Power in Perspective: The ABCs of Data-Built Energy Budgets

Between unpredictable weather pattern changes, record heat waves, devastating storms, and raging wildfires, utilities remain under massive strain to keep up with unpredictable usage demands. Additional factors like regulations, tariffs, and grid constraints further impact energy budgets. As unforeseen costs and usage spikes remain rampant, especially for companies with multi-site portfolios, current energy budgets simply cannot keep up.

So, how can companies, their facilities managers, and other stakeholders work to establish a budget that both meets today’s demands and plans for the future?

With data.

When it comes to collecting data from utility bills, multi-site businesses face unique challenges. Thousands of invoices from hundreds of locations serviced by a host of individual utilities and suppliers put undue burden on multiple departments. Different systems, bill periods, and invoice-level details create variables that can make efficient utility expense and data management a struggle, resulting in missed invoices, late fees, shut-offs, or overpayments.

Paying bills correctly and on time is hard enough. Companies are under constraints to do additional analysis and spot overlapping service dates, billing and meter errors, spikes in consumption and demand, or other usage anomalies. To manage this volume of information, business decisions must not be merely informed by data; they must be built on data.  

What Happens if the Data Is Incorrect?

Inaccurate data erodes trust, creates confusion, and damages the financial health of the organization. Data is the baseline for future accrued expenses, budgeting, and trend reporting. Without the consolidation, verification, and usability of good, comprehensive utility data, companies face material risk, including reissued utility bills, false baselines, or wasted capital.

A modern utility data management strategy is essential, but with each supplier using a unique invoice format, tariff structure, and billing practice, how can an organization streamline data collection and management?

It’s easy as A, B, C.

A Is for Accuracy

By capturing detailed cost and consumption data on bills, organizations can audit used resources and identify billing errors and potential shut-offs. This allows them to see how and where resources are being consumed.

How can this be done?

• Step 1: Capture Line Items Across All Utility Bills: Create a process to collect data from utility bills, creating insights that spot exceptions such as incorrect meter readings or meter multipliers. Data collection and storage should be done consistently across all locations and bills to create a database for reporting, supporting trend analysis and benchmark reporting.

• Step 2: Conduct a Pre-Payment Audit: Auditing bills to check for overlapping or missing service dates, types of charges, and usage identifies potential billing errors prior to payment, ensuring that organizations do not overpay for the resources actually used. This eliminates the time-consuming task of working with vendors to obtain credits on future bills.

• Step 3: Create a Baseline to Support Trend Analysis: Businesses need to capture and know where true costs are and how the overall spend breaks down. Line-item data from utility bills can help identify separate charges by resource with a baseline created for each utility.

B Is for Best Practice

Any business can create a precise and future-proofed utility budget with four best practices in mind:

1. Start with Site-Specific Baselines: Companies must use a bottom-up approach. By starting at the account level and establishing baselines for usage and unit price, the budget will be more accurate, with better insights into how to respond to unforeseen changes.
2. Track Accruals Against Budgets: Unlike other budget category expenses, accruals cannot be tracked based on the bills paid. The length of billing cycles varies between utilities, and resource budgets must be aligned according to the month used, rather than the month billed. Consider seasonality and weather patterns when projecting expenses and creating accruals that minimize exposure to budget variance.
3. Track Variances by Both Cost and Usage: Consider how usage affects and drives resource expense. As you build utility budgets, track and document individual components of resource costs to help others understand the drivers and address stakeholder questions about why the variance occurred.
4. Use Variance Analysis to “Manage Down” in the Organization: Data analysis determines how to improve results, ensures expenses are allocated correctly, identifies trends in variance that support re-forecasting usage, and reduces surprises by understanding fluctuations in spend. Use financial data to identify sites where expenses are higher than projected: Variances may have been caused by an issue in the budget or by a site issue, such as a leak or failed meter.

C Is for Collaboration

Once you identify how and where resources are being consumed, your organization’s energy and facility teams can use this data to implement and measure the success of energy conservation measures (ECMs), resulting in significant energy reduction and cost savings, by:

• Evaluating current portfolio performance by collecting bill data to determine how and where to focus energy conservation efforts.
• Identifying high-cost, high-use facilities and raising awareness to get employees involved in energy conservation programs.
• Providing no- or low-cost conservation efforts, such as maintaining temperature set points, installing occupancy light sensors, keeping exterior doors and windows closed, and turning off unused equipment.

Reevaluating and reviewing site data can back up a program’s return on investment and prove its effectiveness. By determining savings, businesses can reinvest those funds in additional energy efficiency projects that require capital but have short paybacks.

D Is for Data

Detailed, accurate data acquisition, analysis, and management practices help identify bill errors and resource expense reduction opportunities, inform purchase decisions, and guide strategic initiatives. Real-time analytics and forecasting measures pinpoint budget discrepancies, provide solid ROI, and support cost avoidance, adding value to the AP and finance departments while serving as the foundation for strategic decision making across the organization.

Technology that incorporates AI into processes, forecasts usage, identifies anomalies, or optimizes procurement can only deliver results with proven data. Investing in systems that reduce billing errors while building a comprehensive energy and sustainability management system creates an environment of trust that leads companies into a smarter, more sustainable future.

Bryan Hopper is the Head of Commercial for the Sustainable Resource Management Division of ENGIE Impact.