Energy Efficiency MeasuresENERGY RATES AND BILLSWhen planning an energy retrofit, it is useful to begin with a thorough examination of a facility’s energy bills. The primer below will help you understand the sometimes arcane and complicated nature of bills and rates, so that you can maximize the savings of your energy efficiency improvements. The basic unit of heat energy in the U.S. is the British Thermal Unit, Btu, the amount of heat necessary to raise a pound of water a degree Fahrenheit. A million Btu is written MBtu and is the energy equivalent of about a person year of labor. The table and chart below show units and relative costs for eight common forms of energy, based on estimated average costs paid by commercial and industrial consumers in Utah in the spring of 2005:
In developing an energy retrofit strategy, it is useful to begin with a thorough examination of energy bills and utility tariffs, which include rates (see links below). Examining patterns of consumption and cost by season and other variables helps to identify opportunities for energy and bill savings. Utility tariffs are somewhat arcane, but it is worthwhile checking details of your company’s tariff and others that may also apply to your circumstances to minimize costs. Sometimes a business customer who might qualify for a less expensive rate is accidentally charged at a higher rate. Thus, examining the utility’s tariff structure with care combined with a conversation with a customer service representative of the utility is always appropriate. ELECTRICITYElectricity is usually the greatest energy cost item for commercial and industrial businesses, as well as for agricultural operations. Whereas residential customers are only charged for electrical energy (measured in kilowatt hours, kWh), larger customers are also charged for demand (measured in kilowatts, kW). Demand is the instantaneous use of electricity, while energy is use over time. In Utah, electric rates for commercial and industrial customers of the Utah Power & Light Company are relatively high for demand but substantially lower for energy. Thus, a typical 80,000 square foot commercial office building may have a summertime monthly bill of $12,000, of which $8,000 is due to demand charges at $12.76 per kW and $4,000 due to energy use at $0.02574 per kWh. This corresponds to a composite equivalent rate of about $0.077 per kWh, the figure used in the above table. A utility must be prepared to meet the highest demand on the grid, which usually happens on hot summer weekday afternoons when residential customers are air conditioning and commercial and industrial customers are still in full operation. To meet this demand, the utility must build power plants or buy power from other generators (which is quite costly during peak periods). Accordingly, rate structures are designed to charge commercial and industrial customers for their greatest peak demand (typically averaged over a 15 minute period) over the past month. The Utah Power & Light Company has an Electric Service Schedule Number 6 that fits most commercial and smaller industrial customers. Schedule 6 covers non-residential customers whose 15 minute demand has not exceeded 1,000 kW over the past 18 months. There is a $15 monthly service charge and an energy charge of 2.574 cents per kWh. The power charge (demand) is $12.76 per kW from May through September and $10.24 for October through April. In addition, the utility charges a modest additional fee if a customer’s average power factor for the month is below 0.9. The fee is tacked onto the demand charge and amounts to ¾ of a percent for every percent that the average power factor is lower than 0.90. Low power factors are usually due to the inductors in motors and transformers. Power factors may be raised by the addition of compensating capacitors. A copy of Utah Power’s Schedule 6 may be downloaded at www.utahpower.net/Regulatory_Rule_Schedule/Regulatory_Rule_Schedule2267.pdf. In addition, the company’s web site includes a helpful explanation of its rate schedule. Click on “Behind the Bottom Line” on the business portion of the utility’s home page, www.utahpower.net. Schedule 8 is applicable to larger commercial and industrial customers who do have peak demands that exceed 1000 kW somewhat frequently. The rates for these customers include a “facilities charge” of $3.15 per kW demand. However, only demand charges during peak periods are assessed customers who quality for Schedule 8. From October through April, peak demand times are from 7 am to 11 pm weekdays excepting holidays. For these times, the demand charge is $7.42 per kW, while the energy charge is 2.5776 cents/kWh. During off peak periods, the energy charge drops to 2.2776 cents/kWh. From May through September, peak demand times are 1 pm to 9 pm weekdays, excepting holidays. For these times, the demand charge is $10.29 per kW, while the energy charge is 3.2776 cents/kWh. During off peak periods, the energy charge drops to 2.2776 cents/kWh. The power factor charge is the same as with Schedule 6. A copy of Utah Power’s Schedule 8 may be downloaded at www.pacificpower.net/Regulatory_Rule_Schedule/Regulatory_Rule_Schedule48909.pdf. In sum, commercial and industrial electricity consumers can save money by saving energy at any time, but especially when approaching their own peak demand periods. In evaluating the cost effectiveness of potential energy savings projects, it is important to consider both the reduction in demand and energy charges. Further, it is cost efficient to shift as much load as practical into times when other demands are lowest. For example, it may be possible for a large office complex to meet its cooling needs by producing ice during the evening hours when machines and lights are off, then using the ice to supply space conditioning in the heat of the business day. This avoids running high-demand chillers when other demands are necessary. In addition, adopting alternative energy sources such as gas-fired chillers can be a cost-effective strategy to reduce peak load. Additional savings are available to customers with low power factors by adding capacitors as large inductive loads come on line. NATURAL GASTariffs for natural gas in Utah are every bit as complicated as those for electricity. Gas is metered by the cubic foot, but charged by units of energy, typically the therm or decatherm. A therm of natural gas is the energy equivalent of 100,000 British thermal units and is nominally equal to 100 cubic feet of gas. A decatherm (Dth) equals a million Btu. Questar Gas serves the entire state of Utah. The utility offers commercial and industrial gas service at fixed rates and interruptible rates, the latter costing less. With interruptible rates, there are substantial penalties associated with using gas when the supplier has asked for a curtailment. With both fixed and interruptible tariffs, there are a number of surcharges, the most important of which reflects the utility’s cost of natural gas from its suppliers, which varies substantially in today’s volatile gas market. Flexible pricing structures may be possible for large gas-using customers who threaten to do business with others. This is particularly important, since many large gas users are able to secure natural gas from providers of pipeline gas, typically for commodity costs that are lower than those offered by the utility company. In these cases, the utility charges a fee for transporting the gas and metering it. Rates for transportation depend on whether the service is fixed or interruptible, and anticipated volumes are typically specified, with penalties for exceeding them. In all events, Questar charges customers an annual administrative fee of $6,800 for transporting pipeline gas in addition to a delivery charge based on the quantity of natural gas delivered. There are often several rate structures under which a given business can be charged for natural gas. The tariff structure for all customers of Questar may be downloaded from the company’s web site; it is a 128 page document in pdf form. Go to www.questargas.com/Tariffs/ariffs.html and click on Utah. If asked, the utility company’s representatives will explain the differences in various rates and assist in the selection of the rate schedule most suitable for the customer’s needs. A tariff professional is available at 801-324-5564. Email inquiries are fielded by Evelyn Zimmerman; her email address is Evelyn.Zimmerman@questar.com. Choosing the appropriate tariff carefully can save money. |
||||||||||||||||||||||||||||||||||||||||
|
Why Care About Energy Efficiency? | Steps to Saving Energy & Money | Recommendations by Sector Energy Efficiency Measures | Assistance | Program Profiles | Case Studies | Glossary of Energy Terms | Home © 2006 Southwest Energy Efficiency Project |