- Section H- Energy Rates & Tariff (Rate) Structures P08¢ Understanding Energy Rates + Rates directly impact © Cost savings from energy management activities © Cost of energy + Rates are often © Not well understood © Not well explained by suppliers © Complicated 2017-0317Types of Energy Pricing + Fed (Smath)o ftrtes (SAN Ste r Sn) + Block rates akon SS ocnguects - Wht gps SO foe © irate an) A HE « Twmatlne ten aoe 2 acer 9 Pat pn er te « Gesenal ns ® Drpaticeon oaeaes Shieh arm Freo9e Types of Energy Pricing + Transmissicn rates fo Primary versus secondary © Price related to votlage (electric) or pressure (938) + Demand rates ‘© Rate of energy demand rather than energy + Interruptible rates ‘9 Demand Response + Additional causes ‘0 Electie paver factor (08 @) penalty ‘9 Demand ratchet penalty 2017-03-17Electric Rates / Opportunities + Utility Rate Structure Incentives ‘© Demand Reductions “Tine of day rate oF rea tine pricing Seasonal rato Power Factor Corection Primary vs, secondary meting bates and Rate riders (electric heat, etc) + Potential approaches © High efeency equipment ‘© Scheduling for of peak use ‘© Demand iting 2 owerno FE Electricity Rate Structures + Electricity is the most complex energy rate because of Peak Demand ‘© Measured in KW or MW (or KV) «© Charged monthly: $/kWimo or $ikVA/mo * Algo weten Siem oF SRV © How fast electricity (electrical energy) flows into a facility + Faster the ow the bigger the wires, vansfermer, generators, et. + Demand Charges can also exist for natural gas, water, chilled water and steam + Easiest to understand part of electric rates is the energy cost in $ per kWh 2017-43-17Electricity Rate Structures + Demand © Other terms: load, power © Billing demand + Measured at customer's meter +15 minute demand window or interval is typical ‘© Oner demand interval include 30 minute and 4 hour + Notinitantaneous or rea time Fro9ee Electric Utility Load Swings + Energy utlities (electric and naturel gas) experience varying seasonal loads © Summer peak driven by cooling load or © Winter peak driven by heating load Electric utilities experience widely varying daily loads, for example ‘© Morning peak: 10-10:00 am © Evening peak: 5:00-9:00 pm Loads drop: ‘After 9:00-10:00 pm © Loads lowest Midnight to 6:00-7:00 am PRc80¢' 2017-03-17dcr fr Tp cyt rad EGiue Regulated Rate Structures For traditional utlities- Generation, Transmission (T) and Distribution (D) are usually combined. 3 charges are common for large customers: 1. Customer Charge (ypicly Ra charge for each class] 2. ‘Energy Charge (SiN) + Inctudes uti fuel cost and O&M cost + May of may not include fuel adjustment Kh 3. Demand Charae ($KWIbiling period or SVAMiling period) Options: Demand ratchet, power factor, voltage levels, interruptible rates, taxes, seasonal ortime-o day rates, F098e 2017-03-17Regulated Rate Structures For traditional utilities as well as T&D utilities in the deregulated environment- + Seasonal utilly system demand peaks ‘© Some utilities respond with differing summer and winter prices for energy and demand + Daily utility system demand peaks © Peak petiod (e.g. 10 am. to 8 p.m.) has higher rates © Off-peak for rest of day has lower or no charge "Shoulder period" charges sometimes are found FPrc90e Regulated Rate Structures + Peak and Off peak rates and others are time-of-day or time-oFuse rates. + Real-time pricing is a recent innovation 2017-43-17Basic Deregulation Complications + Two billing sources (T&D and generation separate) © Local utility + Stil regulated, bills resemble traditional bils + Bills for distribution, its own local transmission, and other transmission ‘© Supplier—generally bil in kWh + May get two bills or combined bill from utility © Billing periods may differ VP 098e Another Deregulation Consideration + Independent System Operators (ISO) © Federally controlled + Others operated by Power Pools (PP) © Locally controlled + May add capacity charge to bil from local T&D utility 2017-03-172017-03-17 Regulated Rate Structures + Future will see more use of real-time pricing is 80! Cost Analysis for Any Situation + Key issue—is the cost component priced in kWh or both kWh and kW?? + Find out on the billDemand Ratchet + Penalty for unusually high spike in demand 6 Biled demand will never be less than X% of the highest measured demand in the past N months + X varies from 50% to 100% + N-can vary; 11 months is common + Example: Billed demand will be the maximum of the current month's demand, or 75% of the largest demand in the previous 11 months. PR oee| Power Factor (cos @) Charge Penalty typically levied in two ways. . Billed Demand = Actual Demand x 2% Level PE Facility PF ‘© Floor level is set in tarif (0.85 is common + Penalty is for facility PF < than floor level 2. Billing directly for kVA, $/kVA/mo, 2017-03-17 A FrmslerShySample Electric Rate Structure Example 1 Rate Tariff Structure (Charges per month): + Customer charge $50.00 per month + Energy charge $0.09 per kWh + Demand charge {30.50 per KW per month + Fuel adjustment $$0.025 per kWh + Taxes Total of 8% on entire bill VP c08e| Bill Calculation Example 1 * Alarge office building receives service from its electric utility at the above general service demand rate structure, The electric energy use and demand for this company for one month are: © Energy Consumption 150,000 KWh © Metered Demand 525 KW + Find the cost of the electric bill for the month. 2017-03-17 10Bill Calculation Example | - Solution = [850] + [150,000 kWh X ($0.09 + $0.025)/kWh] + [($8.50/KW) X 525 kW] = $21,762.50 X 1.08 (tax rate) = $23,503.50 + Blended rates are the ratio of total cost to total kWh consumption. © For example the facility above has a blended energy ‘cost of ($23,503.50)/(150,000 kWh) = $0.1587KWh, + Electrical energy saved during off-peak hours © Use is not reduced when peak demand charges ‘occur, thus savings off peak are energy-related only and are $0.1242/KWh (including fuel adjustment) + Aproject that reduces peak demand only would save the company $9.18 per kW par month. © Pure demand savings not captured by blended rates F—cc30e! 2017-03-17 1"Sample Electric Rate Structure Example 2 Rate structure (Charges per month: + Energy cost: $0.09/kWh + Demand cost: $6.50/KWimo = $6.50/KW-mo + Fuel adjustment: $0.025/KWh + Power factor penalty: $6.50/kVA/mo = $6.50/kVA-mo © OR: KWhilled = kW x (0.85/PF) ‘+ Ratchet clause: Monthly Demand Charge is found by selecting the Maximum of (kW this month from the meter reading, or 70% of maximum kW in last 11 months bills) + Sales tax is an additional 8% ofthe total bill © See the examples on the next few pages FP—090e Example 72 Cost of a S0-minute Mistake: ‘A production facity has four large machines with a demand of 200 KW each. The machines could be controlled by a computer which would limit the total demand to 400 KW at any one timo, ‘This company limits the use ofthe machines by operational policy which stats that no more than two machines should be tured on at any given time. This room is separately metered {rom the rest ofthe facility, and the other aads are very minor ‘One moming at 8:00 am, a new employee tumed on the two ‘machines, At 8:30 am the plant foreman noticed that too many ‘machines were running and quickly shut down the extra two ‘machines, What oid this mistake cost the facility? F—08¢ 2017-03-47 2Immediate Cost of Mistake “The immediate cost on the month's electric bill has two components. Including Sales Taxes- Assume a demand rate of '$[Link] or the month plus 8% tax = $7,02/KWV and an energy rate ‘of ($0.08 + $0,026 Jkwh plus 8% tax = $0.1242/KWh, then the Immediate cost nefease Demand cost increase 400 KW x 0.5 be x $0.1242/KWh 524.84 Energy cost increase Total bil increase this mont 2,808 + $24.84 = $2,892.84 Note: May be able fo negotiate a one-time mistake forgiveness or forbearance. Ask your uly account representative P08 Ratchet Penalty Some utility rate structures include a demand ratchet. For xampl, for a 70% ratchet, there would be a minimum demand {assessed forthe next 11 months of 70% ofthe highest demand in the previous 11 months, regardless of actual metered demand. 0, for our example, in the second through 12th months of the future, assuming the facility goes back to a 400 KW demand, the peak demand in each of those months wil be 800 }W trom the. fatchet rate. Thus, there will a penalty for the next 11 months of 160 KW, found from: (070800 419-400 KW: DRI Pesaty) ‘This wou increase the cot of the mistake a8 oo: Tell cost of mistake (annua = soenae4 + s1225620 =515,18804 (es) 2017-03-17 2Sample Electric Rate Structure #3 Secondary service (service level 5) + Customer charge §151.00/bill (monthly) * Demand charge applicable to all kWimonth of bling demand: 9 On-peak season $13.27/KW-mo © Offpeak season $4.82KNmo + Definition of season: 9° On-peak season: Revenue months of June-October of any year © Offpeak seacon: Revenue months of November of any yesr through May of he succeeding yea : Froee + Energy charge: © First two millon KWh 5.528 kWh © AlLKWh over two ailon 5.113 g/kWh, + Power factor clause: ‘0 When the customers average power factors ess than 80%, he Bling Derrand shal be determined by mulipying the metered demand by 0.80 and dividing by the actual average power factor as a decimal racion + Fuel adjustment: «© Avatiable amount set by the utiy to alow them to recover a thelr fuel costs + 65% Ratchet Clause... Billing Demand is the higher of 6 The Current Monts (power-factor corrected) kW; OR © 65% ofthe highest KW during the past 11 months e FP c80e¢! 2017-03-17 4Bill Calculation Example 3 + Using the rate schedule above (Service level: ‘Secondary-service level 5), calculate the September bill {or this company: + Month: September Actual demand 250KW © Consumption 54,000 Wm © Previous high biled demand (July) S00 KW © Power factor 75% Tax 60% + Fuel adjustment: 1.15 ¢/kWh (Calculated by the utility according fo the formula in the rate schedule.) 3 Freaoee’ + Asa frst step, calcuate the demand 4. Actual demand adjusted for PF correction 2. Maimum demand by ratchet clause + Power factor carrction PF corecid demand » actu! demand »(.80/PF) = 250 (0.800 75) = 266.7 + Minimum demand charge (ratchet clause) 00 KWs0.85 = 32540 + Final bled demand is higher value = (286.7 WW or 225 KW) = a25 KN (oe =f tere was no PF cretion you woul comgare actual demand wih Mhomnzimum damand carpe agusted fom rachel cause). 2017-03-17 6*+ Calculate demand charge (on-peak season) = 325 KW $13.27/KW = $4312.75 * Caloulate energy charge = 54,000 kWh x $0.05528/KWh = $2,985.12 * Calculate fuel adjustment = 54,000 kWh * $0.01 15/KWh = $621.00 + Total energy and fuel adjustment charges =$3,606.12, + Customer charge = $151.00 2 G~080ee! + Total charge before sales tax = $4,312.75 + $3,606.12 + $151.00 = $8,069.87 + Sales tax = $8,069.87 «0,06 = $484.19 + Total 8,069.87 + $484.19 = $8,554.06 F—cee'! 2017-03-17 62017-03-17 Cost Management Opportunities + Consider third party suppliers if deregulated + Check bills for errors periodically + Check for best tariff from utility periodically + Pay only applicable taxes and fees + Avoid monthly ate fees © APR > 12 times the monthiy rate (expensive overtime) + Use the account representatives Canal with niaaes, minsersarcns, an un ates «© Think of uty account representative as your"parne not your er 7