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Hey everybody, this is Gene Marks and welcome to another episode of the Hartford Small Biz Ahead Podcast. Thank you so much for joining me. Let’s talk this week about energy and the cost of utilities. So as you’re aware, the cost of energy, including the, like cost of gas at the pumps has plateaued around the country, which is really great news. We obviously had spikes over the past year or so, caused by a lot of different factors as we know, anywhere from the war in Ukraine to supply chain issues. Those energy concerns, those oil price concerns, gas costs have actually leveled out, and that’s good news. If you take a look at your utility bill and what you’re paying for electricity, you will notice something. As with most of my clients over the past two years, the cost of our utilities, electricity, even natural gas has increased anywhere from 50 to 75%, which means that depending on where you are and where you’re buying your power from, you might be paying as much as 75% more for those utilities than you were just two years ago.
I’m seeing that all across the country. Plus those numbers are supported by the Bureau of Labor Statistics and recent numbers that support the producer price index. So we’re looking at a much higher energy environment right now. And the question is, what do you do? You know, how do you, how do you control this big… this big issue that’s impacting your overhead? Well, I spoke to a few people that are expert in this area and I wanted to share with you some ideas just so you can bring ’em back to your business. The first, get an energy audit, talk to your local utility. Now, I live in Philadelphia, so my local utility is Peco, but you know, there’s ConEd in New York and whatever power company you might have wherever you live, talk to them. Most of them are mandated to provide free energy assessments to their customers, which means that you can have a representative from your utility come on out to your place of business.
Walk around and identify any places in your business that might need some work done insulation put in, things changed to make your business that much more energy efficient. They’re free and they will leave you with a lot of really, really good advice. So that’s the number one thing that I want you to do. In addition to doing that, I also want you to consider something else, particularly if you live in a deregulated state for energy, as many states are. Do you know if your state is deregulated? Well just Google it. Google yourself with your state name and deregulation for energy or utilities, and you will find out pretty quickly whether your state is a deregulated state. If it’s deregulated, you know what that means? It means you could buy your energy from anywhere. You don’t necessarily have to buy it it from your local power company.
In fact, in a deregulated state, the local power company is responsible for delivering the power. That doesn’t necessarily mean that they have to sell you the power. So what I want you to do is I want you to find a utility consultant or utility broker. Again, you can find those in your local area just by googling your state and utility consultant or utility broker. A good utility broker will consult with you. We’ll see what your energy and power needs are and will shop your options around for you. Brokers can find power companies that may have bought their energy previously or at lower prices or had special deals or certain types of unique contracts that you can take advantage of. So a good power broker, good utility consultant, will be able to advise you and then sell to you the power that you need. And the energy company, your local power producer, your utility, they are required in a deregulated state to provide you with that power.
Now, most utility consultants will also advise on the length of time that you want to commit because the energy markets are so volatile right now many of the utility brokers and consultants that I speak to are advising shorter periods of times they commit to maybe six months or a year for your energy contract because they just don’t know whether or not costs are gonna go significantly up or actually fall even more. But talk to a broker because they’ll be the ones to identify that the best savings for you and advise you on how long a period of time you should commit to your energy purchases. In addition, there’s one other thing I’d like you to look into, and this really does apply if you’re a slightly larger business, maybe 50 or a hundred employees and larger. So it might not apply to all of you guys who are listening to this, but hear me out on this.
It’s called demand response. Many power companies around the country have been mandated. This is a federal rule to provide demand response programs. What does that mean? Well, it means this, if you’re big enough and it makes enough of a difference, you can get a generator for your business. And in many cases the utility companies will help to pay for the cost of that generator and the generator would run on less expensive natural gas. Why do you want a generator for your business? Because in a demand response program, your local utility will tell you in advance, “hey, we’re gonna have a peak usage day tomorrow because it’s the height of the summer. So we want you to go off the grid, use your generator, don’t use our power.” If you do that, the utility company will give you significant credits on your utility bill.
So if you’re willing to participate in a demand response program, get a generator put in and then go off grid when your utility asks you to go off grid, you could save significant dollars on your annual utility costs because your utility will issue you credits for when you’re not using your energy and even more incentives to participate in that program. So a demand response program, like I said earlier, doesn’t apply to everybody. It is generally for mid-size businesses and above not your very, very small businesses, but could really be a great opportunity for you if you fall into that category to save a lot of money on your utilities. So let’s recap. Number one, regardless of the size of your business, talk to your utility company. Have them come out and do a free energy audit of your business. Like I said, it’s free.
They will identify and make recommendations for all sorts of ways that you can cut back on energy from installing more energy efficient light bulbs to putting in thermostats in certain rooms to cut down the power to putting in more insulation in certain areas. So you definitely want to talk to… and get that energy audit. That’s number one. Number two, you want to get a utility broker or consultant if you live in a deregulated state and all you need to do is Google your state and deregulation utilities or power or energy, you’ll find out if you’re in a deregulated state, you will have so many more options for the power that you can buy. And finally, number three, if you’re big enough and you qualify, ask your utility about a demand response program.
That way if you put in a generator, you can go off the grid during peak periods and then get paid by the utility in the form of credits against your utility bill. It could save you significant amount of money. So yeah, energy costs have plateaued. That is really good news. But when you look at it from two years ago, our energy costs are significantly higher than they were back then, and that’s an issue. It’s a big adjustment to our overall overhead. So we’ve gotta make some changes as well. Take my advice and do the things that I recommended in this segment, and hopefully that will help you cut down on your utility bills or at least bring them more into control. Hey, you’ve been listening to the Hartford Small Biz Ahead podcast. I hope you’ve enjoyed it and I hope you’re getting some good advice here. My name is Gene Marks. I’m gonna be back with you next week with some more advice to help you run your business. In the meantime, if you need any advice or tips or help to run your business, please visit us at SmallBizAhead.com or SBA.TheHartford.com. Again, my name is Gene Marks. Thanks so much for listening. We’ll be back to you again next week. Take care.
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