AI Summary: Property managers cannot control the weather, tenant behavior, or every building’s cooling requirements, but they can reduce energy-cost surprises by reviewing each property’s usage, contract structure, renewal timing, and operating profile. A portfolio-wide energy review can show where costs are changing and help managers choose contracts that better match each property’s needs.
Note: For property managers, energy contracts typically cover electricity and natural gas. For the purpose of this blog, “energy contracts” refers to one or both of these agreements, depending on the property’s needs. Property managers may have one or both types of energy contracts, and the same energy broker can review and negotiate each contract separately.
When summer arrives, property managers see the same problem across their portfolios: electricity costs rise, but not evenly.
One building may experience a modest increase and another may see a much larger jump. A retail property may consume more electricity because tenants extend their operating hours, while an office building may have lower occupancy but still run cooling systems throughout the day. A multifamily property may have a different pattern again, depending on the building’s HVAC system, common-area usage, and tenant behavior.
The result is a portfolio that becomes difficult to budget.
Cooling is a significant source of commercial electricity use. The U.S. Energy Information Administration reports that electricity used for cooling accounted for about 14% of total electricity consumption in commercial buildings in its latest Commercial Buildings Energy Consumption Survey data. The EIA’s commercial-building data also shows why cooling requirements vary widely by building type and climate.
For property managers, the question is whether those changes are understandable and manageable.
Why are cooling costs so difficult to predict across multiple properties?
A portfolio is not one business with one energy profile. It is a collection of buildings, systems, tenants, schedules, and contracts.
The following factors can affect electricity use from one property to another:
- Building size and age
- HVAC system type and condition
- Occupancy levels
- Tenant operating hours
- Indoor temperature settings
- Seasonal weather
- Common-area requirements
- Refrigeration, elevators, lighting, and other electrical loads
- Whether energy is separately metered or centrally managed
Two properties may be located in the same city and still have very different cooling costs. A large office building with centralized HVAC is not comparable to a strip mall where individual tenants control their own hours and equipment. A warehouse may have large square footage but lower cooling demand than a smaller restaurant or grocery property.
This is why comparing properties only by total monthly cost can be misleading. The better starting point is understanding what is driving the difference.
What is causing the bills to change?
An increase in the monthly bill does not automatically mean the energy rate is higher.
The change may be coming from:
- Higher electricity usage
- A change in the supply rate
- Delivery or transmission charges
- Demand-related charges
- Taxes and other regulated charges
- A contract that expired or was renewed
- A shift from a fixed rate to a variable or default rate
- A change in tenant activity or building occupancy
This distinction matters because each cause requires a different response.
If usage increased because a building was occupied for longer hours, changing suppliers may not solve the problem. If usage remained relatively stable but the supply rate changed, the contract deserves closer attention. If the property moved into an automatic renewal or month-to-month arrangement, the issue may be the timing and structure of the agreement.
A property manager should be able to answer a basic question for every major building: did we use more energy, pay more for the energy we used, or experience a change in the other charges on the bill?
Without that information, the portfolio is being managed by reaction.
Should every property have the same energy contract?
Not necessarily.
Consistency can make a portfolio easier to administer, but the same contract structure may not be appropriate for every property. A property with stable occupancy and predictable operating hours may benefit from a different approach than one with seasonal tenants, fluctuating occupancy, or uncertain future usage.
A fixed-rate contract may offer more budgeting predictability, but it may not be the right fit in every situation. A variable-rate contract may provide flexibility, but it also exposes the business to market movement. The right decision depends on the property’s operating profile and the level of uncertainty the owner is willing to accept. The mistake is treating the lowest quoted rate as the entire decision.
A rate that looks attractive for one property may create unwanted exposure for another. The contract should be evaluated alongside the building’s usage, operating schedule, budget requirements, and anticipated changes.
Can multiple properties be reviewed together?
Yes, and they often should be.
A portfolio-wide review can identify patterns that are difficult to see when each property is handled separately. It may show that several contracts expire within the same period, that one property has unusually high usage, or that different buildings are being managed under inconsistent terms.
A useful portfolio review should bring together:
- Current and previous energy bills
- Supplier and utility information
- Contract expiration dates
- Renewal provisions
- Historical usage
- Property type and operating schedule
- Occupancy information where relevant
- Planned renovations, expansions, or changes in use
- Any known changes to HVAC equipment or building operations
This does not mean every property must be placed into one contract. It means the decisions can be made with a complete view of the portfolio rather than one bill at a time.
The review may result in one strategy for several similar properties and a different strategy for buildings with very different requirements.
What should an energy broker review?
A qualified energy broker should be willing to review more than a single rate.
The broker should understand how your property operates, which buildings have predictable usage, where seasonal changes occur, and what the owner needs from a budgeting perspective. They should also explain the difference between supplier charges and utility delivery charges, identify renewal provisions, and make clear which parts of the bill may change.
A broker should not recommend a contract without understanding the business behind the meter.
For a property manager, the most useful first step is usually a review of the portfolio’s bills and current agreements. That creates a factual basis for comparing options and identifying where costs are actually coming from.
How can property managers keep next summer from becoming another surprise?
Predictability starts with visibility.
Maintain a renewal calendar for every property. Review contracts before the notice window closes. Track usage trends instead of looking only at the total amount due. Make sure ownership, finance, facilities, and property-management teams understand who is responsible for each decision.
Most importantly, do not wait until a bill becomes uncomfortable before asking why it changed.
American Wholesale Energy works with commercial property managers to review electricity and natural gas contracts, compare supplier options where available, and evaluate contract structures against the way each property operates. A review can begin with recent bills and contract information, with the goal of making the next energy decision more informed and easier to manage.
Check whether commercial energy options are available in your area, or request a contract review to understand what your properties are currently paying and what should be examined before the next renewal.
