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Manage the Cost of Energy at Your Facility

Energy prices remain on the rise in the United States, impacting operating costs for facility managers who oversee both residential and commercial properties. Energy Star, a joint program of the Department of Energy and the Environmental Protection Agency, projects that energy demand will increase by 31 percent during the next 25 years and that energy prices will rise 2.4 percent each year. As a result, facility managers can help avoid financial trouble with some attention to energy use.

“Energy prices are the most volatile prices on the planet,” says Jeffrey Mayer, president and CEO of MXenergy, an independent natural gas and electricity supplier. The cost of gas or electricity can fluctuate as much as 50 percent in a single week, he says. By recognizing these cost shifts and making an effort to reduce consumption, facility managers can boost their bottom line. 

1. Audit Your Facility
To lower energy consumption, a facility manager should first hire a professional to conduct an energy audit — checking the building’s insulation, electric loads, HVAC system and plumbing, says Joseph Milillo, vice president of marketing at Long Island Power Solutions in Bohemia, N.Y. “The professional can assess where energy is being used and provide a facility manager with recommendations on retrofit projects to help reduce energy consumption."  

2. Tighten the Building Envelope 
More than 50 percent of all energy consumed in the United States is used to heat or cool a building, according to Energy Star. Significant heat loss and gain result from poorly insulated walls and ceilings, Mayer says, and facility managers can begin saving on energy and operational costs by improving the building envelope. “An updated HVAC system is great, but the system’s efficiency will not make a difference if the facility is not properly insulated first,” he adds. 

3. Protect Your Prices 
Negotiating and fixing prices are two options facility managers often overlook. “The utility business is the only business in the world where you don’t know the price until after you’ve consumed the product,” Mayer says.

Facility managers can lock in prices and avoid future hikes using an energy rate plan that guarantees a fixed rate for the length of the plan. Such plans can be set for 12 or 24 months, and offer a fixed rate regardless of how much energy is consumed. The rate, determined by the utility provider, is based on the energy the provider projects the facility will consume during the contract period. 

Facility managers can call their local provider to learn more about their building’s energy consumption. “Some utility providers are open to negotiated prices provided the facility has large demand,” Mayer says. Once negotiations are met, a facility manager should look into implementing a fixed-rate plan with the negotiated price. 

4. Use Renewable Energy 
Renewable energy has great potential for future growth, thanks to government-funded tax incentives and rebate programs. In fact, it’s one of the most exciting areas of energy efficiency available at a commercial level, Mayer says.

Milillo agrees, noting that sticker shock should not scare facility managers away. “Facility managers shouldn’t be offset by the higher prices associated with renewable energy because the government offers incentives that cover 50 to 70 percent of the upfront cost,” he says. 

Incentives include the Federal Energy-Efficient Commercial Building Tax Deduction and the Renewable Energy Production Incentive. Most states also offer sales-tax exemptions for purchasing renewable energy equipment, and renewable energy providers offer energy-efficiency rebate programs. For more information regarding federal tax incentives and rebate programs in your state, visit the U.S. Department of Energy’s website or contact your local International Facility Management Association (IFMA) chapter. 

By realizing the need for an energy management plan and understanding the most beneficial approaches for reducing energy use, every facility manager can decrease their building’s operating costs.

“It all starts with being proactive and looking toward the future,” says JC Blakely, corporate facilities manager for the PICA Group in Nashville and president of IFMA-Nashville. “It is feasible to reduce energy consumption without compromising building value and occupant comfort.” 

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