Energy | By Andrea McMaster
Energy expenses are becoming one of the largest costs of doing business for banks large and small. Whether it’s maintaining the costs of your energy bills from month to month, the cost of replacing fixtures and equipment that use that energy, or dedicating the time and manpower it takes to create a plan to lower energy bills and become more efficient, controlling energy costs can significantly save banks money, but the task can seem overwhelming.
Electricity and natural gas prices are rising across New York. With this volatile pricing season, now is the time to take that first step.
For many banks, reducing and controlling energy costs can make a significant difference in their monthly expenses. As energy costs fluctuate monthly, it will become harder to budget these costs. Knowing what electricity and natural gas purchasing option is best for your bank is step one.
Since deregulation began in New York, businesses now have the option to choose an alternative supplier for both their electricity and natural gas needs. This allows for the flexibility in choosing pricing options. The two most common pricing options are a fixed rate or an index rate. The fixed price option gives businesses the ability to secure a set rate for a contracted term based on the company’s historical usage. A fixed rate option also allows for budget certainty. Since you know your rate and your usage, you know what your annual costs for energy will be. Fixed price options will also protect you from market volatility and set your mind at ease should the market spike for any reason.
The index option allows businesses to pay a variable market price for energy. This option allows customers the opportunity to take advantage of market volatility by giving you the ability to manage your usage based on the market at any given time.
More costs upfront save over time
Retrofitting equipment to new, more efficient equipment can decrease energy costs as well.
Outdated equipment can actually be increasing your energy demand, therefore increasing your costs. The cost to replace a burnt out light bulb may sometimes be cheaper than replacing outdated lighting, but in the long run it may actually cost you much more. Just as putting a quick fix on your boiler can be cheaper than replacing the whole boiler, in the end the costs of that quick fix can be devastating to your bottom line.
Having a comprehensive energy study completed on all of your site locations can help you determine where you are using the most energy, what equipment needs to be replaced due to inefficiency and how you can retrofit this equipment so it generates saving in both usage and dollars. These studies are presented to you with an easy to understand cost versus saving analysis. The costs of these projects can be combined with state grants and incentives, utility incentives and can allow for on bill financing deterring out of pocket upfront costs.
If you want to go deeper into controlling energy costs, green energy technology projects like solar panels, wind turbines, and fuel cells all currently have grants and tax incentives available to make installation more affordable. Solar panels are a great way to reduce electricity costs and allow banks to become more environmentally friendly. Most renewably energy companies will provide you a study that includes grants and incentives to make it easier to see if this is a cost-effective measure for you to take.
Many companies are unaware of revenue-generating programs available to them. While assisting with the stability of the overall energy grid, banks can generate profits. To determine if you qualify for these programs, a simple study can be completed. Participation in these programs can also be a great public relations tool to let your customers know they are part of a banking institution helping to sustain the reliability of the energy grid.
Energy is no longer a simple cost of doing business that you have no control over. These are just a few of the steps you can take to lower your energy costs. Whether you want to dive in and take advantage of all of these steps or you just start with the basics in reducing costs through purchasing supply, there is no better time to start than now. ■
Andrea McMaster is owner and partner of Four Corners Energy, a one-stop shop consulting company designed to assist businesses, including community banks and financial institutions with all their energy needs. The firm’s experience ranges between electricity/natural gas procurement, energy services, green energy technology and municipal and government relations. Andrea may be reached at firstname.lastname@example.org.