As energy costs continue to rise and regulatory landscapes evolve, businesses in deregulated states are discovering that the greatest savings come from a dual strategy: choosing a competitive electricity supplier and investing in energy efficiency. Competitive supply allows you to secure lower rates and tailor contract structures to your needs, while efficiency improvements reduce consumption, demand charges and exposure to price volatility. Together, they can deliver substantial cost reductions and environmental benefits. This article explores why combining these approaches maximises savings and outlines
practical steps to implement them.
Why Competitive Supply Alone Isn’t Enough
Switching from a default utility supply to a competitive supplier can provide immediate savings. In deregulated markets, suppliers compete on price, contract length, renewable content and value-added services. Businesses can lock in fixed rates to gain budget certainty, or choose index-based plans to capitalise on market lows. However, securing a lower price per kilowatt-hour addresses only part of your energy spend. Demand charges, based on peak usage, and total consumption levels still drive a large portion of your bill. This is where energy efficiency comes in.
Reducing consumption through efficiency measures lowers the baseline against which your supply rate is applied. LED lighting upgrades, high-efficiency HVAC systems, building insulation, and smart controls can cut energy use by 20 to 40 percent in many facilities. According to industry research, LEDs use up to 90 percent less energy than incandescent lamps and 60 percent less than fluorescents, leading to significant long-term savings. When you use less energy, your supply contract covers a smaller load, further amplifying the effect of a lower rate.
Implementing an Integrated Strategy
To fully realise the benefits of competitive supply and energy efficiency, follow these steps:
- Conduct an Energy Audit: Start by benchmarking your current energy consumption. A professional energy audit will identify inefficiencies, prioritize upgrade opportunities and estimate potential savings. Many utilities or energy service companies offer audits at little or no cost.
- Prioritise Efficiency Upgrades: Target low-hanging fruit such as lighting retrofits, HVAC tune-ups, insulation and weatherization. LED lighting typically provides payback periods under two years, while HVAC upgrades and building automation systems may require longer horizons but yield significant demand reductions.
- Leverage Incentives and Rebates: Federal, state and utility programs often provide financial incentives for efficiency improvements. The Energy Trust of Oregon, for example, offers cash incentives for LED lighting and equipment upgrades. Leveraging these programs reduces upfront costs and shortens payback periods.
- Select Your Supply Contract: With a clear understanding of your load profile post-efficiency upgrades, solicit quotes from multiple suppliers. Consider fixed-rate and blended structures, pass-through components and renewable energy options. Negotiate contract terms that align with your risk tolerance and operational needs.
- Integrate Demand Response: Partner with your supplier or a demand response aggregator to earn revenue for curtailing load during peak periods. Automated load control systems can reduce consumption temporarily without disrupting operations, providing additional savings and supporting grid reliability.
- Monitor and Optimise: After implementing upgrades and selecting a supplier, use energy management software or your supplier’s analytics tools to track consumption. Continuous monitoring helps verify savings, identify anomalies and guide future investments.
Case Studies
Manufacturing Facility: A plastics manufacturer in Illinois partnered with an energy consultant to audit its operations and implement efficiency upgrades. They replaced older T12 fluorescent lighting with LEDs, installed variable-speed drives on production equipment and optimized compressed air systems. After reducing overall consumption by 25 percent, the company entered into a three-year fixed-rate supply contract with a competitive supplier. The combined strategy lowered total electricity spend by nearly 30 percent and reduced greenhouse-gas emissions by 500 metric tons annually.
Office Complex: A commercial property owner in New Jersey used a competitive supplier to hedge half of its load at a fixed price while exposing the remainder to index pricing. Simultaneously, the owner invested in building automation systems and HVAC upgrades that cut peak demand by 15 percent. During high-price intervals in the PJM market, the building reduced consumption through automated demand response, earning additional credits. The synergy between procurement and efficiency saved the property over $100,000 in the first year.
Conclusion
Maximizing savings in a deregulated energy market requires more than finding the lowest supply rate. By pairing competitive procurement with targeted efficiency measures, businesses can significantly reduce consumption, demand charges and exposure to market volatility. Efficiency improvements shrink the load that suppliers must serve, while competitive contracts lock in favorable pricing for the remaining consumption. Incentives, demand response and continuous monitoring further enhance returns. Start by understanding your energy use, prioritize upgrades, choose a supplier that meets your needs and continuously optimize. For tools and resources to support your journey, visit the Electric home page.