When Utility Companies Sell Less, You Make More

For most large corporations, when sales drop, so do profit and shareholder value. However, for regulated utility companies, the same rule does not necessarily apply. In fact, utility companies regularly benefit from a guaranteed profit, which can act as an incentive to sell you less. So when your business uses less energy, you help more than the utility company or the environment, you help your own bottom line.

By separating revenue and profit, regulations now incentivize energy conservation. This is because utility companies are allotted a set amount for fixed costs along with a modest guaranteed profit. Producing less means utility companies increase their overall revenue, and decrease your monthly energy bill at the same time. When revenue exceeds the allotted benchmark, a regulated utility company must refund that additional profit back to consumers. When revenue falls short, the state steps in.

Much like for-profit businesses, utility companies can only do so much with their existing equipment and infrastructure before reaching capacity. Therefore, meeting occasional peak demands eventually reaches a breaking point, at which time a new and quite costly power plant needs to be constructed. All of these factors work as motivation for utility companies to encourage and incentivize customers – like your business – to cut back.

One of the most popular options for businesses to cut back on usage is a clean energy lighting retrofit that reduces wattage and power for your facility. It is no secret that responsible energy practices can help a business do its part in protecting shared environmental resources. The less we use, the less often utility companies depend on “peaker” plants that are associated with higher air emissions and greenhouse gas.

To make cutting back simpler before jumping into a retrofit, Smart Meters have been rolled out nationwide and are transforming the manner in which consumers control their usage by delivering detailed statistics in nearly real time. These meters help administrators monitor how much energy they use and how they can minimize that cost by shifting certain activities based on time-based rates.

Greater control, clean energy options, and transparency mean businesses can assess trends, enhance decision-making, optimize processes, and drive immediate and long-term operational and policy improvements. Energy conservation and going green mean we all win together.


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