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Making Sense of Savings Potential
As options for controlling energy costs continue to expand, and energy prices become more volatile, the ability to account for where the money is going also becomes more important. Setting up a good corporate energy accounting system is essential to gaining leverage over both those costs and the options to cut them.
As with other parts of the energy services industry, energy accounting is undergoing change, with new firms appearing and others disappearing without notice. Throw in the other pieces — deregulated energy pricing, interval data metering and demand-response programs — and you’re looking at a complex jigsaw puzzle.
At the most elemental level, energy accounting systems record, analyze and report energy usage and cost. Users of such systems often find such analysis of their energy bills and meter readings to be an integral part of their efforts to control energy costs. Various types of software and services are available to make this task manageable, but choosing among them can be a daunting task.
Once received, most utility bills are entered into an accounting ledger and paid. Beyond verifying that account numbers are in order and that there are no duplicate bills, only minimal oversight is exercised. Many facility executives simply lack the time to scrutinize energy data. An investigation usually starts only when a bill jumps by an extraordinary dollar amount.
When a firm manages a dozen or more energy accounts, meters and submeters, the cost of energy accounting software and the time to set it up often pays for itself in the first year by revealing billing errors and easily correctable operational problems. Typical errors include failed controls or incorrect fan schedules.
The need to watch for both invoicing and metering errors and problems in operations often leads to PC- or Web-based analysis tools, most of which offer similar basic capabilities. Pricing varies widely, with base costs ranging from a few dollars per meter per month, to more than $30,000 just to buy software. There is no single best choice: Facility data needs, both present and future, must be evaluated, along with each manager’s assessment of the value of the information to be obtained.
PC-based energy accounting software has been used by thousands of large energy customers to control energy costs, but it requires a major time investment to set up and typically looks only at monthly billing and metering data. Web-based energy accounting tools are new and allow users to shift much of the setup and maintenance work to an off-site party, but issues of cost, access and data security need to be carefully reviewed.
While a variety of PC-based programs have been developed to handle bill and meter data, relatively few dominated the market during the 1990s. Since then, the major players’ products have undergone changes in structure and availability, and other vendors have taken new paths. Some have transferred all software to password-protected Web sites through which customers can access and analyze their monthly data. Upgrades and bug fixes are automatic. Acquisition and posting of utility bill data may be done by electronic data interchange directly from the utility, thus avoiding any manual data entry. Others have merged energy accounting and energy management functions.
The accounting function becomes an extension of a more powerful capability to control and monitor energy usage as it happens, instead of a month later. Such programs differ greatly, however, in their capabilities, costs and compatibility with other systems.
Establishing criteria before shopping for software will make it easier to navigate through the available products and services. To get started, create three lists.
First, identify what’s really needed. Lay out minimum energy data-handling capabilities that you are seeking, such as billing and meter data entry, billing analysis, forecasting, report writing and internal billing among departments.
Second, decide whether existing resources are compatible with the software. Focus on any requirements for working with existing accounting and energy management systems already in place, such as Windows network compatibility. While there may be no plans to integrate such systems, maintaining the ability to do so later increases the flexibility of the system should plans develop.
Third, identify special features. Write down the functions or capabilities — such as remote meter reading and automated demand-response control — that would be nice to have in an energy accounting product. Try to imagine capabilities that would make using the software easier, such as automated entry of bill and meter data.
Any system you buy should have all the capabilities on the first list, the ability to be upgraded to cover most of the issues on the second list, and options available that could meet the desires expressed on the third list.
You may also create a list of issues that you don’t want associated with an offering, such as vendor access to your data or efforts to sell other products.
Before calling any vendors, establish a maximum price that you believe your firm would authorize for energy accounting capability, taking into account the avoided cost of personnel presently involved in such efforts if a new system could reduce it. Doing so will give you a reality check on just how far you can take the effort. If the answer is under a few thousand dollars, don’t even get started.
If, however, the price is manageable, you can start shopping by asking energy service providers — utilities, retail power marketers, controls firms, meter vendors, engineering consultants — about what systems they recommend.
Several states that have deregulated electric utilities are allowing metering to be provided by non-utility entities, called meter data management agents or metering service providers. Web sites for the public utility commissions of New York, California and other states have listed licensed providers of such services, providing an immediate shopping list for those areas.
Lindsay Audin is president of Energywiz Inc., a New York-based energy consulting firm. He has more than 25 years of experience in the energy industry.
Making Sense of Savings Potential