Hotel electricity rates increase by up to 11%

By | April 9, 2015

Hotel electricity rates increase by up to 11%

utility-bill-2In January, energy providers across California raised commercial electric rates by up to 11 percent. These rate hikes mostly apply to electricity used during brief windows at specific times of the day and year – times when hotel activity levels are typically highest. This leaves many hotels particularly vulnerable to rising costs.

Commercial electricity bills are made up of various charges. Energy charges are based on the total amount of energy consumed each month, while demand charges, the lesser-known part of the bill, are based on maximum usage. You might think of energy charges like buying gas for your car, where you pay a certain price for every gallon that you need. Demand charges, on the other hand, would be more like a fine that you pay each month based on your top speed.

Due to factors such as inexpensive natural gas and widespread adoption of renewables, the cost of producing energy has actually declined or stayed flat in recent years. As a result, energy charges have largely trended down while the cost to deliver that energy has stayed the same or even increased, due to aging infrastructure and capacity constraints. This means that energy providers must increase demand rates to make up for lost revenue and cover fixed costs.

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This is reflected in rate data, which shows that average energy charges went down by more than 30 percent in the last 10 years, while demand charges have gone up by more than 75 percent. This leaves demand charges as an even larger part of most commercial electricity bills.

Many hotels have attempted to lower their electricity bills with energy efficiency initiatives such as LED lighting or towel and linen reuse programs. While these help lower overall energy consumption, they do not address demand charges. In fact, until now, there has been little to nothing that can be done to control the one part of your bill that has consistently become more expensive.

Fortunately, advanced technologies are now available that allow hotels to control demand charges by combining learning software and energy storage to automate savings.

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Companies like InterContinental Hotels Group and Extended Stay America have implemented energy storage services in order to:

  • Save money by automatically trimming energy peaks with no change to operations
  • Receive valuable alerts to shift energy use away from moments when costs are highest
  • Accurately estimate electricity bills before they arrives
  • Visualize how and when they use energy to identify hidden waste
  • Assess the impacts of operational changes for better informed decisions

As the leading provider of advanced energy storage to hotels, Stem lowers monthly energy bills with no change to business operations, or guest experience. Stem does more than just store and deploy – it learns your hotel’s patterns to maximize savings and deliver real-time, actionable insights. Getting started is easy, with simple activation and no upfront costs.

Combat rising demand charges with Stem.
See if you qualify today.

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How Stem works