Ames Department Stores, Inc. is a chain of discount department stores with more than 300 locations in 14 states and the District of Columbia. Ames implemented an energy accounting and bill-auditing program with the assistance of an outside consulting firm. The program helped the company receive nearly $600,000 in refunds from billing errors and more than $200,000 in annual savings from rate and service changes. As a result, the program helped Ames reduce its $31 million annual energy budget.

Historically, Ames had an energy department that concentrated primarily on demand-side management. Ames had no systematic tracking of energy use and costs and no means to identify and correct errors in bills other than obvious errors identified by the accounts payable department during bill processing. Ames relied on utility companies to perform rate analysis and select the most favorable rate.

Facilities executives realized a need to gather use and cost data and check bill accuracy. The goal was to establish a database of energy consumption and costs for the prior three years, to make recoveries for past billing errors and to ensure that each utility company was applying the most beneficial rates.

The facilities department did not have the staffing to complete this project. Due to financial constraints, Ames could not hire additional staff or add other internal resources. Although outsourcing seemed the obvious solution, limited funds were available.

The solution was an arrangement with an energy accounting and auditing firm in which a majority of the fees for the project were funded from cost savings. The firm performed the following:

• Audits of past bills to identify errors and make recoveries.
• Rate analysis to identify optional rates to reduce on-going costs.
• Construction of a use and cost database for the past three years.

These efforts resulted in refunds of $559,700 and annual on-going cost savings of more than $200,000. Because electricity is more than 80% of Ames' annual energy budget, the majority of findings were associated with that energy type. In fact, 79% of refunds (see Figure 1) and 88% of annual cost savings (see Figure 2) were in electric costs.

The sources of the refunds (see Figure 3) were surprising. More than half of the refunds resulted from meter reading or bill calculation errors. Only 5% of the refunds resulted from erroneous rates, a surprisingly low percentage. The refunds resulted from the correction of numerous small errors. The total refund consisted of more than 100 individual refunds ranging in size from $91 to $36,470.

Most of the on-going cost savings (see Figure 4) resulted from optional rate changes. The company also saved by correcting meter reading errors and transferring payment responsibility to another party.

Upon completion of the project, Ames brought the energy accounting function in-house. According to project manager Teri Rainville, "The results made it easy to justify the additional costs to perform this function in-house." She states that the energy accounting data generated by the project has been critical to Ames' participation in electric retail access programs and procurement of natural gas and other heating fuels from third-party suppliers. The value of this data availability is immeasurable.