How Much is Extreme Weather Costing You?

Britta Martinez, Associate Product Manager, Financial & Portfolio Analytics, Product Management

No matter what the season, it sometimes seems our lives are ruled by the whims of Mother Nature. Whether it’s a Little League game that gets rained out, a week-long storm that brings a city to a halt, or an unexpectedly sunny day that draws us outdoors, the weather can really make a big impact. It’s no different when it comes to your business’ carefully planned energy budget, but do you know how to track the impact?

Here are examples of some of the most recent wild weather:

  • Nor’easters Ravaged the Northeast: This year, four wild Nor’easters caused havoc in Northeast cities and states. It seemed that just as people were finished digging out from one, another was right on its heels. The Atlantic even reported that the temperature at the Mount Washington Observatory in New Hampshire hit a low of -34° Fahrenheit in December 2017, which was lower than the temperature on Mars.
  • Cruel Summers and Beating the Heat: It may not be as wild and dramatic as winter, but when parts of the country experience heatwave after heatwave, high temperatures wreak havoc on A/C units and electric bills. We’ve also seen summers turned upside down, like in August 2017 when an Omega pattern sent in fall-like temperatures from the Great Plains to the Northeast while locking in high heat in the West. In the Northeast, companies got unexpected savings on their electric bills but also an unusual spike in natural gas bills.

These more extreme weather patterns seem to be happening in more areas, more often. And they’re having an impact on your bottom line. The challenge is predictability: we all know there will be some impact from the weather, but how do we go about quantifying, benchmarking, and planning the next energy budget?

How Extreme Weather May Impact Budgets

It’s really a ‘no brainer’ that energy use will fluctuate with the weather, but the importance is in knowing by HOW MUCH extreme weather effects your budget. Quantifying the impact is what matters when it comes to planning energy spend, so we analyzed a sample across our customer base in the Northeast states to evaluate and quantify the impacts of the wild weather mentioned above.

Winter Impact

Spend

In December, companies saw a 18% increase in natural gas spend, and in January, the impact was the highest with a 18.3% increase in natural gas spend from the prior year. Our sample sites saw a total of $1.7 million increase in spend for January alone!

Regional

Natural gas use and spend was negatively impacted in all Northeast states in December and January. Electricity was negatively impacted in over 50% of the northeast states. Every state in the region experienced at least a 9.4% increase in costs over the prior year.

State

New York suffered the most of all the Northeast states, with a 16.9% increase in natural gas for December and a whopping 18.7% increase in January.

Winter Usage Impact

Summer Impact

Spend

In August, our sample sites saw a 7% decrease in electric spend from the prior year, saving them nearly $5 million collectively!

Regional

While electricity in the Northeast states was positively impacted by unseasonably cool temperatures, natural gas use and spend was negatively impacted in June, July and August, with the region experiencing up to a 14% increase.

State

Maine had the coolest summer of the Northeast states with a 46% decrease in cooling degree days. Favorable rates and usage resulted in 22% less money spent for electricity.

Summer Impact Usage

A Plan is Better than a Guessing Game

So, we know that there is rarely such a thing as ‘average weather’ anymore, nor is there a crystal ball to know where and when extreme weather will happen. The next best thing is a plan, and here are a few steps to prepare:

1. Leverage Data to Track Usage Patterns

Compile, track and analyze your energy cost and consumption data across your portfolio, also accounting for weather, the size of the facility, number of average occupants, and hours of occupancy. Doing so allows you to analyze facilities portfolio data in a way that offers insight into consumption, relative site performance and cost drivers.

2. Develop a Dollar Amount for Budgeting

Once you have compiled a pattern of changes in usage due to weather, determine the dollar amount of the increase and build it into yearly energy spend budgets. ENGIE Insight’s Budget Development clients have sophisticated regression analysis and robust weather information incorporated into the forecasted budget for individual locations.

3. Track

Without a crystal ball, predicting future weather events is tough. As the year progresses, the ability to track variances to budget and explain them is crucial. If you can break down those variances into controllable (usage) and semi-uncontrollable (unit cost and weather) drivers, you have the insight needed to act.

4. Weatherization

Armed with information regarding impacts of weather to your locations makes it easier to build a business case for weatherization projects that could help you save money in the long run. Some low-cost suggestions:

  • Repair/replace failed weather stripping. Letting conditioned air out is money down the drain.
  • Perform regular maintenance on RTUs and air handlers: replace filters, ensure fan belts are not cracked or slipping, and clean cooling coils.
  • Service your cooling system before the hot season (e.g. verify refrigerant charge and/or cooling tower water chemistry) and your heating system before the cold season (e.g. clean burners on a boiler).
  • Verify and update thermostat schedules as needed to ensure alignment with operations.
  • Consider modifying thermostat setpoints seasonally. As a starting point, consider a heating setpoint of 68°-70°F in the winter, and a cooling setpoint of 75°-78°F in the summer. Adjust as needed to balance occupant comfort with energy savings. Schedule thermostat setbacks during unoccupied hours to further minimize energy costs.

With the right tools, accurate data, and a plan, your business—and your budget—will be ready for whatever Mother Nature throws your way.

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