have them routinely tuned up, suggests Maura Beard, an Energy Star spokeswoman. Be sure to plug up leaks until you can afford to replace older equipment. Wrapping an insulation blanket around a water heater, for example, can help capture heat, she says.

Remember to keep your office’s air filters clean, says Jim Dagley, a spokesman for Johnson Controls' energy-audit unit in Milwaukee. Depending on how dirty they are, changing air filters can shave 5% to 20% off your utility bill, he adds.

4. Run office equipment efficiently

Set your computer to sleep mode after 5 to 10 minutes of inactivity and then turn it off when it’s not in use. To cut out “phantom” energy drains, which can occur even when a device is fully charged or turned off, plug equipment into a power strip and then disconnect it at the end of the day.

If you need new equipment, think about buying Energy Star-certified products, which use as much as 60% less electricity than standard equipment.

5. Use your energy-management system

Particularly if you lease office space, it's more than likely that your building already has a system in place for setting temperatures and controlling what time hot or cold air kicks on and off. “Almost every office building has an energy-management system,” says Dagley. “People just aren’t using it or they aren’t using all the features.”

In addition to climate control, check to see if you can regulate air flow. Rather than conditioning 100% of the air that comes into the building, “it is much more energy-efficient to limit the amount of outside air,” says Dagley.

Make sure you’re getting the best rate

When supermarket owner Algazzali received his first utility bill after being audited by his local utility, the Pacific Gas and Electric Company, his bill actually increased to $24,000 from $20,000. “We were shocked,” says Algazzali. “That was almost as much as rent.”

However, after doing some digging, the utility discovered that Algazzali was enrolled in the wrong rate plan. After fulfilling the utility’s recommended energy moves (such as changing the light fixtures) and getting in the right plan, Algazzali’s electric bill plummeted to about $7,000 a month.

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