Making sense of tourism business utility bills

Utilities are the regular services delivered to a property from the municipality, Eskom or a property manager. Most domestic and commercial properties receive a monthly utility bill that includes property rates, waste removal, electricity, water and sanitation. The properties of several GeePee Responsible Tourism Challenge businesses are classified ‘domestic’, even though there are businesses operating from them, simply because the properties were originally residences and are still small enough to be considered domestic.

Utility bill cartoon

No one likes receiving utility bills!

Many tourism businesses want to reduce the amount they have to pay for utilities.  In this article, we talk about those monthly utility costs that vary with usage – water, electricity and sewerage and how to make sense of them. Similar to waste removal, the charges you pay are linked to the type of property you have. The business in the example below is charged a domestic rate for all utilities. We’re going to look a bit further at all of these utility costs and explain what they mean. It’s useful to know that electricity and water are billed on a sliding scale (also called block tariffs) – once you use above a certain threshold, you pay more per unit.

Understanding your electricity bill

Electricity users are charged by the kilowatt hour (kWh), and all Eskom or municipal accounts show how many kWh units were used during the billing period. Kilowatt hours describes the amount of electricity used in a certain amount of time.

electricity bill

Most appliances have a sticker on them telling us how much power they use. The rating will be in watts ( W ), and you just have to remember that 1000W is equal to 1kW.

kettle

A picture of my kettle showing that it uses 2500W, or 2.5kW

If you run an appliance with a rating of 1kW for one hour, you use 1kWh of electricity. If you use an appliance with a rating of 2kW for half an hour, it would also use 1kWh of electricity. I would need to use my kettle for 24 minutes to use 1kWh of electricity.

Here’s a handy infographic from Eskom telling us how long we would need to use appliances to consume 1kWh of electricity.

kilowatthour

What would we have to do to use 1kWh of electricity

You also have to remember that you use appliances for different lengths of time. Drying washing in a tumble dryer for 20 minutes will use roughly the same amount of electricity as having the TV on for four hours. Also, some appliances like fridges stay on all the time, so it’s best to get appliances that are energy efficient in the first place.

Municipality bills don’t give you the unit cost of electricity per kilowatt hour but we can easily calculate this from the bill.

Cost per kWh = Total electricity cost / electricity used
                          = R3,225.68 / 2644 kWh
                          = R1.22 kWh

If you know the electricity rating of your appliances and how long you use each appliance for, you can calculate which are the most expensive appliances used in your business. You can find estimates for common appliances in the table below (City of Cape Town Smart Living Handbook).

Appliances

Energy consumed by typical home appliances

Understanding pre-paid electricity receipts

Pre-paid electricity receipts don’t usually give the cost of electricity per kilowatt hour, it gives you the cost and how many units of electricity you have bought. You would think that you could calculate the unit cost of electricity in the same way we suggest for a monthly utility bill (cost/units). This is not the case as prepaid electricity also includes service charges. However, you may be able to find prepaid electricity tariffs for your municipality on  www.prepaid24.com.

Understanding your water bill

A property’s water consumption is measured in kilolitres, or kl for short. Each kilolitre is equal to 1,000 litres of water. We can picture a kilolitre if we imagine water filling a square which is 1 meter wide, 1 meter tall and 1 meter deep.

utility bill

Properties are also billed in block tariffs for water used. This means that the more water the property uses, the higher the rate per kilolitre will be.  The business in the example above is charged Scale B: Domestic for water. This is because the business uses more water than the threshold of the lowest scale. If the business is small enough it can aim to reduce water usage and move down to Scale A, but only if it does not compromise on quality service.

Again, we can calculate the cost per kilolitre:

Cost per kl = Total water cost / water used
                      = R1,013.74 / 59Kl
                      = R17.18 per Kl

Understanding your sanitation bill

utility bill

Municipalities assume that the water you use will be disposed of as waste, and so charge for the water used or a portion of the water used. In this example, the municipality assumes that all of the water you use will be discharged as waste, and charge you accordingly. However, the cost of receiving water is less than the cost of disposing of it:

Cost per kl = Total sanitation cost / water disposed of
                     = R210.30 / 59Kl
                     = R3.57 per Kl

So, the less water you have coming into the property, the less you will pay for sanitation.

Where to from here?

We hope that after reading this your utility bills make better sense and you know how to get more insight than what is presented. But there is still something important lacking – utility bills tell us nothing about how electricity and water usage varies with the number of guests we have. It makes sense that the more guests in our establishment, the more water and electricity will get used and the higher our utility bills will be. Read our next post on utility bills to find out how to compare resource usage and occupancy, and other ways of saving electricity in your business.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s