By Bob Beckmann, Certified Energy Manager & Engineer for Missouri Enterprise
When was the last time you read your electric bill? I mean besides the total amount you need to pay. Electric bills vary from month to month, so it is human nature to just put it on the stack to pay and then make out the check at the end of the month. But your bill can hide some secrets or rather, point you to some areas where you can save. Allow me to uncover as we go section by section.
Customer Charge – This is a charge that you pay for the luxury of, well, paying your bill. This is normally a flat fixed rate and is based on your status (Business vs Residential).
Demand Charge – This can be a big one! The Demand Charge rate is normally based on your peak usage. That peak may be from this month or it could be from a few months or up to a year ago. Some utilities measure it every 15 minutes and others use ½ hour or some other time increments. Your Demand Charge is what the utility charges you to maintain the infrastructure and equipment needed to provide you your peak demand 24/7. The argument is that if you needed that much electricity once, you may need that much constantly, and they need to be able to provide that to you. Think of it as your speedometer and the mechanic charges to maintain your vehicle so that it can travel at the highest speed you have ever gone.
Seasonal Adjusted Rate – This is a built-in seasonal rate hike that usually kicks in during the summer months. This is because the utility needs to produce (or buy) more electricity when overall demand is high because everyone is running their air conditioners.
Usage – This is normally in kWh or kilowatt hours, which means the amount of electricity used over a set amount of time. Think of it as man-hours of work. A factory can have 1 person that works 40 hours a week or 40 people that work 1 hour a week and the cost is the same to the factory.
Rate – This is what the utility says you pay. In Missouri, I have seen it as low as $0.04/kWh and as high as $0.20/kWh. The average cost for the companies I have worked with has been about $0.09/kWh. Sometimes you will have a tiered rate where you pay one rate for your first so many kW and then it steps up or down as you use more. Some even have a time of use rate where the rate drops during the evening hours.
Transmission Charge – You may see this charge if you are buying from an entity that purchases then resells electricity. Sometimes they will buy the electricity from far away and it comes through lines until it gets to your box. This charge is to pay for the expense of getting the electricity to you and to cover the losses seen when electricity is sent over long distances.
Power Factor – Occasionally the utility will charge you for inefficiently using electricity. Power factor is a ratio of power going in, to power actually doing something (apparent power to working power).
Blended Rate – This one is not going to be on your bill. This is what you actually pay per kWh. The utility may say you pay $0.04/kWh but really you need to add all the charges, fees, taxes, renewable energy surcharge, etc., and then divide by your usage to get your true blended rate. That is what you are paying for each kWh of electricity that comes into your facility.
So how can you save some money this month and, in the months to come? Here are a few simple ideas you can implement.
1. Addressing Demand Charges – This is the area I get questioned about the most. If you are concerned about your demand charge, contact your utility. Ask for a breakdown of your demand for the last year or at least find out when your demand peak time occurred. Maybe it was first thing in the morning or maybe when you came back from a holiday break. Then you can think about what happened then to cause a major demand of electricity. Here are a few tips to reduce your demand:
a. Stagger starting up large equipment. Don’t throw a breaker to start up a line. Go from machine to machine to start them up and wait for the motor to get all the way spun up before you start the next machine. A motor draws the most electricity when it is starting up.
b. Add soft starts to your large (over 5hp) motors. This brings them up to speed more slowly.
c. Don’t run equipment unnecessarily. Turn on equipment only as it is needed later in the day.
d. Look into computer-based load controls. This allows you to use a computer to help control the loads and electric usage drawn by your equipment.
2. Change the starting time of your facility. The early hours of the morning are the coolest so you need to run fans less,plus you may be able to take advantage of the time of use rates.
3. Look into solar systems that can store some energy. They will allow you to reduce your usage from the utility. You don’t have to replace your entire usage with solar, but rather start with 50% or less – even that will make a dent in your bill!
And a few other energy items while I have your attention:
1. The price of LED lights continues to drop. What was a poor investment five years ago now pays for itself in less than a year.
2. Air compressors are like a bank account. You pay to put air in and it costs every time you make a withdrawal. Never let employees spray off equipment with air or take an “air shower” to clean off. This is very costly and can be dangerous if debris gets into someone’s eyes. Buy them a brush and a dustpan.
3. Before you make any energy improvements, make sure you check for possible rebates and incentives. Depending on who you get your electricity from and your location, you can get someone else to help pay for a portion of the project. This may not apply to everyone, but always check. Don’t leave money on the table!
4. Energy audits pay for themselves. Missouri Enterprise has never done an energy audit and NOT found enough potential savings to pay for the audit within a year. Let us help!