Utilities Cost Reduction Ideas for Long-term Planning

Over the past few years, one of the bright spots in facilities budgeting has been the relatively low cost of utilities. Lower oil prices have reduced institutional energy costs — from heating and cooling buildings to fueling university cars and heavy equipment. Sooner or later, however, these costs are going to rise again. That’s why business officers should start taking steps now to manage the utilities budget while costs are down. A little foresight and cost-reduction planning can pay big dividends when prices go up.

Track the Reasons for Cost FluctuationsOil price drop - CBO blog #3

Depending on where you look, you can find any number of explanations for the current low price of oil — increased U.S. output, powerful demand in Asia and record production in Russia, to name just a few. There’s plenty of information in the news to help you track factors that can influence utility prices. If prices do start to trend upward again, watch for the U.S. government to announce that it is releasing oil from the country’s strategic oil reserves. This move will usually result in a short-term leveling off or decrease in oil prices, but releases only happen when the long-term outlook calls for significant price increases.

Invest Utility Budget Surpluses

What can you do now to prepare for fuel price hikes? The key is to use the money you are saving today to offset future increases. Too many institutions are treating surpluses in the utilities budget like found money to help cover shortages in other areas. The best thing to do with these savings is to invest them in projects that protect the institution from future price increases. Here are just a few examples:

  • Create a “utilities reserve” to fund any deficits created by an unforeseen rise in fuel cost. This reserve can tide you over until you can adjust your energy budget to the new norms.
  • Invest the savings in building improvements, such as insulation and roofing, that will increase the long-term efficiency of facilities and reduce future fuel consumption.
  • Invest the savings in technologies like solar that can reduce the campus’ reliance on fossil fuels.

Investments in building efficiency and alternative energy sources can also go a long way toward improving the sustainability of the campus.