LATEST MARKET UPDATE: UK gas and power markets have traded lower across the curve so far this week, with a bearish outlook as Norwegian outages come to an end next month and fears of a second wave of Coronavirus has pushed prices within the wider commodities lower. Oil prices in particular continue to be pressured by the threat of a reduced demand that a second wave of Coronavirus could bring, with prices trading below $40/bbl for the first time since mid-June.
Rising costs are expected to put increased pressure on the UK’s facilities management sector over the next five years.
This is according to data from the Building Cost Information Service shared by the Royal Institute of Chartered Surveyors (RICS). The five-year forecast predicts that maintenance costs will rise by 19% between 2019 and 2024, cleaning costs by 26% and energy costs by 6% (based on annual averages 2018 to 2023).
It’s not exactly music to the ears of facility managers. However, through smarter energy management you can help to safeguard your business against potential increases while ensuring you operate in the most efficient way.
Third party charges are on the up
If you manage facilities or properties and have done so for a number of years, you’ll have probably noticed your energy bills creeping up year on year.
This is largely due to increases in third-party costs, also known as non-commodity costs. Such costs relate to the purchase and supply of energy, as opposed to the actual energy costs (aka commodity costs). These include, but aren’t limited to:
Transmission Use of System (TNUoS) – the fee for using and maintaining the energy transmission network.
Balancing Services Use of System (BSUoS) – the National Grid levy for balancing the electricity system.
Distribution Use of System (DUoS) – the fee for distributing electricity across the network to the supply point.
Feed in Tariff (FiT) and Renewables Obligation (RO) – costs of these government renewables policies are passed on through the supplier to the customer.
Climate Change Levy (CCL) – a fee charged to larger companies to encourage them to be more energy efficient.
Nowadays, non-commodity charges account for around two thirds of a non-domestic energy bill, and this will likely rise in future.
What’s frustrating for businesses, including facilities and property management firms, is that they are often left in the dark about third party charges. There’s a serious lack of transparency; charges rise or brand new charges are introduced with little to no warning.
But because these costs don’t relate to the actual use of utilities, then surely managing and lowering them is out of a business’ control? Actually, it’s not.
The worst thing to do is to do nothing
You might have no control over increases to third party charges, but taking the time to assess your business’ energy usage and bills, identify cost-saving opportunities and make positive changes can pay serious dividends in the long run.
This, of course, takes time – and can be a complex process. Hence why many businesses hand over energy management to the experts, like Utility Team. With our market expertise, insight and leading software, we’ll help to deliver a sustainable energy plan that lowers costs while increasing business efficiencies.
Here are just some of the many ways our services and solutions can save your company money:
Real-time energy procurement. We read the energy market daily and constantly seek to add value by lowering your energy costs.
Site audit. We can assist with Energy Savings Opportunity Scheme (ESOS) audits and make sure you take full advantage of the recommendations to improve energy efficiency and manage costs.
Switching supplier. Changing suppliers could be one of the best ways to save money – we’ll do all the hard work for you.
Renewable business energy. We can assist you in purchasing green business energy so you can secure your CCL levy as a way of off-setting premiums attached to purchasing renewable or green business energy.
Revolving Green Fund. Receive interest-free funding for energy efficient technologies that will lower energy usage and therefore costs.
Accurate billing. Make sure you’re not being overcharged for energy with our comprehensive bill validation services.
If you’d like to discuss business energy procurement or any other service in more detail, we’d love to chat. Get in touch today.