CEOs – Why Energy Management Should Be One of Your Top Priorities
As the postmortem on the recent Texas deep freeze continues, I am reminded that for the past several years I have tried (with varying degrees of success I might add) to encourage C-level executives to view their energy usage and the costs as a critical business function.
You are already hearing about businesses, schools and government entities that signed up for a variable rate electric plan that is now producing huge bills due to the winter storm. CEOs get frustrated with rising power costs, but many times do not connect the dots to see that those costs are manageable through deploying a holistic, strategic energy plan that includes energy procurement, risk management, reliability and renewables.
I am advocating that as an organization, you actively manage your energy exposures and risks. Many a CEO has said to me, “Well what can I do about those costs? Aren’t they sunk costs? Isn’t the company at the mercy of the rate? It is what it is!” Let me dispel that notion. Energy management is not a crystal ball or a strategy based on hoping that prices remain stable. It is a living, breathing function that deserves and needs senior leadership focus. It needs a well-thought-out strategy and energy plan that can save money, limit risks, appeal to shareholders and the general public, and set an expectation at the social (macro) level.
Energy management in a corporation needs an owner. That owner must reside in the C suite, especially since it is in the top five expense items in your budget. Strategies around energy management cannot be developed, then left on a shelf. It must have support of senior management and the board, and it must be executed, like other key business priorities.
To begin, you must understand what your energy exposures are now and understand what is happening. Then, determine how you can improve those costs/risks. (They can, I promise you.) By adopting the right strategy, you can reap the benefits of reduced costs, a lower carbon footprint, enhanced reliability and, ultimately, improved shareholder value and brand.
In my experience, I have seen corporations embark on this journey, treat it with the importance and focus it deserves, save 10 to 20 percent on the price of energy and mitigate the adverse impact of rolling blackouts and a deep freeze.
