This winter surprised gas consumers with significant price increases. For the past few years we have been lulled dormant by low gas costs. Now gas users have awakened. And beginning in April, system gas users are feeling the effects with approved total annual bill increases of 28% for Union Gas and 40% for Enbridge.
So what made up the big increase in utility gas costs on April 1? It was partly due to higher prices projected for the coming months, as compared to the prices forecast last December for the last quarterly adjustment. But almost half of the increase is actually a recovery of costs incurred in January, February and March, when the coldest winter in 25 years forced gas prices to levels not seen for more than a decade, prices much higher than what the utility was selling gas for. Essentially, if the utility could have passed through that price instantaneously, we would have seen much higher utility bills over the winter months. We are now settling up for the fact that we were paying a price that was much below the market price of the gas we were using.
What can be done? Now is the time to fast track those energy efficiency plans if you want to have some degree of protection from these higher gas costs. Doing this systematically will yield the greatest returns so we approach this two ways.
The first is by the type of activity. It’s most cost effective to start with operational improvements before ones requiring capital. In addition to seeing immediate savings, the early results inspire staff and build commitment to do more.
The second is to use the data that you have available to you. Start with consumption data to help prioritize and direct activity. An analysis of consumption data for each facility and comparisons to other equivalent facilities is an underused approach but one that yields enormous insight. Benchmarking provides the first important level of prioritization to address the highest consuming and least efficient operations. Depending on how detailed your data collection is, comparisons can identify how well or poorly the facility is operating day to day and week to week. This information is insight gold for understanding which facilities are operating optimally and which ones are simply wasting energy every day. We cannot ignore or underestimate the significant savings that can be had through adjusting set points, tightening on/off equipment schedules and other no cost optimizations done before the next heating season.
With the year still young, it’s time to plan and implement the retrofit and re-design capital projects so they will be completed by next winter’s heating season to further isolate the higher price impacts. The savings annuity will grow as energy prices rise through reduced ongoing operating costs.
There is another area that increasing gas prices will impact – the budgeting process. We will see greater volatility in gas markets because of events of the past winter and this will require much more attention to energy budgets. The budgeting process will be more effective when energy costs are better understood and managed. This is achievable by adopting the right gas procurement strategies along with the efficiency activity mentioned earlier.
As a final note, it’s not just gas costs going up. Electricity is rising around 9% in Ontario and water has been rising in most municipalities for several years and will continue to go up. Water charges in Toronto have been rising 9% per year since 2006 and will be increasing 9% for at least another year.
The most effective and persistent way to ensure you have some protection from energy increases is through the right energy efficiency measures done right. Aegent has helped energy users understand where the opportunities are, what the impacts on budgets can be and the best strategies for managing it all.
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