UTILITY costs are often ignored, but savings can be generated in this area. The commercial sector could save R800m a year alone by effectively structuring electricity costs, says Iain Johnston of Venn Diagnostics.

'Utility charges represent a key component of any company's cost structure, but because they have been supplied by the state or state-owned enterprises, the way services have been packaged and priced has typically been accepted as a given.'

Johnston says Venn is positioned as a channel between utility suppliers and end-users, and provides services that allow organisations to structure their utility arrangements and manage their costs.

'Utility costs can be efficiently structured, like any input cost, which is vital if one takes into consideration that the commercial sector spent about R3,8bn last year on electricity alone,' he says.

'Utility management is different to facilities management, but we see ourselves working hand-inhand to provide the best most economical solutions to property managers.'

Johnston says the process of utility management begins with a complete understanding of the market.

Areas covered include an understanding of charging structures, bylaws and legislation and monitoring council changes and expected developments countrywide, including privatisation and deregulation.

Johnston says a number of by-laws are outdated, and with the amalgamation of town councils into huge metropolitan councils, the standardisation of rates could lead to confusion.

'We look at what the implications of standardisation are and how they affect big business and industry consumers.

'Also, tariffs could rise, so we are on the lookout for opportunities to help clients secure optimum usage for best rates,' Johnston says.

'By keeping abreast of changes, amendments and additions to charging structures, we are able to structure service provisions so clients benefit from by-laws they would not otherwise have known about.'

Deregulation and privatisation should open up the utilities market and Johnston says he sees increased opportunities for all stakeholders.

He says Venn does a usage analysis for clients, involving a financial and a technical audit. 'We conduct an analysis of electricity and water consumption and the cost of waste management, and then advise the client on any more economical options that are available.'