Making Cents of Energy Understanding Utility Rates

Disclaimers I am talking about commercial energy rates Disclaimers I am talking about commercial energy rates. Focus is on electrical. These are just the basics.

What’s in the Bill You pay for: - Consumption - Elec Demand - Power Factor - Misc. Fees What’s in the Bill Rate Type Miscellaneous Fees Electric Consumption Electric Demand Gas Fees Power Factor

Demand Demand is a rolling 15 minute window of how much electricity is being used at any given time. A peak is set when the user achieves the highest 15 minute average within a billing period. You are billed for the peak amounts per the published peak rates. It is not uncommon to see demand charges equaling close to half of a commercial building’s electric bill. A Demand Ratchet stipulates that an owner will pay no less than X% of their highest demand point in the last year.

Why does the utility company charge for demand? Building #1 Peaks at 1,000 KW Building #2 Building #3 Utility Provider Simplified Example: A utility provider serves three buildings. Each building peaks at 1,000 KW That’s a total of 3,000 KW that is being “demanded” of the utility provider.

Most Common Electric Rate Types General Service Rate – For owners with average annual loads under 50 KW. Only consumption, no demand charge. Power Service Rate – For owners with average annual loads between 50 KW and 250 KW. Time-of-Day Rate – For owners with average annual loads greater than 250 KW. Includes base, intermediate and peak times.

Primary or Secondary Service Primary Service The owner owns and maintains the transformer. Secondary Service The utility provider owns and maintains the transformer. You will pay higher utility rates for a secondary service because the utility provider is taking responsibility for the transformer.