• 6 min read
Gas vs. Electric: Where Businesses Waste the Most Money
Most companies pay attention to their total energy bill but overlook the line items that actually drive waste. Whether you buy electricity, natural gas, or both, the biggest savings often come from fixing structural issues rather than chasing pennies on the commodity line. Here’s where businesses commonly overpay—and how to stop it.
1) Electricity: Demand and Capacity Charges
Electricity bills include more than energy usage (kWh). Peak demand (kW) and capacity charges can represent a large portion of total cost, especially for facilities with intermittent heavy loads. The problem is that a few short-lived spikes can set the charges for the entire billing cycle.
- Stagger equipment starts to prevent overlapping peaks.
- Shift optional processes outside local peak windows.
- Use submetering or interval data to pinpoint problem hours.
2) Electricity: Auto-Renewals at Uncompetitive Rates
Many businesses sign a supply contract and forget it—until they’re rolled into a renewal with higher pricing or unfavorable terms. Prevent this by setting reminders 120, 90, and 60 days before expiration and running a competitive RFP across multiple suppliers.
3) Natural Gas: Basis and Transportation Overlooked
On the gas side, commodity price is only part of the story. Delivered gas depends on basis differentials and transportation components that are easy to miss in quotes. A side-by-side comparison that includes basis, balancing, and any pass-throughs is essential.
4) Natural Gas: Seasonal Usage Without Strategy
Heating-heavy portfolios often overpay because they lock pricing at the wrong time or fail to consider seasonal blocks. A structured approach—buying a portion of expected winter usage ahead of time while leaving room for market dips—can reduce total cost without exposing you to undue volatility.
5) Both Fuels: Contract Mismatch
Choosing the wrong contract structure is a universal problem. A fixed price can be safe but expensive for variable loads; floating can be cheap but risky for budgets. The solution is a structure that fits your profile: fixed for the predictable portion, indexed for the opportunistic slice.
How to Capture Savings
Run a competitive procurement process and test multiple structures. Compare not just cents per kWh or therm, but the total landed cost, including fees and pass-throughs. Align contract terms with usage, and tackle demand peaks with low-friction operational changes. For a practical walkthrough, see our Energy Savings process.
Next, get smart on switching providers: What to Know Before Switching Commercial Energy Providers. And if you’re planning for the year ahead, don’t miss Cut Energy Costs in 2025.
Keywords: commercial electricity savings, reduce business electric bill, lower natural gas rates for businesses, energy rate quotes commercial property.