Utility charges are on an upward trend with no end in sight. The good news: You can hold back and even reverse increases in electric, water, sewer, gas, telephone and trash bills.
High Utility Bills?
Rising utility costs seem unavoidable. Utility costs have been on an upward trend for the last quarter century, going back as far as the previous west coast droughts in the late 1980s and early 1990s, when water became scarce and a precious commodity.
Utility cost increases resulting from deregulation, trash franchising, smart meter technology, downsizing, outsourcing, tiered and penalty rate pricing and other utility industry issues result in utility costs continuing to rise every year — draining the reserve funds of community associations and prompting them to look for ways to reduce their utility bills.
The reduction of common-area utility bills seems to be one area where many boards feel confused or powerless, delegate this responsibility to landscape committees, managers or others, or attempt to reduce these costs by energy management or conservation techniques alone. Since utilities are usually the top 3 budget expenses, these should be delegated to a professional to audit every 1-3 years.
Cut costs with utility auditing
Utilities now rank among the top budget items for almost all communities on the west coast. As communities have increased their utility budgets each year to accommodate rate increases, many have lost sight of exactly how much utilities are truly costing them. Is it possible to fight these ever-increasing costs?
Communities do have an ally in the battle against rising utility rates: a utility audit. A utility audit is an in-depth examination of your organization’s utility bills, and includes a visit to your property to inspect all the onsite utility services (e.g., water, sewer, gas, electric, telephone, trash) that are billed to your community. Not to be confused with an energy audit, a utility audit looks at all of the common-area utility bills and what is actually being charged per sewer unit, per gallon of water, per kilowatt hour of electricity, per gas therm, in addition to telephone and trash costs.
This in-depth utility audit can locate utility billing errors such as decimal point errors, wrong rates, incorrect service charges, incorrect meter multipliers, sewer fees billed for irrigation water, tax errors, and many other overcharges to give you back money now. A utility audit can also find you lower-cost utility rate schedules available through your existing utility provider to lower your future per-unit costs for water, sewer, gas, electricity, telephone and trash.
Generally, a utility audit can decrease a community’s annual utility budget by 20% with no equipment expenditures and no change in use or consumption! A utility audit may put money into an association’s reserves, with no out of pocket cost to the association. With extra reserve money, any association is better prepared to deal with disasters.
Energy Audit vs. Utility Audit
What’s the difference? An energy audit examines and recommends ways that an association can reduce the overall usage of their utility consumption by installing energy efficient equipment, retrofitting existing equipment to be more energy-efficient or changing increase utility conservation and reduce the total number of units used. An energy audit will recommend the use of energy conservation devices and methods, such as LED lighting, light timers, drought-tolerant landscaping, low-flow toilets and showerheads, smart irrigation controllers, energy efficient boilers, timer switches for laundry room lights, reduced hours of use for pool pumps or tennis court lighting, etc.
A utility audit determines if there are any billing errors or overcharges that would entitle the utility customer to a refund from the utility company and/or obtain lower utility rates from the utility company. In most instances, associations are overpaying simply because they are not aware of how their utility bills are calculated. This type of audit reduces the rates that you actually pay per unit of utility and eliminates any utility overcharges that most associations are not even aware of! In addition to obtaining refunds from your utility providers for past overcharges, the future utility costs are lowered through either the correction of these utility billing errors or the application of new, lower rate schedules from your utility providers.
Reduce Overall Utility Consumption AND Reduce Per Unit Cost Of Utilities:
All communities should have both types of audits, in addition to rebates, conservation and possibly brokering. This would ensure that the community is managing its utility consumption in the most efficient manner (energy audit) AND paying the lowest per unit cost for all utility consumption (utility audit). These services should be no different than scheduling the annual financial audit or reserve study.
To make the biggest impact on overall reduction in all common-area utility expenses, an association should explore all of the following:
- Utility Audit: Do this first so that if utility billing undercharges are discovered (which happens), then the association is alerted to these undercharges by the utility auditor – without incurring a large backbill for these billing undercharges from their utility company!!
- Rebates: Explore all available rebates or retrofitting programs available with your existing utility providers and/or cities and counties by visiting their websites or contacting them directly. At this time, LADWP has over 12 rebates and conservation programs available for communities.
- Energy Audit: Hire an energy management company to conduct an energy audit of the property to discover additional ways that the association can reduce utility consumption, such as new equipment, energy efficient lighting, drought tolerant landscaping, etc.
- Brokering: If the association uses a significant amount of electricity or gas, purchasing gas through a gas broker may be a good option to reduce the cost of electricity or gas.
Future rising utility rates are unavoidable, but with utility audits, any community can reduce the financial impacts of these increased utility costs and keep more money in their reserves!