Utility costs are typically one of the largest expenses a business will incur on a regular basis. The bad news, this cost will only keep on increasing. Statista projects that the average cost of electricity is projected to increase by as much as 2.8% in 2021. On the other hand, the good news is that energy costs aren’t fixed and are something most organizations actively monitor.
Photo courtesy of U.S. Army Corps of Engineers.
In fact, most companies do more than just monitor their energy consumption and bills. They actively put together an energy strategy given it’s a large cost component. The Harvard Business Review notes that approaching energy as merely a cost to be managed is a strategic mistake for businesses that overlooks enormous opportunities to reduce risk, improve resilience, and create new value.
That being said there are a number of ways a business can reduce its utility costs, two of which include conducting an energy audit and a utility bill audit. The difference between them? In short, a utility audit focuses on the cost of the commodity (i.e. monitoring the bill) whereas the energy audit focuses on reducing your consumption.
From our experience, the difference between an energy audit and a utility bill audit (and their respective benefits) is often misunderstood by decision-makers tasked with potentially monitoring or reducing spend. This article will delve deeper into the main differences between an energy audit and a utility bill audit.
AN ENERGY AUDIT IS USED TO ESTABLISH A BENCHMARK FOR ENERGY CONSUMPTION
An energy audit revolves around an assessment of your business’s energy consumption and needs. The typical goal of this type of audit is to examine your facilities’ efficiency in terms of how the energy is being consumed on a regular basis. This involves identifying energy-consuming equipment and pointing out areas where energy is being wasted.
ENERGY AUDITS ARE PHYSICAL
Typically, energy audits involve an on-site visit, which includes a trained auditor who tests the building envelope, undertakes a visual inspection of equipment, and interviews maintenance/operational staff in order to collect necessary data to identify energy-saving opportunities. This visit is referred to as a walk-through and is usually conducted by a professional in the energy field, who can evaluate the efficiency of your business’s energy use. With an energy audit, the auditor will physically walk through a location and point out areas where energy is being wasted, and typically summarizes findings into a report for your business to later review and make operational decisions.
As a side note – many organizations have shifted to virtual energy audits as a result of COVID-19 related restrictions. If you’re curious to learn more about virtual energy audits, here’s a good piece discussing the future of in-person vs. virtual energy audits.
ENERGY AUDITS VARY BY DEPTH
The American Society of Heating, Refrigerating and Air Conditioning Engineer (ASHRAE), a nonprofit organization that develops and publishes the standards of the industry, defines three different levels of energy audits, each dependent on project restrictions set by the client and the site’s potential.
Regardless of audit depth, all energy audits aim to:
- Establish a baseline for energy consumption
- Measure energy usage according to its isolated roles
- Benchmark with facilities and variables alike
- Identify energy cost reduction opportunities
UTILITY BILL AUDITS START AND END WITH THE INVOICE
As opposed to scheduling an on-site visit, a utility bill audit will never involve an intrusive walk-through or a physical review of any kind. Typical utility bill audits start with an initial audit review based on one recent billing statement. The auditor will then determine whether there are any billing errors present and if a detailed audit is recommended.
This initial audit process is complete in 24-48 hours. From there, a good, thorough utility bill auditor will:
- Work directly with your service provider to collect paperwork
- Correct all billing errors, saving you money monthly
- Request a refund from your utility provider for over-billing
- Only get paid after you’ve been credited with the refund
UTILITY BILL AUDITS GO BEYOND ENERGY SAVINGS
Unknown to most consumers and business owners, it’s estimated that 80% of utility and service billing statements contain errors. Of these, electric and gas statements contain the most billing errors. However, there are other utilities and specialty services that a utility bill auditor can analyze to determine cost-saving and refund opportunities. Utility bill audits for waste removal and procurement, for instance, can deliver monthly cost reductions (sometimes up to 60%). Other utility bill audits include telecom audits, merchant processing audits, shipping audits, and workers compensation audits.
HOW UTILITY BILL AUDITS HELP
When you use a commercial utility billing errors and auditing service, you don’t have to change utility providers or equipment to get the money that is owed to you or even to get better rates. The service does all of the necessary research to ensure every penny that is owed to you is uncovered. They inform the utility company of their findings and work with them to ensure your business receives a refund. The auditing company also researches every single program and rate to determine which plan is right for your business. Utility bill audits can maximize your company’s savings year after year and keep more money in your budget for other line items.
OVER-BILLING IS VERY COMMON
Don’t assume that just because your overcharges aren’t current that you aren’t entitled to a refund. Regardless of when those overcharges occurred, as long as you paid them, you are entitled to a refund. Billing is an automated process that needs to be audited periodically. And even though most utility companies will do their best to prevent overcharges, the sad fact remains that over-billing is a lot more common than you think.
UTILITY AUDITS THE UTIL WAY
Utility auditing is where we got our start, and it’s a crucial component of our business process. By assessing your business’ past payments, contracts, agreements, and document history, we can find potential for savings and save your budget from avoidable “unexpected” fees.
Our process leverages proprietary knowledge, methods, and superior technology to thoroughly analyze invoices and services for errors, anomalies, and inefficiency in billing.
This is the same process we’ve used to generate significant refunds for Phoenix Press. This is also the same process that was adopted for Coastal Foods, a world-class supplier of quality food products to the foodservice and grocery industry, which ultimately resulted in the recovery of approximately $83K in overcharges which spanned over two years.
From our experience, we know that being thorough and having a clearly defined audit strategy is the best way to maximize savings, refunds, and catch errors. It’s the exact reason we’ve created UVIEW, a holistic dashboard where clients can track the progress of each audit, at each location, in real-time. When conducting your audits, you’d want to make sure to clearly outline the categories of spending you plan on auditing and include estimated savings from each category (as outlined below).
Both energy audits and utility bill audits offer unique cost-saving opportunities. But the key difference between an energy audit and a utility bill audit is within the qualification process and the ultimate goal of the exercise. Energy audits require physical visits – utility bill audits can be done from anywhere in the world. Energy audits seek to optimize energy use – utility bill audits seek to reduce costs, spot errors, and maximize refunds. Utility bill audits are also quite flexible and can look at many facets of a business’s operations. This opens doors for serious cost-saving opportunities beyond just the energy bill.
We know that a lot of these terms can be confusing and quite overwhelming, but cost audits are worth the time and effort given the financial implications they can have on your business. If you think your business can benefit from a reduced energy spend (or a cost audit in any operational aspect of your business for that matter), let’s talk. We kick off our process with a free in-depth review of your bills, and we only get paid if we’re able to save your organization money.
ABOUT UTIL AUDITORS
Util Auditors specializes in utility bill auditing for businesses. We identify and correct utility and service contract billing errors. We have successfully reduced monthly costs and obtained substantial refunds from providers of electricity, gas, waste removal, telecommunications, shipping, merchant processing, and even worker’s compensation insurance nationwide.