Energy Budget Checklist: A WeCompete Energy Guide to Accurate Forecasting

April 23, 2018 | Alexandra Degala

Delayed bill payments tarnish the image of the company and cause cash flow problems. Business owners need to have a forecast of their monthly and annual expenses. Making a budget is difficult because of variable costs. Variable costs are expenses that do not have a fixed budget and vary from month to month such as electricity bills. No company wants to be caught off guard so we prepared a guide that can help you get an accurate prediction of your upcoming bill.

Electricity bills have several components, not just energy consumed. This can be a sound basis for forecasting your energy expenses but to get an accurate forecast, several other things must be considered.

  1. Non-commodity Charges - You pay for several things aside from your energy consumption. Several other charges are carried on to your bills like lost energy and transportation or distribution charges.

  2. Energy Taxes -  This may sound obvious, but companies often overlook this when forecasting their annual energy expense. Businesses can increase their energy savings and bring down their energy bill through tax exemptions that can be applied to their enterprise.

  3. Energy Rate Increases - Energy suppliers file for an increase in energy rates now and then. The increase may be approved or disapproved, and the approved rate may differ from the requested amount. The increase in energy rates is out of the hands of the business owners. The best way to prepare for it is to stay updated on the current rates and watch out for announcements about a possible increase in pricing.

  4. Energy Rate Class - The price of electricity differs for residential and commercial customers. There are several more classifications under those two categories. Make sure to know your rate class and observe the trends and patterns that affect its pricing.

  5. Energy Source - To encourage consumers to turn to renewable energy, the government, and energy suppliers give tax credits and other incentives. Businesses can take advantage of this program to lower their costs. This should also be factored in your forecast to avoid overestimates.

  6. End of Contracts - Be aware of the duration of your contract, especially the end date. Energy contracts are often not in sync with the fiscal year of a company making budgeting a little more complicated. Electricity prices frequently fluctuate throughout the year. Budget your expenses accordingly by observing your annual energy consumption for the past years.

  7. Operational Changes - Any changes in your business operations will impact your energy consumption. Changes such as an increase in production or extended work hours should be reflected in your forecast. Sudden surges in consumption such as renovations and the purchase of additional equipment should be factored in as well.

 


These are important budget components that must be considered to help you prepare a budget for your energy expenses. At WeCompete Energy we take pride in putting our clients’ energy security first. This includes getting them the best energy deals, so they don’t fall short. Learn more about our energy purchasing options from our specialists at +1 (844) 937- 7727 or at contact@wecompeteenergy.com.