Your energy budget: Forecasting and planning best practices

What is the best way to plan your energy budget? When we’re asked that question, we are reminded of the quote attributed to Abraham Lincoln:

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”
― Abraham Lincoln

Most customers have not had the tools available to effectively plan and forecast their energy budget. Out of habit, customers typically look at the last 12 months of cost and usage and then add some adjuster (1 to 2%? inflation?) to those numbers.

What’s wrong with most energy budgets?

Energy budgets are comprised of basic arithmetic: usage x unit rate = expected energy budget. Easy, right?

Not so fast. Here’s where things can go awry:

1. What assumptions are you using for usage forecasts? Have you normalized last year’s usage to account for weather anomalies?
2. Have you conducted any major projects that will impact your energy budget?
   • Are you building or upgrading facilities?
   • Have you conducted any efficiency projects that will impact usage or demand?
3. What assumptions are you using for unit rate?
   • Is next year’s supply/commodity cost going to be the same as last year’s?
     • Are power prices the same next year as they were last year? How do you manage uncertainty?
     • What about other cost components, like capacity?
   • What about next year’s delivery rate? Is there a rate case going on that will impact next year’s delivery costs?
   • Is there some new regulatory proceeding that you should know about?

How else can energy budgeting work?

Many individuals involved in energy budgeting feel as if the budget process is a) agonizing, b) a necessary evil, c) a big fire drill, c) a big guess or d) a waste of time. Sometimes, it’s all of the above.

What if we told you that there is a straight forward process for managing energy budgeting? Or that you can gain powerful insights about your organization during the budgeting process*? How about if we told you that it can get easier? All of this is true.

*There is research that shows that when we are forced to operate within significant constraints, in the manner that we often are when managing the budgeting process, the result is newfound creativity. We’ve written about this phenomenon here.

We walk through the process in an upcoming Webinar:

Introduction to Energy Budget Planning

When: Thursday, March 29, 2018 12:00 PM 
How long: 45 minutes
How do I register? Click here

Join us to review the best practices for planning your energy budget

Register here. 

Bottom line for finance and energy managers: Join us to review energy budget planning best practices.