The above headline refers to a retail business that has a canteen for staff, a hardware store
connected to their general retail (food and pharmacy) store as well as a liquor store. All of the
various stores are located in different areas in a small mall.
The business owners were becoming increasingly concerned about rising energy costs that seem to
be outstripping the approved municipal electricity tariff increases. It seemed as if the costs continually escalate every month without justification. Bringing it to the attention of the landlord who supplies the electricity hasn’t helped,primarily due to the fact that the landlord knows little about the complexity of tariffs and is, in effect just passing on the costs to the tenants as a utility.
Landlords often just charge tenants pro rata depending on the square meterage of their
stores. If they do have to draw metered statistics per tenant, it’s often through equipment that was installed years ago, which is neither
maintained or checked regularly. In some cases, tenants have either increased or decreased the size of their shops with the electrical reticulation remaining unchanged. This facilitates a general outcome of one shop contributing a portion of their neighbour’s allowance or vice versa. You can conduct this verification yourself; just turn off the main switch in your shop and see if anything is still actively consuming current (if so you’re connected to your
neighbour’s electricity supply), or go next door and ask if anything happened or any equipment was rendered inactive (if so, they are connected to your power supply).
We were engaged by the business owners to help them understand their electricity costs. Our first recommendation was to install permanent metering in order to understand the actual consumption of each
store of the business. We installed a meter at the main incoming feed for the main store and sub-meters for the refrigeration, butchery, bakery, kitchen, the liquor store and hardware store.
It took less than two weeks after the meters were installed to discover an innocent billing error by the landlord had been costing the business owners over R400 000 a year in incorrect billing allocations. That alone paid for the meter installation; many times over as it were. A few weeks later , the impact of being able to identify poor behaviour caused by the staff (and this was essentially only due to unintentional bad behaviour ) resulted in the management team saving more than 10% of the store’s monthly electricity consumption. In some instances, well over 25% of the total billed amount was saved!
A perfect example of this was the bakery.
The standard habit of the bakery staff was to come to work early in the morning and turn on all of the equipment simultaneously, and then head outside for a smoke break whilst waiting for the ovens and proofers to warm enough to start baking. This bad practice resulted in high demand charges that often occurred during one of the high peak tariff periods that resulted in increased electricity costs. Simply by identifying this behavioural trend (and many others) from an energy management behaviour perspective, the business was able to save an additional R100 000 per annum.
If you consider that most retail businesses thrive on high volume sales albeit with low margins – some as low as 3,5% – to generate the equivalent of R50 000 in savings, the store in question would have had to generate at a minimum of R1,5m in revenue! In this case, saving energy for the store created a far greater return on investment than selling 150 000 individual cans of Coca Cola!
If you are watching your electricity costs continual rise but know that your operations are unchanged, contact us to discuss how we can help you identify problems and start saving money!