(And what you can do about it)

We’ve had a number of customers contact us lately to talk about their energy bills and what they see as a dramatic increase in prices. They are not mistaken. Electricity prices have gone up – in fact, in some cases, by quite a bit. For the typical Georgia Power Corporation (GPC) Residential customer, the average monthly power bill has increased from $109.50 in 2009 to $129.68 in 2011.

That’s an increase of over 18% in a little more than a year. In addition, the news is not any better if you’re a small to mid-size commercial customer.

Here’s the breakdown of the rate increases (see the Fuel Cost Recovery Schedule in PDF):

Recent Fuel Cost Adjustment (April, 2010) – $5.59 / month

Requested Rate Increase (January, 2011) – $10.86 / month

2011 Phase-in of Costs of VOGTLE #3 and #4 – SB 31 (January, 2011) – $3.73 / month

TOTAL: $ 20.18/month

Furthermore, you need to understand the difference between what the PUBLISHED electrical rate is and what your EFFECTIVE rate ultimately is after you add in all charges, fees, and taxes. There is a dramatic difference to what those two numbers usually are.

For most commercial customers, your bill is comprised of three main components: a) Consumption – as measured in kWh (kilowatt hour); b) Bill demand – as determined by your Peak Demand in kW and finally; c) Compliance, recovery, fees, and taxes.

Consumption is fairly straightforward in that it is a measurement of how much electricity you’ve used over the month. If you have 10, 100 watt lamps (which equals a 1,000 watts) and you leave them on for 1 hour then you have used 1 kWh.

Bill Demand is a function of the Peak Demand that you have used in a month. That is, it is the charge the utility passes onto you in order for them to meet your maximum amount of energy usage in a period of time. This is very important because the utility typically locks you into your maximum bill demand based upon the HIGHEST 30 minutes or an hour (varies depending on your utility) over the previous 11 months (or other period of time). You are effectively penalized for your worst period of performance, or highest peak usage, and that bill demand factor stays with you for 11 months. That can be very costly.

Finally, you have a variety of miscellaneous charges that are added to the bill that are not captured as part of the consumption (kWh) or Bill Demand (kW). Those typically contain meter charges, environmental compliance costs, Nuclear Construction Cost Recovery (5.8619% of the bill), Fuel Cost Recovery, Franchise fees, and taxes. Again, these can add up to quite a bit. (To see a complete breakdown of the rate plans and tariffs go to http://www.georgiapower.com/pricing/gpc_rates.asp)

(As an aside, Residential customers are typically not charged on a Bill Demand basis. However, they do still pay consumption charges and the other associated fees. Large Industrial customers, while having a published rate, sometimes have their own rate plans.)

It’s pretty confusing, right? Well, let’s take a typical customer’s bill and see what the PUBLISHED rate is and how that varies dramatically from what the customer’s EFFECTIVE rate is. As a rate payer your focus should be on the EFFECTIVE rate and how you can control it.

 

Here’s one of our customer’s bills from 2/11/10-3/14/10 (for privacy, we’ve removed any personal account information – click bill to see larger version):

Note that this customer is on a GPC PLM rate plan. To figure out his EFFECTIVE rate take the Cost of service for this month ($1043.56) and divide it by the total kWh used for the month (6960) and you get $0.150/kWh.

Now let’s take a look at our customer’s bill a year later for the period 2/13/11 – 3/14/11 (the period of time doesn’t correspond exactly but cost and usage should scale on a daily basis on average).

 

Using the same calculation as above, take the monthly cost of electricity ($1193.61) and divide it by the amount of kWh used (6880) and you get an EFFECTIVE rate of $0.173/kWh. That’s a 15% increase in one year. And, this customer has the benefit of having a 22 kW Solar PV system and an Empower Edge Energy Management system. His EFFECTIVE rate could be even higher.

So, what can be done to get a handle on Energy Cost for your small to medium size commercial facility? (Unfortunately, your tactics as a Residential Customer are really only to reduce your Consumption at this point.). The good news it that there are tactics and technology that can help you control costs but first you need to understand how your power bill is constructed.

1. Start reducing your consumption by ensuring that energy loads are turned off during hours when your facility is not occupied or when they are not needed. Utilize advanced lighting controls such as Wattstopper that turn on and off lighting loads automatically or install thermostats and HVAC controls such as Vykon that dynamically adjust temperatures and settings based upon occupancy and comfort levels. The savings to be recouped are significant.
2. Get your Bill Demand down by dramatically cutting your Peak Demand. This can be accomplished with advanced metering such as Eaton Power Xpert which gives you instantaneous information on energy usage. Combine this info with an intelligent energy controller such as the Vykon Jace and your ability to control you peak demand is greatly enhanced. Energy usage can be managed proactively instead of waiting for next month’s energy bill and then retroactively reassessing. It’s extremely important to control Bill Demand since, depending on your facility’s Load Factor, it can represent up to nearly 60% of your energy bill.
3. Change your rate plan. This is really advantageous to only a select number of customers and its important that you have a very good understanding of your energy consumption before you do this. Once you change plans you can be locked into it for two years. However, for some companies, there can be some significant savings to be had. For example, if you are 2nd or 3rd shift company or a restaurant that opens in the late afternoon or the evening, there are some advantages to moving to a Time of Use (TOU) plan. The reasons these can make sense is that the plans reward you for shifting your energy usage to those periods of time that are different from the peak demand times of the utility (typically after 7 P.M.)

Conclusion

The takeaway is that you do have control over your energy costs. Large facilities have been deploying these techniques for years. In the past, on site generators were used to “shave” the energy usage of a particular facility which in turn saved them from expensive peak demand charges. But now, thanks to the combined trickle down effects of technology, memory, storage, and programming, effective Energy Management is now within the realm of the small to medium commercial customer.

In fact, for some customers the Return of Investment (ROI) can be significant. In addition, more financial and leasing institutions have embraced Energy Management and Energy Services Contracts as a strong, viable program. Some lease programs require a minimal security deposit and the energy savings alone can cover a significant portion of the lease payment. For those customers who wish to simply pay for it outright, Section 179 allows for 100% deduction of equipment in year 1.

Contact Empower Energy Technology if you wish to learn more about Energy Management and how it can save your facility money. Call Mark Bell at 404.681.3270 or send an email to mbell@empoweret.com.