How to Understand Electricity Usage for your Business

If you are a business-owner, you’re likely accounting for every penny spent, from office supplies and wages, to overhead costs, including utilities like electricity. As someone who runs a successful business, it’s important to ensure all aspects of your company are running efficiently. Energy usage is no less a priority, so why pay your energy bills blindly without taking a good, hard look at what you’re actually getting in return? It’s time to take ownership over the power that sustains your company. 

What qualifies for a business electricity plan?

Business electricity rates in Texas apply to any commercial business that runs either from any sort of property or building, regardless of size, whether it is a commercial property or a home. This can include large corporations or small organizations, such as schools and universities, religious institutions, hospitals or medical clinics, offices, and small businesses. As long as a business is running out of a building or property, that building qualifies for a business electricity plan.

The advantage for businesses in Texas is that with Texas’s energy deregulation, every business has the freedom to choose their retail energy provider (REP) and explore various rates and plans offered by different REPs. That means it’s all the more important to familiarize yourself with your business’s electricity usage to learn your energy use patterns and find the plan that makes most sense for you and your business.

What factors contribute to a business electricity rate?

Business rates and plans tend to be slightly lower than residential rates and plans in Texas. This is primarily because businesses tend to use a lot more energy than residential units (ranging from 5000 – 10,000 kWh/month for businesses as compared to 1000 – 2000 kWh for homes), for the purpose of powering all their business activity, like LED lights or heating and cooling

for large office spaces. Some reports have shown that business electricity rates are at about $0.09/kWh, whereas residential rates are approximately $0.13/kWh. Despite the reduced rate, because of higher overall energy consumption due to increased activity, electricity costs are usually still higher overall for businesses. Different factors contribute to the rate that a business in Texas will see. Many of these are common to the factors that affect residential rates. These include the following:

  • Season/Time of year: 

As we have learned in a previous blog, the hot, summer months when energy grids tend to be overloaded due to increased air conditioning use typically have higher electricity rates, whereas winter months have lower rates.

  • Area/Region: 

Although rates are generally consistent across Texas, certain areas will have lower rates, such as the Abilene region.

  • Discounts based on usage: 

Similar to residential rates, businesses can find plans that optimize savings depending on how much electricity is used per month.

  • Special business discounts or programs: 

Businesses are encouraged to go green in Texas, with special discounts offered when opting for renewable energy plans, saving money while reducing environmental impact.

Tips to Reduce Business Energy Costs

If you’re a business owner, it may feel daunting to explore how you can save money for your business. Here are some important ways you can understand your business’s electricity usage to help minimize costs and maximize profits for your business:

Go through your bill every month

It’s simple advice, but you’d be surprised how many business owners merely pay their dues without a second glance at their bill, or delegate payment to an admin assistant. Taking the time to go through your bill will help you understand trends in your company’s energy usage on a month-to-month basis. That way, if something seems off, like a sudden jump in utility fees or a leakage in your building, you can be aware and prepared to take action. This habit amounts to good leadership and good business practice.

Understand your energy profile

Knowing the how, when, where, and why of your business’s energy use is essential to making good business decisions. Understanding your company’s unique energy profile may call for a quick Energy-101 refresher course, but knowing the basics of how energy works can better equip you to take charge of your business’s expenditures to ensure you’re not being sold short by your energy provider. 

Here’s the rundown: energy is measured in watts, and 1000 watts make a kilowatt. Your bill shows your energy usage across time, that is, per hour, so you will see how many kilowatts of energy you’ve used in one hour. This is called “kilowatt hour”, or kWh. 

Some appliances that your business may be using include: 

  • laptops (50 watts), 
  • lightbulbs (60 watts), 
  • monitors (150 watts), 
  • coffee maker (900 – 1200 watts), 
  • television (150 watts), 
  • water heater (5000 watts). 

As an example, the coffee maker that you’ve purchased for your company’s kitchen for employee use would use 0.9 – 1.2 kilowatts if it were being used for one full hour. If your energy supplier is charging you 10 cents per kilowatt, you would pay 9 cents to $1.20 per hour for that appliance. This is one small example, but adopting this perspective can help you make useful decisions about the kinds of functions that you want running in your business.

Consider an energy consultant

Like a mortgage broker for your home, retail, or business property, an energy consultant has access to all of the various suppliers’ energy rates and programs in your area. An energy consultant can help you find the most appropriate energy plan tailored to your business and its activities and needs. This process is known as energy procurement. In a deregulated market like Texas, the need for an energy consultant is all the more important as there are various competitive rates to choose from, and you can consider factors like reliability, ratings from other businesses, contract length, dates and terms of agreement, volume of energy use for your business, and any exit or termination fees. 

If you would like more information on how you can better understand your company’s unique electricity usage to help your business run more efficiently, Arrow Energy can walk you through it. Contact us today!