5 Tips Every Manufacturer Should Know to Optimize Utility Bills

Utility expenses are one of the most overlooked areas where manufacturers lose money. Even with efficient operations, you could be overpaying due to billing errors, outdated rate structures, or missed refund opportunities. At SM Engineering, we specialize in helping manufacturers reduce utility costs without changing how they operate.

Here are five high-impact tips every manufacturer should know to keep utility bills in check and protect the bottom line.

1. Audit Your Utility Bills for Errors and Overcharges

Utility companies don’t always get it right. We routinely uncover errors in line-item charges like demand adjustments, rider fees, and misapplied rate classifications. These mistakes can quietly cost thousands each year if left uncorrected.

Pro Tip: Schedule a professional utility bill audit annually to catch billing discrepancies and ensure you’re not overpaying.

Quick Tip: Want a simple way to check if you’re paying too much?  Take your total bill amount and divide it by your total kilowatt-hours (kWh) used.  That gives you your effective cost per kWh.

Example:
If your bill was $8,900 for 74,000 kWh of usage:  $8,900 ÷ 74,000 kWh = $0.12/kWh

If your rate is consistently over $0.10–$0.12 per kWh, there’s a strong chance we can help you save.

Learn more on our Electricity Bill Audit Services page.

2. Review Your Rate Class and Tariff Structure Annually

When your service starts, your utility provider assigns you a rate class. But if your energy usage or operations change, your assigned rate may no longer be the most cost-effective.

Many businesses don’t realize utility companies are not obligated to place you on the lowest-cost rate available. The Public Utilities Commission (PUC) requires them to make rate schedules public, but it’s your responsibility to understand and select the best one for your operation.

⚠️ Not all customers qualify for every rate. Switching to a seemingly better rate without understanding its terms could actually increase your costs.

Pro Tip: Work with a utility billing specialist to determine if you’re eligible for a better rate and avoid costly missteps.

3. Monitor Demand Charges Closely

Demand charges are often the most expensive part of a manufacturer’s electric bill. They’re based on your highest 15-minute usage spike during the billing period; and even a one-time equipment startup can trigger a much higher charge that sticks around for months.

It’s also important to understand ratchet clauses: some utility tariffs lock in those demand charges for an extended period, based on a prior peak. That means one bad month could raise your bills for the next 6-12 months.

Pro Tip: While we don’t recommend changing how you operate your facility, knowing how demand and ratchet clauses work can help you plan smarter and avoid long-term billing spikes.

Pro Tip: Work with a utility billing specialist to determine if you’re eligible for a better rate and avoid costly missteps.

4. Separate Operational Efficiency from Billing Strategy

Many manufacturers have upgraded to energy-efficient lighting and equipment, but still overpay because they haven’t reviewed their utility billing setup. Saving energy doesn’t automatically mean saving money. You could be operating efficiently while still being billed incorrectly or being on a poor rate plan.

Pro Tip: Make sure your utility bills reflect the operational improvements you’ve made. A billing review ensures that your energy-saving efforts are actually delivering financial savings.

Explore more success stories from manufacturers like you.

5. Explore Refund Opportunities for Past Overcharges

If your facility has been overbilled, you may be eligible for retroactive refunds – but only if you request it. Some utilities allow corrections going back 12 to 36 months, while in some states the statute of limitations is as long as 10 years.

At SM Engineering, we handle the entire refund process for our clients. That includes identifying overcharges, preparing documentation, and applying for refunds (whether through the utility or directly with the state).

⚠️ Not all line-item charges are refundable. Since rate selection is typically your responsibility, refunds are not always granted for being on the wrong rate. Our expertise lies in knowing what can be refunded, and how to build a strong case for it.

Pro Tip: Keep copies of all your utility bills, and work with a firm that knows how to navigate refund opportunities effectively.

What Our Clients Say

“Hypertherm engaged SM Engineering to do an audit of our utility costs for our business in Minnesota. To our surprise they obtained $37,150 in one-time utility savings and $12,500 in recurring annual savings going forward. SM Engineering made the process so easy for us. It is not often that things are too good to be true, but this is one of them. They had the expertise to chase down the savings due us through existing legislative incentives and then pass them along to us. Thanks SM Engineering.”

— Perry D. Seale, Director of Facilities, Hypertherm, Inc.

See the full reference letter

Stop Overpaying on Your Utility Bills: Take the First Step Today

Most manufacturers are overpaying without realizing it, even if their rate seems low or their bills look routine. Billing errors, misapplied rate structures, and overlooked refund opportunities are more common than you think. If you haven’t had a professional utility audit in the last year, you could be leaving real money on the table.

Let us do the digging for you.
There’s no cost, no obligation; just a straightforward review by specialists who know where utility companies quietly overcharge.