Three keys for saving on your company's electricity bill

The cost of electricity is increasingly important when it comes to your business' income statement. It was already an aspect that we studied carefully, but now, with electricity prices skyrocketing as a result of international tensions arising from the conflict in Ukraine, the issue has become critical.  

The price of gas has climbed to an all-time high. The wholesale price is set marginally, meaning that price increases affect the entire market, including end consumers like your business.

International geopolitical tensions and the functioning of wholesale markets influence the price of electricity, although there are three keys that must be taken into account, as they offer the possibility of making savings on your company's electricity bill.

The fixed cost on your company's electricity bill

To understand where you can start saving on your bill, first it's important for you to understand which costs are fixed. The price of the energy term and power term are not the only prices that are shown on your bill: the meter rent, the cost of the social bonus, and, at present, the cost of the "gas cap" mechanism under Royal Decree 10/2022 are also fixed. Furthermore, two other relevant concepts may feature on your bill: excess power and reactive energy.

Therefore, looking at the energy term by itself if not enough, as the total sum of the bill is much wider. However, if you drill down into the other costs, you can see which ones are more important.

When it comes to meter rental and the cost of the social bonus, they are usually very small amounts that are negligible in terms of total cost.Furthermore, there is nothing you can do about them as they are regulated concepts defined by legislation.

The "gas cap" is a wholesale market price, which is influenced by several factors such as weather or aggregate demand each hour. This is also beyond the customer's reach.

So with which fixed cost items can I make savings on my company's electricity bill?

There are three concepts that are manageable and that can save you a lot of money on your business' electricity bills. These are as follows:

• The power term. This is traditionally referred to as the fixed term of your bill, since it does not depend on your energy consumption each month, rather it is a fixed cost for being connected to the grid.
  This concept serves to reward the fixed costs of the transmission and distribution grids that carry electricity to the end customer.
  Each customer can choose to contract the power they deem most appropriate at any given time. In other words, if you check the power in each of your company's electricity contracts and find that it is higher than the power you actually need, you can contact your supplier to reduce the contracted power to the level you think is appropriate. This will result in a direct reduction in your bill from the following month, as the fixed term will go down.
  Ideally, your company should help you study how much to reduce your power term, as you have to make sure that it is enough to cover the technical needs of the installation and your business.

• Excess power. This is the opposite case to the case indicated above, i.e., when you have contracted less power than your business needs. When you exceed the contracted grid power, you are charged a penalty for the excess in the final price.
  If this is the case, contact your marketing company and ask them to perform an optimal power study. This optimal power will be the term that, despite being higher than your current term, means that the new fixed term to be paid is lower than the price you are paying right now for having a lower fixed term and paying for excess power. The difference between the excesses and the price of your new optimal power will be your savings from that moment on.

• Reactive energy. This is the great unknown that may be responsible for massively increasing the total on your bill. This cost, as in the case of excess power, is also a penalty for improperly using the network. In this case, it is attributable to inductive equipment or reagents installed at the customer's facilities, which distort the electric current when passing through said supply.
  These devices are usually necessary, since they are usually lights, fluorescents, motors, or similar elements necessary for the company's ordinary activity. However, since their coils or capacitors distort the current, the meter measures the alteration and the penalty is charged.
  In this case, you should talk to your company to install reactive energy compensation equipment. For a moderate investment, which you will also pay off quickly thanks to the savings you see, you will no longer have to pay for reactive energy. Once you have repaid the cost of the equipment, for the rest of its useful life, you can save a considerable amount on your bill.

How can I save on my company's electricity bill through the variable cost?

To help you save on the variable term, Endesa performs a free study based on your company's electricity bill, which involves analysing the tariff you have contracted and advises you on the most appropriate tariff for you based on your business' consumption habits, offering you the cheapest price, as well as recommending specific actions that will help you further reduce your electricity consumption.

In summary, there are measures that can be implemented to improve the efficiency of your company's electricity bill. With Endesa's advice, you can reduce both fixed and variable costs and save on your electricity bills.