The New Daylight Saving Time: Costly for Businesses?

By Linda Orlando

Daylight saving time started this year just like it has every year, with millions of people around the country "springing forward" by setting their clocks an hour ahead just before going to bed on Saturday night. But this year the time-saving began a full three weeks earlier than usual, on March 11. The U.S. Congress introduced a provision in the Energy Policy Act of 2005 that expanded the daylight saving time period to begin three weeks earlier, on the second Sunday in March, and "fall back" one week later than usual, on the first Sunday in November.

The measure was intended to save electricity, and the jury will be out for a while before there is any quantifiable data about whether it succeeds. The American Council for an Energy-Efficient Economy (ACEEE) estimates that by the year 2020, the consumer savings from the extra hour of daylight will reach $4.4 billion. The ACEEE analysis concludes that because of this lowered energy use, there will be no need to build more than three large electric power plants, and carbon emissions across the country will be reduced by nearly 10.8 million metric tons.

Massachusetts Rep. Edward Markey, one of the co-sponsors of the bill, said that there will be countless other benefits resulting from the expanded DST schedule. Reduced crime, more time for recreation, increases in economic activity and revenue production, and fewer traffic fatalities are just some of the boons Markey and other proponents are looking forward to. "The entire population is active at 6 p.m. versus 6 a.m., and if we all have an extra hour before we turn on the lights, that's a big saving," says David Moulton, Markey's chief of staff.

But the as-yet unrealized benefits of the extra four weeks of DST are coming with a cost to businesses. Companies with older computer applications had to make manual adjustments to their systems or install software patches to reset internal clocks that had been designed to reset automatically, but according to the DST schedule that has been in place for decades. For businesses with time-sensitive data such as stock transaction, bank accounting, and travel schedules, computer mistakes and incorrect time logs may have resulted in millions of dollars in losses. Industries with that kind of sensitivity had no choice but to spend thousands of dollars in time and labor to ensure that their systems switched to the new DST schedule right on time. Rich Kaplan, Microsoft’s vice president of customer service, said that for his company the change would amount to just "a nuisance," but for other companies without the same financial clout, the costs have been significant.

Jeffrey Hammond, senior analyst at Forrester Research, estimated that the DST switch cost the average company about $50,000—a total of about $350 million for the 7,000 public companies in the United States. "In the aggregate it will probably be worth it, but right now it's an unfair tax on corporate America and even businesses worldwide that I don't think Congress thought about," says Hammond.

Another stumbling block that many companies have had to make adjustments for is the fact that most of Europe began daylight saving time two weeks later, so the U.S. will be out of sync with the rest of the world for longer this year than usual. Businesses that have offices overseas will have to also patch or manually adjust their systems, in order for employees traveling back and forth between offices to have their PDAs on the same schedules.

According to Michael Downing, author of Spring Forward: The Annual Madness of Daylight Saving Time, "Congress has been studying this for 100 years and has yet to come up with reliable energy savings." Studies performed since the last time the DST was extended in 1986 have shown that Americans do spend more time outdoors, shop, play sports, and drive more often after daylight saving time begins each spring. "Our demand for power, whether through electric lighting, computers or TV, isn't really elastic," says Downing. "We just ask for it at different times." Many of these activities, Downing says, will offset any environmental gains that might be realized from the savings on energy. In November, when DST lasts for a week longer, time zones in the western U.S. will see the sunrise so late that houses will be lit up an hour or so longer for that last week of DST.

The Department of Energy will keep track of energy consumption during the next nine months and use that data to calculate at the end of DST just how much the extended period saved in energy. If the DOE’s assessment finds that the change didn’t really have any positive impact, Congress has reserved the right to revert back to the old schedule for daylight saving time. Which, for many businesses, will just mean more headaches and more money to make the same fixes all over again.