Siloed Utility Costs

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If you don’t already know, energy and utility costs are what we’re all about. Distributed Energy Management tackles energy costs first and foremost from a budget standpoint, as decisions in business tend to start and stop there. In a recent article by Energy Smart, Kurt Fisette discusses the fallacy of siloed energy management; something we often discuss here at DEM. Jimmy Jia, our CEO, leaves his remarks below.

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Why do we manage utility costs in silos? As this article indicates, facilities, procurement, sustainability and other teams frequently can create conflicts that raises utility costs rather than work together in order to lower utility costs. This seems counter intuitive as wasting energy is neither cost efficient nor in the best interest of the business.

Before we get into that question, let’s ask a different one: what is a utility cost? Think about it. Certainly a utility bill is a utility cost. You are also buying the equipment that will be consuming the energy in the first place, so that should be considered a utility cost. You are also paying for facilities to maintain the equipment – should that be a utility cost? What about qualified utility incentives and tax rebates – are those considered to be part of your utility cash flow? Chances are, your business is only considering the bills generated by your production activity as the utilities. Yet these additional future activities will affect your utility budget.

At DEM, we believe that utility costs are managed in silos because companies lack an over-arching strategy about how future budgets will affect future cash flow. Bringing cross-discipline teams together, as suggested by this article, is critical in achieving cost savings and improved efficiency. Furthermore, these teams help bring clarity to costs, budgets and priorities – all of which helps the business grow. Defining a comprehensive utility budget and managing cross-discipline teams to execute that budget is simply the best practice of utility management.