Local consultants can cut your costs 10 to 20 percent by next month

If you’re like the majority of businesses today, you’re unwittingly overpaying for certain operating expenses. But it needn’t be that way.

“A professional fiscal management consultant can identify where you’re hemorrhaging cash and plug the leak, saving you a bundle on your operating expenses,” says Roger Zona, CEO of TPI Efficiency. “Many times the savings are immediate — upwards of 10-20 percent on your next bill — which means more operating cash for your business.”

Smart Business spoke with Zona about the ways fiscal management consultants can help companies save money.

Why is overspending for operating expenses so rampant?

Most companies just aren’t aware of their options. Fact is, when it comes to managing key operating expenses, you basically have four choices — only one of which saves you any real money.

A common approach is to manage things in-house. But without a sizable team, you’ll be lost in the maze of rapidly changing policy issues and the subtle shifts and trends in the markets that greatly affect your price. Even worse, without the buying power of an economy of scale, you won’t have access to wholesale pricing that might save you significant money.

Another option is small businesses. Sadly, they’ll face the same pitfalls of doing it themselves with the added hurdle of less attention focused on your business while they juggle enough clients to stay afloat.

Alternatively, you can try a national call center service. The big issue here is the ‘one-size-fits-all’ trap they’ll shove you into. Without ever setting foot in your business and with only a passing glance at your numbers, they stick you in long-term contracts with a handful of cherry-picked suppliers that may in fact shave a few pennies off your bill, but pay them big bucks in kickbacks on your bills. Your business gets the same boilerplate ‘fix’ as everyone else, regardless if it’s the best option or saves you the most money.

Finally, you can partner with a professional fiscal management consulting company. They’ll send someone to your facility who will look for ways to save your business money almost immediately. And the suppliers earn your business, so it never costs you a dime and all the savings go directly to your bottom line.

How does a local consultant save me more money than those other options?

A consultant worth their salt will visit your facility and meet with you to gain a deep understanding of your management, growth goals and risk tolerance.

Next, they’ll spend as long as it takes to get a crystal clear picture of how your business operates before carefully sifting through your operation to identify myriad ways to save you money.

Then they’ll build you a custom tailored ‘Request for Proposal’ and send it to a vast array of suppliers. And they’ll walk step by step with you through the set-up process to ensure it goes flawlessly.

Finally, they’ll provide ongoing support for as long as you’re a client, including calls and face-to-face meetings, to update you on changes in the market that affect you and a plan to combat them.

What should I look for in a local consultant before choosing one to work with?

First, look at their internal team. They must have the manpower to keep their finger on the rapid changes in the markets. Do they have a proven system for achieving consistent, spectacular results for their clients? If they can’t explain it in 30 seconds, they don’t.

Do they have access to true wholesale pricing? Only a small number of consultants are licensed for wholesale pricing. Beware of those who aren’t.

It’s important they have a broad network of quality, vetted suppliers. Not just 10 or 20, but 100 or more.

And they should be supplier agnostic, meaning they don’t care who the vetted supplier is as long as you’re getting the best price for services.

Lastly, your consultant shouldn’t cost you a dime. No percentage of savings, no fee tacked onto your bill, nothing. Suppliers fight for your business, and happily pay a consultant a small, preset fee per customer, totally apart and aside from your dealings with them. That way it’s a true win-win.

Insights Energy Solutions is brought to you by TPI Efficiency Consulting

Do you qualify for free LED lighting upgrades?

According to the U.S. Department of Energy, LED lighting is “the easiest, most affordable way to lower your electric bill and put money back into your business.” With some LED bulbs now available free of cost, it is the perfect time to start reducing your consumption, your environmental impact and, most importantly, your monthly bill.

“Replacing certain LED bulbs is free. Other bulbs, fixtures and controls are heavily subsidized. If you have a remaining balance, zero-upfront capital options may be available — the energy you save pays for the bulbs before you ever have to cut a single check,” says Tim Regan, president of the fiscal consulting firm TPI Efficiency. “Traditional bulbs are being phased out entirely and these rebates won’t last forever. Now is the right time to make the switch.”

Smart Business spoke to Regan about free LEDs, and reducing your total energy budget and usage through high-impact energy conservation measures.

The word “free” caught my attention. What’s the catch?

In January, a Northern Ohio utility reinstated energy efficiency programs. The incentives are available to commercial, industrial, governmental and institutional consumers of all sizes. The catch? Really there isn’t one. These incentives help the utility reduce energy consumption and meet government-mandated guidelines. In the end, it’s cheaper for them to hand out efficiency rebates than to build new, more efficient power plants. Replacing most bulb types including tubes and high bays is heavily subsidized, but there are a handful of ‘Edison-style’ screw-in bulbs that can be 100 percent free to the end user.

What types of businesses get free bulbs?

Essentially, any business will get significant rebates on LED replacements. But, if your lights are traditional screw-ins, indoor and outdoor floods, and even candelabras they will likely qualify for free replacements. The industry is finding a lot of opportunities for free replacements in hospitality, institutions, offices, warehouses, factories, retail and car parks since they often use a substantial amount of screw-in-type bulbs.

Where should businesses begin?

Talk to a fiscal consultant and lighting expert. Find an expert with a scale and leadership position that allows them to provide you with maximum subsidy and ultimately the maximum savings possible. These advisers will provide a free, tailored savings assessment that details your annual savings, payback period and ROI.

What savings should businesses expect?

That’s the best part. LED bulbs last 25 times longer than traditional bulbs. That means you can cut your lighting bill up to 80 percent and reduce maintenance costs like bulb and ballast replacement for years to come. LED provides the full spectrum of lighting ‘colors’ to highlight your products on the shelf. It provides better atmosphere for your clients and staff, and eliminates traditional lighting ‘flicker’ and eyestrain for a brighter, more efficient workplace. All of this can increase productivity and profits.

If your bulbs aren’t 100 percent free, they can be heavily subsidized through rebates, rider reductions and tax credits to improve your ROI. Average ROI is a little over one year, and the bulbs often more than pay for themselves through the amount you save on energy. Furthermore, there are exclusive programs in place where you may pay for your upgrade with no upfront capital through your energy supplier. You may even be able to install these energy solutions today but delay payment up to 24 months. By then you have already reduced your consumption, improved your load profile, decreased your monthly bill and impacted your future cost over the life of the bulbs.

Chances are if your building uses T12, T8 fluorescent or sodium halide lamps, you are spending at least twice what you should to light your facility. If you use traditional screw-ins the utility would like to replace them for free. While the funds are available, you can increase profits and spend less to get more. The price is right. The time is now.

Insights Energy Solutions is brought to you by TPI Efficiency Consulting

A triage approach to operational efficiency

Managing business expenses can be enough to make you light-headed. Long- and short-term decisions, priorities, vendors, contract terms, limited resources — the effects can be paralyzing. The good news is many businesses today are adopting an established methodology loosely based on medical triage to make sense of it all.

By definition, “business triage” is the sorting and allocation of resources according to a system of priorities designed to maximize your investment. See also: “get more bang for your buck.”

“It’s a great tool that can breathe life into your bottom line and effectively reduce your spend,” says Roger Zona, president and founder of TPI Efficiency.

Smart Business spoke to Zona about utilizing limited resources for the greatest good, discovering additional improvements for long-term financial health and how business triage might just be the answer to what ails you.

Where should companies begin?

When we look at a business’s entire book of operating expenses, often the largest recurring operating expenses include employees, insurance and facility costs. All of these costs need to be considered for the long-term health of the company and this is where companies can begin to measure against the triage method. Triage determines which items should be addressed first to have the largest, long-term payoff.

Picture three tiers of a pyramid. As companies make their way up the pyramid, costs typically increase as well as length of financial recovery or ROI.

At the top, is tier 3, ‘long-term care,’ which includes the most expensive purchases such as employees, inventory, mortgage or rent, insurance and taxes.

The second tier is ‘specialized care.’ This includes services that may require specialized equipment and expertise like telecommunication services, building envelope, HVAC, credit card processing and technology.

Tier 1, at the bottom of our pyramid, is ‘urgent care,’ which is usually the best place to start. First, you’ll want to ‘stabilize’ business expenses by investigating potential tax recovery and reviewing obvious ‘pain points’ felt by your financial team. Often, the greatest impact at this stage is through turnkey solutions, such as utility contracts.

What typically is the best course of treatment? 

Similar to an emergency room patient, you’ll need to first stabilize your expenses and establish good ‘baseline vitals.’ Analyze ‘patient history’ by reviewing contracts, risk tolerance, exit penalties, term and auto-renewals with an expert. Based on the best technology and analysis available, you can recommend the course of treatment.

Perhaps you need a ‘prescription’ change, finding a new vendor that offers greater assistance to reach your financial goals. At this stage, you may be ready to ‘schedule extended treatments,’ opting for technology enhancements, ‘transplants,’ or more extensive testing and diagnosis to determine the viability of second-tier strategies such as HVAC, building envelope or LED lighting enhancements in the longer term. You will want to be referred to a specialist to assist with these efforts. And, as always, you’ll want to schedule regular ‘check-ups’ to assure your financial strategy is on track.

Who should be involved in examining operating expenses?

The procurement market can be confusing to the casual observer and capital projects may be difficult to deploy, but there is no need to face your efficiency goals without some assistance. Experienced consultants who know what they’re looking for will bring your attention to caveats, offer assistance during the discovery period, make recommendations for service providers and specialists, and assure that long-term care is provided to keep your operational expenses as efficient as possible.

A triage approach to operational efficiency transforms the expense management experience, helping you quickly identify and fix immediate symptoms and locate appropriate care for long-term financial success.

Insights Energy Solutions is brought to you by TPI Efficiency

Energy-efficient resolutions for the New Year

With 2017 just around the corner, it’s time again to think about New Year’s resolutions. While your personal goals may revolve around staying fit, quitting bad habits or spending more time with family, the year’s end is also a perfect time to reflect on your business’ progress over the past year and set goals for the future.

“Most business owners want to set goals that will help their business grow,” says Karl Shaw, COO of TPI Efficiency Consulting. “Leaders looking for achievable, measurable ways to make their business more profitable and easier to manage in 2017 should remember to include energy efficiency.”

Smart Business spoke with Shaw about energy initiatives and purchasing strategies to help your business thrive in the New Year.

What energy goals should organizations set to increase profits this year?

  • Goal One: Investigate your current energy costs. Electricity costs are typically one of an organization’s biggest monthly operating expenses. In many cases that’s an immediate opportunity to reduce your spend by 5 to 20 percent. For some industrial businesses, the energy used for production can even exceed 70 percent of operating costs. The first goal for an energy-efficient new year definitely should be to reduce the cost of the power you’re using today by negotiating a favorable rate and term.
  • Goal Two: Investigate advanced purchasing strategies. Most businesses buy energy at a fixed price. That strategy is often 10 to 15 percent more expensive to large consumers. A fixed price contract might be effective for a pizza shop, but it probably isn’t the right solution for a manufacturer using over 1 million kilowatt hours per year. Larger users, you have more purchasing options that utilize market fluctuations to your benefit, protect you from volatility and allow you to take advantage of lower prices when they’re available. These advanced purchasing strategies can be a bit tricky to navigate on your own but they are easily executed by a qualified energy broker at no out-of-pocket cost.
  • Goal Three: Get that LED project rolling. Not only do LED systems create a brighter, safer, more efficient workplace, but according to the U.S. Department of Energy, modern LED bulbs are up to seven times more efficient than incandescent bulbs, cut energy use by more than 80 percent and often last more than 25 times longer. LED lamps and controls also eliminate replacement and labor cost, making them one of the easiest, most affordable ways to lower your energy bill for 2017, and for years to come.
  • Goal Four: Take advantage of the various efficiency programs available. LEDs practically pay for themselves. Not only have their prices dropped over the last few years, there are also a variety of government programs available including rebates, rider reductions and tax credits to improve your ROI. Rumor has it 2017 will be a good year for rebate availability, so get your paperwork filed early to take advantage of new programs as they become available.

How can companies ensure their energy efficiency program is successful this year?

The energy market can be confusing to the casual observer and capital projects may be difficult to deploy, but there is no need to face your energy efficiency goals without some assistance. The improved ROI and increased net savings gained by working with a skilled procurement consultant will always pay off. Quality consultants aren’t just contract negotiators or project managers, they offer new ideas, insight to current industry trends, vetted suppliers and access to a network of experienced professionals that serve as an extension of your team.

With some strategic assistance, 2017 will be the year your company uses energy efficiency to find untapped cash flow and make facilities improvements that deliver safety and increased profits.

Insights Energy Solutions is brought to you by TPI Efficiency Consulting

How weather predictions influence energy usage, forecasts and decisions

The winter of 2016-2017 is the subject of mixed predictions for length and severity. According the National Oceanic and Atmospheric Association (NOAA), Northeast Ohio and the Midwest have been under a “La Niña watch,” which means conditions are favorable for cooling of sea surface temperatures in the Pacific Ocean, translating to a very cold and very wet winter for Northeast Ohio. In late August, the La Niña watch was dropped, and the regions were designated to be in neutral conditions, which favors a mild winter.

Weather, however, is reliably unpredictable. That makes using forecasts to get a sense of your company’s energy usage, particularly when it comes to natural gas, a gamble.

Smart Business spoke with Roger Zona, president of TPI Efficiency, about how the weather predictions may or may not influence your company’s energy budgeting and what you can do to mitigate costly price swings.

Given NOAA’s changing prediction for the coming winter’s weather, how can businesses plan for something that is uncertain?

The canceling of La Niña is a fairly significant meteorological event considering that La Niña effects typically have a strong impact on weather in the Midwest. Given NOAA’s fluctuation, the decision to ‘roll the dice’ on natural gas rates — in other words, not taking any action to lock in rates at favorable levels in anticipation of mild weather — is a really big and impactful decision for many businesses. And it’s a decision that shouldn’t be left to chance.

Take into consideration that even though this year’s winter may be predicted to be mild overall, this is Northeast Ohio and businesses can still expect at least a couple of severe winter storms and cold snaps. Unfortunately, one perfectly timed, prolonged cold snap can spike natural gas variable rates dramatically, causing budget projections to become obsolete while quickly eating up any of the savings businesses were hoping to cash in on.

How does the weather’s unpredictability affect the energy costs incurred by businesses?

Take a look at your company’s natural gas usage patterns and the energy markets as a whole when determining the strategy you’ll take heading in to this winter. The price of natural gas is currently at near-historic all-time lows. Businesses can still secure fixed natural gas rates between $3 and $3.99 per MCF versus Dominion Ohio’s Standard Choice Offering (SCO) variable rate price of $2.80 per MCF. Although this may seem like a significant spread on a per MCF basis, a business needs to analyze their specific natural gas usage and determine the true risk.

Many businesses are primarily ‘heat load’ natural gas users, meaning they use a significant portion of their annual usage when it is cold outside. As a result, a variable rate program typically has the greatest chance of spiking in the months during which there is the greatest potential to use the most natural gas. Reflectively, your exposure to risk on this plan is actually much greater than you may be anticipating when simply comparing a variable rate from September to a fixed rate program that protects you all winter long.

What can businesses do to avoid the risk of natural gas price increases?

Although many businesses might be hoping for a mild Northeast Ohio winter as NOAA now expects will be the case, it’s rarely a wise decision to gamble against Old Man Winter. If anything can be guaranteed it’s the promise of unpredictability. The best thing businesses can do is lock in their natural gas rates today while those rates are still near historical lows. Doing so will ensure that the business is insulated against the chance of price spikes.

Insights Energy Solutions is brought to you by TPI Efficiency Consulting

The value of a procurement expert

It can be difficult for business owners to get the most out of their operating budgets. This is often the case because they are too close to a situation and lose objectivity, it’s not their area of expertise, or they’re focused on the day-to-day business of growing their companies.

When companies are looking for a fresh perspective on reducing expenditures, they may want to consider the unique services provided by an emerging class of consultants known as procurement experts.

Procurement experts specialize in contract negotiation for a variety of operating expenses. They provide the objectivity and market insight needed to maximize monthly expenditures and achieve budget certainty, so business owners can focus on their passion.

“Great companies have a passion for their product or service, but often that passion doesn’t extend to negotiating expenses,” says Karl Shaw, COO at TPI Efficiency Consulting.

Procurement experts provide innovative strategies, market and technology guidance, and help finding the right contract to reduce costs and invest in operational efficiency.

Smart Business spoke with Shaw about the role of procurement experts and how their work impacts the operating costs for businesses.

What should companies expect from working with procurement experts?

Procurement experts are more than number crunchers and contract negotiators. They offer new ideas based on their experience working with a variety of businesses. That can include current information on industry trends, knowledge of supply sources and vetted suppliers in a given region, and access to a network of experienced professionals that serve as an expansion of the company’s internal team.

Businesses of all sizes face ever-increasing competition. Nonprofits find themselves competing for scarce donation and grant funds. The increased revenue gained by reducing operating expenses can be reinvested in growth and the long-term health of the company. In this way, the net savings and improved ROI gained from working with a skilled consultant will always pay off.

How do procurement experts operate and who should consider working with a procurement expert?

Businesses with multiple locations, manufacturers and companies that own large commercial office buildings have significant expenditures. Their large service and commodity purchases can be complex. Associated contract negotiations may be time consuming to those unfamiliar with product and pricing structures. That’s where a procurement expert comes in.

While most business owners typically negotiate a few contracts related to operating expenses every year, procurement experts negotiate hundreds of contracts every month. They confidentially collect and assess current operating costs, suppliers and contracts, then develop and review RFPs. Then they explore capital expenditure solutions to help companies invest in even greater efficiency. Most importantly, procurement experts will provide continuous support, keeping you informed about emerging technologies and market changes throughout your contract.

What is the benefit of working with procurement experts? What do they offer that companies may not be able to produce on their own?

The importance of effective budget management cannot be overstated. Untapped cost reductions are an effective way to increase cash flow and free up resources for facilities and product improvements that net sales.

There is no reason for a company to face a competitive world without professional assistance. Procurement experts are professionals that match a plan to your corporate capabilities for continued success in an ever-changing marketplace.

Insights Energy Solutions is brought to you by TPI Efficiency Consulting

Small investments that spur business growth

Most great family businesses start with a small room and the desire to help people. As the company grows and acquires a larger staff, office culture and environment become increasingly important to ensure growth, now and in the future.

“A lot of businesses assume that higher salaries alone will attract the best talent and inspire productivity,” says Roger Zona, President and founder of TPI Efficiency Consulting. “But many successful brands are realizing that simple improvements to the physical office environment and culture have a significant effect on behavior, perceptions and productivity.”

Smart Business spoke to Zona about small changes that can make a big difference.

When it comes to internal changes, how does a company determine where to start and what improvements will make a difference?

Studies consistently show it makes a real difference when employees love the place where they work. It starts with the little things, such as providing essential items like coffee, snacks and bottled water to help employees stay focused and on task. Small investments in the physical environment like a fresh coat of paint, a new chair or proper lighting can immediately reduce stress and affect the output of your company. Upgrading to LED lighting in particular has been proven to eliminate eyestrain and improve performance. Simply adding plants can improve air quality while simultaneously making the physical space more inviting and comfortable for staff and guests.

What other changes should businesses consider aside from physical environment?

An investment in company culture is a great way to invest in growth. For instance, it takes very little funding to clearly define your company culture — one that aligns your staff with the long-term goals of the company and embraces the values you want to convey to your customers. Does your company-wide mission statement still reflect the values of your growing company? Does each department have its own clearly defined values, and long and short-term goals? Are they engaged and inspired to reach these goals? How do you celebrate their success? When employees feel that what they do matters to the overall success of the company they are often much more effective.

Business operations are often broken down into four categories: strategy, people, processes and tools. A growing company should focus on these to ensure business growth. Ask yourself questions like: Are protocols and checklists clearly defined? If not, staff will likely need to check with management more often than necessary to complete simple tasks, resulting in time management issues and a less effective workplace. Does your staff have the business tools needed for optimal success? A combination of proper telecommunications, IT, database and project management tools are essential. Connecting business tools into an effective system allows for clearer communication, accountability and effectiveness internally, and perhaps more importantly adds value to your customers.

How will a company benefit from these types of changes?

The University of Warwick found that employee happiness led to a 12 percent spike in productivity, while unhappy workers proved 10 percent less productive. That’s a 22 percent swing.

Simple improvements in physical workspace and company culture can go a long way to increase productivity now, with the added benefit of increased employee retention. According to one study, it costs an average of $4,000 above salary to hire a new employee and $7,000 to replace management-level staff. Some studies suggest that the cost of hiring new staff exceeds well over 50 percent of annual salary when you consider the cost of talent searches, temporary coverage, administration, benefits and training. Companies may want to invest more in training and adding to the value of employees already on staff for a fraction of the cost it takes to enroll new talent. Additionally, a happier, healthier workplace will make your company much more attractive to new employees when you need to expand your staff.

With some minor improvements you may find significant profit growth and an increase to productivity by building a culture that seriously considers physical environment and job satisfaction.

Insights Energy Solutions is brought to you by TPI Efficiency Consulting

Reduced expenses made easy and affordable with LED lighting retrofits

Smart business owners and facilities managers are always on the lookout for ways to reduce expenses and increase revenue. Because of recent improvements and shrinking costs, lighting retrofits — replacing traditional lamps and controls to energy-efficient LED systems — have emerged as one of the easiest, most affordable ways to lower your electric bill and sharpen your budget.

According to the U.S. Department of Energy, today’s LED bulbs are six to seven times more energy efficient than conventional incandescent lights, cut energy use by more than 80 percent and often last more than 25 times longer.

“Not only do modern LED lamps and controls reduce energy consumption,” says Karl Shaw, COO at TPI Efficiency Consulting, “they also eliminate costs related to maintenance and labor for years to come.”

Smart Business spoke with Shaw about the benefits of modern lighting technology and the resulting cash gains that can support business growth.

What are the financial benefits of switching to LED?

Imagine a typical office environment. On the ceiling there are rows of four-foot lighting fixtures. Each fixture has four T8 fluorescent tubes. Every one of those T8s, when replaced with an LED, equates to nearly $11 in savings every year for the lifetime of the lamp. Since most LED lamps (tubes, high bays, floods, etc.) are rated at 50,000 to 100,000 hours, they can operate for over 10 years without replacement when running at 12 hours per day. That’s at least $110 of lifetime savings per bulb. And because LED systems generally pay for themselves in less than three years, businesses enjoy at least seven years of significantly increased profits.

What type of business should consider switching to LED?

Regardless of size or type, nearly every business can benefit from LED systems. For example, retail stores can highlight their products with the full spectrum of quality light that LED provides. Better atmosphere draws more customers and, in turn, boosts sales. In manufacturing and office settings, the proper level of light creates a brighter, more efficient and safer workspace. LED in schools and offices has been proven to eliminate eyestrain and even improve performance by eliminating the flicker and hum of traditional lights. Improved visibility in parking lots and garages increases the safety of personnel and property. In effect, LED upgrades are the fastest way for any business to reduce electricity costs, improve work environment and increase safety.

What are the steps companies should take to retrofit their lighting system with LEDs?

A good place to start is by talking with an LED expert — one who will take an inventory of your current lighting, discuss improvements and concerns and build an LED solution that creates the desired light output. An expert will also provide detailed energy savings and ROI analyses, several financial options and installation if required.

What commonly stops companies from making the switch?

The biggest obstacle is understanding how affordable LED lighting really is today. Aside from the fact that prices have dropped significantly over the last few years, LED rebates, rider reductions and tax credits may be available to greatly improve ROI.

There are also several ways to finance the project outside of traditional means. You may want to consider a business lease on the equipment. The term is usually five years. The return, however, is often realized within three years, so in most cases the company makes money. A new type of financing called an Efficiency Services Agreement is off balance sheet and guaranteed to be cash flow positive. Another finance program called PACE is paid back through real estate taxes over 20 years.

Most capital investments take several years before seeing a return whereas LED averages less than three. LED prices have dropped, their efficiency has increased dramatically and the savings is undeniable.

Businesses that have already upgraded to LED are benefitting from improved atmosphere, enhanced safety, more productive workers and the satisfaction of savings not left on the table. Isn’t it time you made the switch?

Insights Energy Solutions is brought to you by TPI Efficiency Consulting

Avoiding unethical sales practices that could cost you dearly

While competition drives many of us to be at our best, it also tends to bring out the worst in some. The same is true for the deregulated energy market.

Though most energy brokers and suppliers compete on your behalf to offer favorable pricing and contract terms, there are a handful of scammers out there using deceptive methods to steal your business. This illegal practice of switching your electricity supplier without consent is commonly known as “slamming.” The result can be electricity rates that are more than double what you should be paying and large exit fees for abandoning your current contract.

Smart Business spoke with Roger Zona, president and founder of TPI Efficiency, to learn more about what slamming is, how to recognize it and how affected companies can be made whole if it happens to them.

How does slamming happen?

Sometimes it’s an honest mistake or human error, though in many cases, unethical sales practices are the cause.

One common method is a phone call or mailer from someone claiming to be your existing electricity broker or supplier. The slammer will request some basic account information to confirm that you are eligible for a special offer or promotional rate. However, they are actually gathering your personal information to set you up with a different supplier.

In another variation, slammers will ask for the account number on your electricity bill pretending to process a standard quote for service from a new provider. Instead of coming back with a quote, the scammer uses your information to approve a new contract, and then fraudulently signs for it.

What is the result of being slammed?

The most typical results of being slammed are significantly increased rates, cancellation penalties from your existing agreement and general confusion about energy expenses. Some of the liquidated damage penalties can result in thousands of dollars in fees.

How can companies avoid being slammed?

As a general rule of thumb, don’t give your account numbers or information contained in utility bills to anyone unfamiliar. Know whom you are talking to. Always ask for contract terms in writing and, while it may sound elementary, be sure to read any agreements thoroughly before signing. Finally, always keep a copy of these agreements for your records, even if you have signed up over the phone or the internet.

Utilizing a Public Utilities Commission certified broker is also a good way to navigate the deregulated energy space. Be sure to do your research and keep an up-to-date record of their information including name, phone number and email address.

What recourse do slammed companies have to be made whole again?

Immediately file a complaint with your Public Utilities Commission if slamming has occurred. Refer to any protocols in place within your state administrative code regarding how slamming complaints must be handled.

Electricity customers may also call their previous supplier to get the issue corrected. There are provisions from the state that can allow for the credit or refund of any damages and re-enrollment to your original contract.

Affected companies must act quickly once they discover they’ve been slammed. Most electricity suppliers provide a 14-day window to address the issue without penalty. After that period, the process of correcting the problem becomes a bit more challenging, but can still be resolved.

In the end, you want to be protective of your utility information. Research who you’re doing business with. Designate time each quarter to make sure the utility programs you originally established are still in place. Instruct the people who pay your utility bills to notify company executives if rates suddenly change or the current supplier is unexpectedly dropped. Also, consider working with an energy consulting company to aid you in managing these expenses. They have representatives who constantly monitor accounts for suspicious activity and work to correct problems the moment they occur.

Insights Energy Solutions is brought to you by TPI Efficiency Consulting

Businesses will see nearly half a penny per kilowatt-hour increase this month

Most electricity users that entered into contracts before September 2015 will see an increase up to half a penny per kilowatt-hour (kWh) on their July bill. That can mean tens of thousands of dollars in additional charges to large users and have significant impact on any operating budget.

“Every million kilowatt hours will cost around $4,000 more, even with a fixed contract in place,” says Karl Shaw, COO at TPI Efficiency Consulting. “Manufacturers and large commercial building owners will certainly feel the effects.”

While there’s nothing that can be done to avoid the new charges, there are steps that can be taken to mitigate the fallout.

Smart Business spoke with Shaw about the reason for increased charges and what users can do to soften the financial blow.

What prompted the change that’s impacting electricity costs?

The 2014 polar vortex taxed PJM, the regional transmission organization that’s part of the Eastern Interconnection grid, creating a record peak in demand. More than 40,000 megawatt-hours (MWh) of the fleet’s 180,000 MWh were not delivered because of the freezing conditions. That led to numerous generation failures and operational issues that left more than 20 percent of the region without power for a period of time.

To enhance operational performance and ensure the availability of generation resources, PJM drafted the Capacity Performance Proposal that was approved by the Federal Energy Regulatory Commission (FERC) in June 2015. This arrangement included an Incremental Transition Auction, providing larger payments to generators that commit to having power available when demand is highest.

How does this change affect energy users?

Retail energy providers view FERC’s action as a ‘change in law’ event, meaning they can pass the previously unknown cost to the end user even if the contract includes a fixed rate.

Exactly how much the price will increase is based on the company’s peak load contribution (PLC) tags and load factor. Capacity accounts for 25 to 35 percent of a customer’s contract energy costs on average. Results of the Incremental Transition Auction indicate that customers will see an average increase of 15 percent to overall electric supply charges from June 2016 to May 2017. Customers that have contracts with fixed capacity during this period will see a rate increase of around $0.004/kWh and an estimated $0.0023/kWh from June 2017 to May 2018, based on a 50 percent load factor.

What can a business owner do to mitigate this additional cost?

Returning to the local electric utilities’ generation/supply service is not a viable strategy to avoid the increase because utilities in PJM are subject to collecting the same capacity costs as retail electric providers. There are, however, a few ways business owners can limit the cost impact.

Energy users that undertake efficiency projects — for example, those that install LED lighting and controls, HVAC improvements or energy management and information systems — benefit from reduced usage and lowered PLC tags.
Another option is to work with an energy consultant. Consultants keep their eyes on the market for this kind of change and make clients aware of forthcoming charges well ahead of when they’ll appear on their monthly bill.

No business likes to be surprised by unexpected costs. A good energy consultant will monitor your accounts and reduce the impact of any additional expenses that may occur. In the end, it’s important that you work with someone to procure your energy that is proactive and has your best interest in mind.

Insights Energy Solutions is brought to you by TPI Efficiency Consulting