(This is the Table of Content and Introduction from ENERGY ACCOUNTING: A Key Tool in Managing Energy Costs, available from the California Energy Commission)

ENERGY ACCOUNTING: A Key Tool in Managing Energy Costs

Energy accounting is a system to record, analyze and report energy consumption and cost on a regular basis. Just as financial accounting is used for the effective management of an organization, energy accounting is critical to energy management. It can be one of the most cost-effective tools school districts, cities, counties, colleges and other organizations can use to cut energy costs.

This guide will discuss some of the reasons for energy accounting, go into background information needed to understand it, and explain how to get started with a program. With emphasis on computer software, this document will discuss some of the methods and means of energy accounting, focusing in on energy accounting software packages.
The appendix provides information on some of the commercially available energy accounting software packages.

ACKNOWLEDGEMENTS
This document, Energy Accounting: A Key Tool in Managing Energy Costs, was prepared and reviewed by the following Energy Commission staff: Bill Knox (now with the Department of General Services), Virginia Lew, Daryl Mills and Michael Sloss.

The Energy Commission staff is grateful for the thoughtful comments and suggestions provided by the following: John Cook, Utility Management Services; Bob Hart, Utility Cost Management; David Krinkel, SRC Systems, Inc.; John Matoba, Sacramento County (now with the City of Sacramento); Chuck Murray, Washington State University, Cooperative Extension Energy Program; Chet Sapalio, OmniComp; and T. Kenneth Spain, Johnson Research Center, University of Alabama in Huntsville.

The authors acknowledge Robert Schlichting, Jackie Goodwin and Elizabeth Parkhurst for assistance in editing the document, Eurlyne Geiszler and Merry Bronson for document production and layout and Tino Flores and Sue Foster for the cover design.

This document is one of a series of publications contained in the Energy Commission’s Energy Efficiency Project Management Handbook, which is designed to help local governments, schools and other public entities successfully implement energy efficiency projects in their facilities.

For information on how to obtain a copy of other sections, contact the Nonresidential Buildings Office at (916) 654-4008. All documents can be downloaded from the Energy Commission’s Web page at:
www.energy.ca.gov/reports/efficiency_handbooks

Second Edition, January 2000

Contents

I.    Seven Reasons for Energy Accounting ........................................................... 1

II.    Getting Started ................................................................................................ 5

III.    What Causes Variations in Energy Use? ....................................................... 9

IV.    Understanding Utility Bills ............................................................................. 11

V.    Methods of Energy Accounting ...................................................................... 13

VI.    Means of Energy Accounting ........................................................................ 15

VII.    Features of Energy Accounting Software .................................................... 19

VIII. Tips on Selecting Software ............................................................................. 23

IX.    Summary ....................................................................................................... 25

Appendix A—Descriptions of Some Energy Accounting Software ........................ A-1

I.    SEVEN REASONS FOR ENERGY ACCOUNTING

Before you can manage energy costs, you have to know what they are! Energy accounting provides feedback on how much energy your organization uses, and how much it costs. It also provides a means to effectively communicate energy data that facility staff, building occupants and managers can use to improve cost management. Energy accounting will help your organization:

• Record and attribute energy consumption and costs. Energy costs depend on the amount consumed and it’s price. In an organization with many facilities, energy accounting makes it possible to compare energy use and cost among facilities and to monitor how energy use changes over time. By communicating this information, those responsible for managing energy costs — maintenance staff, site managers, or others — can get feedback on how they are doing.

• Troubleshoot energy problems and billing errors. By consistently tracking energy use, you can identify problems. A sudden unexplained increase in consumption, for instance, means it’s time to investigate the site for the cause. Billing errors can be caught, too. (See page 2.)

• Provide a basis for prioritizing energy capital investments.    Find out which facilities have the highest energy costs, and consider targeting them for energy retrofits or other energy management efforts.

• Evaluate energy program success and communicate results. Did you save what you thought you would from your energy management efforts? How did the actual dollar savings from your lighting or HVAC retrofit compare to the savings predicted by your vendor or contractor? Without energy accounting, it’s virtually impossible to answer these questions.

  • Once you determine the results of energy management activities, it’s important to communicate this information to decision makers and implementers who were responsible for the activities. Energy accounting reports and graphs are the tools for this important feedback.

• Create incentives for energy management. It’s often difficult to get anyone in an organization to take the time and responsibility required for carrying out energy management activities because there is little incentive to take on the task. A maintenance director or site manager may not see much benefit in reducing energy costs if all of the savings revert to the general fund, or if lower energy bills only result in smaller allocations for utility costs in next year’s budget.

  • To remedy this “disconnect” between responsibility and benefits, many organizations have created incentives for energy cost management by sharing energy savings. Energy accounting makes it possible to set quantifiable energy cost reduction goals. One city plans to reward the facilities team by using realized energy savings to augment the facility management budget for the next year. This way, those responsible for cost-cutting measures reap the benefits.

  • Many school districts have shared savings with individual schools that cut costs through student energy patrols or other “behavioral” energy management activities.

• Budget more accurately. Energy accounting gives a historical look at costs that will help you budget more realistically for the future.

• Position your organization to shop for lower prices for energy in a changing electricity market. The market for electricity is changing rapidly due to regulatory reforms and increased competition between electricity suppliers. These changes parallel similar changes that occurred as the natural gas industry was deregulated, which resulted in significantly lower prices for knowledgeable consumers.

In order for your organization to take advantage of the potential for lower electricity prices, you will need to understand how electricity is priced (see the section, “Understanding Utility Bills”), and you will need to know your “electric load profile.” This means knowing how much electricity your organization consumes during different times of the day and different seasons of the year.

By setting up an energy accounting system and understanding the details of how energy is priced, you will be better prepared to negotiate for the best electricity deals in a changing market. If you are a large user, you may be able to negotiate directly with electricity producers in the future. If you are a small user, you may want to pool with other consumers. An “aggregator” may be able to help small users get a better deal by pooling electricity purchases.

The more knowledge you have of your precise electricity needs, the better chance you will have of paying lower prices. Energy accounting methods and software are likely to change significantly to accomodate the changing electricity market. Now is the time to get in on the ground floor and develop expertise in understanding your energy usage.