When utility budgeting season rolls around, property managers tend to either get buried in spreadsheets, or make rough “guesstimates.” There's a better way.
What We’ve Learned About Budget Forecasting & Occupancy
With office buildings nearly vacant in 2020, the commercial real estate (CRE) industry got to test the relationship between occupants and energy use. We learned pretty quickly that it isn’t one to one. The elite energy savers managed to reduce consumption by close to 50%, but for many buildings consumption only went down by 15-20%, even when occupancy was down 90%.
Extrapolate that to budgeting for next year based on occupancy projections and you can see the challenge. Will that 25% projected increase in occupancy drive your energy bills up 5%, or 15%?
Meanwhile, energy prices are ticking up at an alarming rate across the nation, and while some of the causes are somewhat predictable, others are less so. While prices are set to jump up again in 2023-24 (by 20% or more in some territories), they could go in any direction at any point. Trying to play energy expert while managing a property is a high-stakes headache: not only does it take time you don’t have, there’s a good chance of getting it wrong.
What You Need In a Budgeting Partner
Property managers are often happy to turn over budgeting to the right person. But finding them isn’t always easy. Here are four things to look for in a partner:
Expertise
Anyone creating a budget for you should be both an energy expert and a building expert, someone who understands and could explain how different pieces of equipment in a commercial building impact energy consumption just as skillfully as they could explain the natural gas market.
Familiarity
Your budgeting resource needs to be an expert on your building, not just commercial buildings in general. This is why plug-and-play, one-click budgets disappoint so frequently; they only work with the lines of data, not the nuance between the lines that makes your building unique.
Trust
Handing over the budgeting keys only feels good if you’re handing them to someone you trust to have your best interests top of mind. If they’re selling you energy, or a capex-based energy efficiency solution, conflicts of interest can arise.
Communication
If you already know the person prepping your budget, and have already worked with them on other business related to your building, you’ve got a much better chance of receiving a useful budget. If there are parts of it you don’t understand, you’ll know how to ask for clarification and what level of reply to expect.
How Gridium Does Budgeting
We know how your building tends to use energy based on the historical energy usage data our platform collects, and the rate your building is on. You give us historical occupancy data, occupancy projections for the next year, and any major layout changes (e.g. converting an office to retail, adding a server room, closing a floor for renovations, replacing all incandescent lights with LEDs).
We factor in any predicted occupancy and efficiency changes you mention, and combine everything to forecast what rate change you might see in the next year based on energy market trends both macro and micro.
We also have years of experience navigating rate cases for regulated utilities and determining when rates are likely to increase (and by how much). We’ll help you account for upcoming rate increases in your budget so you can feel confident when you turn in your numbers.
What you get is an easy to digest, Excel-based budget, broken out by meter and month. It’s a more nuanced budget than most property managers put together, but if anything needs clarification, our energy experts are there to dig into it with you. The best part: this service is included with a Gridium software subscription.
Getting budget numbers wrong is risky: if you’re under budget, you wind up hitting flighty tenants with a big end-of-year bill; if you’re over budget, you’re cutting checks at year-end to settle up. When the stakes are that high, best to leave budgeting to a partner that understands the nuances of energy, the industry, and has a proven track record of saving customers money.
Interested in getting support this budgeting season? There’s still time. Get in touch with the Gridium team below.
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