Energy Efficiency Measures
PRIMER ON ENERGY RATES AND BILLS
When 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.
Each 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
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
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:
|Interruption Days per
||Interruption Hours per
||% Savings vs Non-Interruptible
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:
- General Rate Schedule Adjustment
- Electric Commodity Adjustment
- Purchased Capacity Cost Adjustment
- Transmission Cost Adjustment
- Air Quality Improvement
- Demand Side Management Cost
- Purchased Capacity Cost
- Renewable Energy Standard Adjustment
- Franchise Fee: a fee negotiated by a municipality and the
energy company that is paid to the municipality.
- Occupation tax surcharge - a fee charged to the utility
by a municipality and typically passed through to consumers.
- Sales Tax
NATURAL GAS BILLS
Tariffs 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.
Xcel 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 YOURSELF
Colorado Electric and Gas Rates
Colorado Steam Tariff
Black Hills Energy
Colorado Electric and Gas Rates
Colorado Springs Utilities
Colorado Electric and Gas Rates
Fort Collins Utilities
Colorado Electric Rates
Holy Cross Energy
Rates (Click on “For Consumers” on the left; then “Rates and
Longmont Power and Communications
Colorado Electric Rates
With some patience and skill in searching, additional information
can be found on the website of the Colorado Public Utilities