Energy Efficiency MeasuresPRIMER ON ENERGY 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. ELECTRIC BILLSEach utility offers different rates for residential, commercial, and industrial customers, and often offers different rate schedules within each class (based on electrical load and voltage requirements, for example). Rates vary by season - higher in the summer. For investor-owned utilities like Xcel Energy and Black Hills Power, the rates - and all additional charges - are reviewed and approved by the Colorado Public Utilities Commission. Municipal utilities and rural electric co-ops, on the other hand, are owned and governed by the cities and members they serve and are not regulated by the Public Utilities Commission (although they can still face requirements from the state legislature). While residential customers generally pay a rate based on only how much energy is used (per kilowatt-hour, or kWh), most commercial and industrial customers pay this energy rate PLUS a demand rate. The demand charge (per kilowatt, or kW) is based on the maximum amount of power used during any 15-minute increment throughout the month. Even if the average is much lower throughout the month, businesses are still charged based on that peak usage. Surveys show many business owners are not aware that their bill contains this demand component, or understand opportunities for reducing it. In evaluating the cost effectiveness of potential energy savings projects, it is important to consider both the reduction in demand and energy charges. In Colorado, electric rates for commercial and industrial customers are relatively high for demand but substantially lower for energy. Customers are charged for their greatest peak demand (typically averaged over a 15 minute period) over the past month, or a percentage (e.g., 75%) of the highest peak demand over the preceding 11 month period, whichever is greater. (The figures in this example are specific to Xcel.) Utilities often offer "Time-of-Use" rates that are higher during on-peak times and lower during off-peak times (i.e. nights and weekends). This is because the utility has a surplus of energy during off-peak times when not as many businesses much, but needs to buy extra on the open market (or build more power plants) to cover high peaks when everyone is demanding a lot at the same time - especially summer afternoons, when residential customers are using air conditioning and commercial and industrial customers are still in full operation. On these Time of Use rates, businesses can save a bundle on electricity bills by shifting as much electricity use as possible to off-peak hours when Time-of-Use rates are lowest. For example, it may be possible for a large office complex to meet its cooling needs by producing ice during off-peak periods and using it to supply space conditioning in the heat of the day. This avoids running high-demand chillers when electricity costs are at a maximum. (Note: Xcel discontinued its Time of Use rate a couple years ago.) If commercial and industrial customers are able to respond to utility requests to interrupt their service from time to time (usually during periods of high demand on the grid), they may quality for interruptible service tariffs. These can save customers money. However, if a customer on interruptible service fails to respond to requests from the power company to temporarily shut down when asked to, substantial penalties may follow. To take an example of Xcel's rate structure for commercial customers whose demand is greater than 500 kW and receive voltage at secondary levels, service and facility monthly charges are $15.30 while demand charges are $12.55 per kW. If the customer chooses an interruptible service tariff, service and facility charges are $195 per month. However, the more interruptions elected and the shorter the time between being notified and the interruption period beginning, the lower the demand charge:
Penalties for a customer's failure to interrupt upon receiving an interruption signal from Xcel are also a function of the interruptible tariff selected. The Penalty Charge per kilowatt hour is $4.00 for customers who select the unlimited interruption option, $2.00 per kilowatt hour for customers who select the 20 interruption-days/year option, and a $1.00 per kilowatt hour for customers who select the 10 interruption days/year option. Industrial customers can sometimes qualify for lower rates by taking higher voltage service. This may require the purchase of a step-down transformer, but such an investment may be recovered quickly in lower energy bills. Finally, some utilities have a flexible pricing structure they offer to large consumers who threaten to generate all or a portion of their own power or switch their service to another provider. Practically speaking, this means that a customer may be able to negotiate a discounted price for demand, energy, or both. When an arrangement between a customer and the utility to secure discounted electricity under the flexible pricing structure is struck, the customer is required to guard as confidential the terms and conditions of the flexibly-priced contract. Xcel's policy, for example, is to maintain the option of immediately terminating a flexibly-priced contract if the customer breaches confidentiality. In addition to an energy charge, a demand charge, fixed charges (that cover such things as meters, distribution lines, etc), there can be various other fees either mandated by the state, the Public Utilities Commission, the city, or in the case of municipal and rural co-ops, the governing board. These can include:
NATURAL GAS BILLSTariffs for natural gas are only somewhat less complicated than those for electricity. Gas is metered by the cubic foot (CF), but charged by units of energy, typically the therm or dekatherm (Dth). A therm of natural gas is the energy equivalent of 100,000 British thermal units (Btu) and is nominally equal to 100 cubic feet of gas. A dekatherm (Dth) equals a million Btu. Utilities offer commercial 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 a number of surcharges, the most important of which reflects the utility's cost of natural gas. Other charges reflect franchise fee surcharges and occupation taxes, and demand side management charges. Should the utility have difficulties in providing high-quality service (e.g., experience gas leaks or have metering problems), customers are credited moderate sums. Flexible pricing structures are also possible for gas 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. There are often several rate structures under which a given business can be charged for natural gas. 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. Choosing carefully can save money. STEAMXcel operates a steam loop in downtown Denver, and under economic conditions favorable for both the customer and the utility, the company is willing to offer steam service elsewhere in its service territory. Steam delivered directly to the user's site saves the customer the expense of a boiler, the fuel to fire it, and associated maintenance costs. Steam can be used for space and hot water heating, sterilization, and (through absorption chillers) space cooling. The energy content of a pound of steam is 970 Btu's. Steam is sold in thousand pound units (MLB). Xcel currently charges a base rate of $8.843/MLB and a cost adjustment of $11.802/MLB, equaling $20.645/MLB, plus a fixed Service and Facility fee of $130/month. A franchise fee and taxes add to the total. As with large electricity and gas users, there is a "flexible pricing policy" the utility can offer a company if it chooses. SEE THE RATE SCHEDULES YOURSELFXcel Energy Black Hills Energy Colorado Springs Utilities Fort Collins Utilities Holy Cross Energy Longmont Power and Communications With some patience and skill in searching, additional information can be found on the website of the Colorado Public Utilities Commission at www.dora.state.co.us/puc/. |
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