Energy: The Cost Isn't Just in the kWh.
In many companies, when the energy bill goes up, the conversation focuses on the obvious: “the price is high.”
But the real impact is almost never just in the kWh.
The cost is usually (also) in:
- Contracted power capacities that no longer make sense (or that are paid for “just in case”).
- Transmission fees and fixed charges that haven’t been reviewed in years.
- Penalties for reactive power or excess capacity.
- Automatic price adjustments that no one questions.
- Clauses that shift risk to the customer… without the customer even knowing.
And there is one factor that is even more costly than all of the above: the lack of governance.
When it’s unclear who makes the decisions (Procurement, Finance, Operations, Maintenance…), energy becomes a “no man’s land.”
And in no man’s land, the contract typically renews itself… and the cost grows on its own.
Optimization here isn’t about “pressuring” the supplier. It’s about understanding the contract, accurately measuring consumption, and making decisions based on data.
If you’re interested, I’m sharing a 12-point checklist for auditing energy contracts (no technical jargon and takes just 15 minutes).
Checklist (12 points) for auditing an energy contract
- Contract type: fixed, indexed, or hybrid. What risk are you assuming?
- Price structure: what portion is energy vs. fixed terms / other charges.
- Indexation: to which index is it linked and with what formula (and whether there is a “floor/ceiling”).
- Term and renewals: notice period, automatic renewal, early termination penalty.
- Contracted power: Is it aligned with actual usage per period?
- Penalties: excess power, reactive power, capacitive reactive power, etc.
- Load curve / consumption profile: Is there an opportunity to shift consumption or adjust periods?
- Regulated terms: How are they passed on, and is there transparency in the bill?
- “Included” services: maintenance, remote metering, management… Do they add value or are they hidden costs?
- Metering and data: access to hourly data, platform, exportable history.
- Internal governance: who approves, who reviews quarterly, which KPIs are tracked.
- Comparability: can you compare offers on a consistent basis (same power, periods, tolls, duration)?
An important caveat regarding the use of external consultants
This is a reasonable decision, but it is important to consider how that relationship is structured.
It is not uncommon for some intermediaries to be paid in full or in part by the energy suppliers themselves. This does not invalidate their work, but it does make it essential to ensure:
- independence in the analysis,
- transparency in incentives,
- and genuine alignment with the client’s interests.
Because in the energy sector, just as important as the price is who is making the decision and based on what information.
Conclusion
Energy should not be managed as an automatic expense or as a purely technical matter. It is an economic, contractual, and internal governance decision.
When roles are clearly defined, data is transparent, and objective criteria are in place to compare offers, costs stop rising “on their own” and come under control.
