Many firms regard their utility bills as relatively fixed in proportion to their operations and largely non-negotiable, but nothing could be further from the truth. You have multiple options for reducing your utility bills, but the first step in every case is to understand how you are being charged for energy use.

Electric utilities, in particular, not only charge for the number of kilowatt hours you consume, but can increase those charges through a myriad of mechanisms such as power factor adjustments, peak demand charges, Summer/Winter ratchets, on-peak/off-peak time-of-day charges etc..

Some of these charges, especially ratchets, are particularly insidious. Under some tariffs, hitting a high peak demand during the 3 Summer months can affect 75% of your demand charges for the other nine months of the year!

Utility bills are frequently confusing and hard to understand. Most have at least three components - generation, transmission and distribution charges - each of which may have three or four “buckets” of kWh at different prices. It is in the utilities’ interest to put as many kilowatt hours in the most expensive buckets, and in your interest to put as many kilowatt-hours in the cheapest bucket possible.

What kind of tariff you are on and how you run your operations will have a significant effect on pricing. For an explanation of how most power bills are structured, see “How Power Bills Work”.

In addition to re-negotiating your current rates, you also have options for minimizing increases in future bills. There are a number of financial options you can use to reduce your exposure to both power and gas bill increases, depending on your Summer/Winter usage and other factors.