UNDERSTANDING UTILITY COSTS

3

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Utility Bills, Rate Schedules,

Data Analysis

This section provides information about utility bills

and rate schedules, and terminology relating to

utility billing. Information about analyzing historical

utility consumption data and discussion about

possible causes of anomalies or high consumption is

also covered in this section.

The utilities and services covered in this section

include:

• Electricity

• Natural gas

• Oil

• Propane

• Water and Sewer

• Garbage

UNDERSTANDING

UTILITY COSTS

Electricity

The following is an overview of electricity terminology and some insights into electricity use analysis. Figure 3.1 below is a sample electric bill. The bold italic comments provide explanation of the bill components. Terminology used on the bill, such as “demand,” is discussed in more detail later in this chapter.

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FIGURE 3.1

Sample Electric Bill

Rate schedule #

Meter number that appears on the front of the meter Present reading

Previous reading

Present read date (28 day period) Previous read date Meter multiplier used

Electric demand for this month Electric consumption (kWh)

(Present Read - Prev Read) x

Reactive power = number of kWh with power factor below 100%* Total amount due for the current month

Demand charges Base charge Consumption charges

Reactive power charge

Electric Meters

All electricity used at a facility goes through a meter. Some equipment may have a separate meter, such as for large irrigation pumps, stadium lighting or a scoreboard. In most cases each portable building has its own electric meter.

Learn to read your electric meter. This will allow you to spot check the energy consumption. This is done by monitoring the meter to determine the energy consumption for a certain period. For facilities that do not have an energy management control system (EMCS) this approach will allow you to develop daily load profiles for any facility.

FIGURE 3.2

Consumption kWh Dials on an Electric Meter

When reading the meter, if the pointer is between the numbers, read the lower number.

When visiting a facility, read the meter. Then check it again after 10 to 20 minutes to determine the electrical load for that period of the day during that time of year. Spot-checking a meter like this several times during a typical day will help you develop load

profiles for each facility. If your facility has electronic digital

meters, your utility may be able to provide daily load profiles. Load profiles are useful in understanding how energy is consumed at a facility. This information will become even more important when you begin making purchases in a deregulated energy market.

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Load Profile: Chart of electrical demand over time. Usually documents distribution of building heating, cooling and electrical loads.

kWh Reading 6159 kWh Reading 6773 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 ₁ 2 3 4 5 6 7 8 9 0 ₁ 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 9 8 7 6 5 4 3 2 1 0 ₉ 8 7 6 5 4 3 2 1 0 9 8 7 6 5 4 3 2 1 0 ₉ 8 7 6 5 4 3 2 1

Rate Schedules

Electric utilities typically offer several different “rate schedules” to their customers. These include a residential rate, a commercial rate, a large commercial rate, an industrial rate, an irrigation rate, and sometimes a separate rate for street lighting. Some utilities may have more than one rate that would be applicable for a particular facility.

The difference between these rate schedules is that the utility will charge different rates for different “chargeables.” Residential rates, for example, do not typically charge for electric demand. An industrial rate, on the other hand, may charge for consumption, electric

demand and power factor as discussed below. Copies of the different rate schedules that are offered can be obtained from your utility.

FIGURE 3.3

Consumption kWh Meters

with Demand

kW demand recording arm (black)

kW demand recording arm (red) indicates actual demand at that particular time (may not be on same meters) Kilowatt hour recording dials Meter seal Meter constant (if any) Meter number Kilowatt hour recording dials Meter constant (if any) Meter seal Meter number

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FIGURE 3.4

Sample Electrical Rate Schedule

Consumption Charge—Kilowatt-hour (kWh)

This is a charge for the amount of electricity consumed. In the Northwest, rates vary from less than $.01 to more than $.06 per kilowatt-hour (kWh).

Most utilities have commercial rate schedules with declining “block” charges. The more energy you use, the cheaper it gets. For example;

• first 20,000 kWhs billed at $.0565/kWh • next 50,000 kWhs billed at $.0450/kWh

• greater than 70,000 kWhs billed at $.0415/kWh

An increasing block rate does the opposite. The more energy you use, the more it costs per kWh.

Declining block rates are more common for commercial

customers. Increasing block rates are very rare. Typically, if you do find an increasing block rate, it will be a residential rate schedule.

Some utilities have seasonal rates, with the cost per kWh going down during the warmer months. This is because the Northwest is a winter peaking region. Electricity usage goes up in the winter. The basic law of supply and demand causes utilities to charge a higher rate during the winter months, and a lower rate during the summer months.

Factors That Can Increase Electrical Consumption Costs

1. Equipment (HVAC, kitchen, etc.) is left on when not needed 2. The energy management control system (EMCS) is not

programmed to match the occupancy patterns

3. The EMCS battery, which protects the customer-programmed schedules, has failed and the factory installed default program is operating

4. Providing 100% outside air for ventilation during cold weather conditions

5. Leaky ducts in electrical HVAC systems 6. Engine block heaters operating uncontrolled 7. The meter is read incorrectly

8. Incorrect multiplier applied to your meter reading

Although not yet common in the Pacific Northwest, utilities are moving toward a less expensive charge for electricity consumed during the “off-peak” part of a day. For example, between 9 p.m. and 6 a.m. (off-peak hours) the rate per kWh could be $.02 less than the rate for electricity consumed between 6 a.m. and 9 p.m. (peak hours). Such off-peak rates make strategies such as thermal storage and earlier building warm-up more cost effective.

As deregulation of electricity becomes more widespread, the option of “time of day” off-peak rates will become more available.

Demand Charge

This monthly charge is billed for your peak kilowatt (kW) use, averaged over a set time period (usually 15 to 30 minutes). Each month, when the meter is read, the demand indicator is reset to zero. Demand charges in commercial rate schedules vary greatly from no charge to more than $6 per kilowatt (kW). Some utilities in the Northwest now offer an off-peak demand rate.

Example of an Off-Peak Demand Rate

• First 50 kW - no charge • Everything greater than 50 kW:

$0.63 per kW of billing demand per month during “off-peak” periods as defined by Bonneville Power Administration $4.50 per kW of billing demand per month during “on-peak” periods as defined by Bonneville Power Administration

Some utilities have a “ratchet” charge on the demand. The highest monthly demand experienced for the year becomes your annual peak. The annual peak is then used to “ratchet” the monthly demand peaks for the next 11 months. For example, the minimum demand charge for any month is 60 percent of the highest demand in the preceding 11-month period. Demand is a very important target for reduction if your utility has a ratchet clause on the demand.

Example of a Ratchet Demand Charge

Your demand in December is 800 kW, and you pay $5 per kW. You will pay a $4,000 demand charge for December.

The following June, the demand meter reads 150 kW. You are charged $2,400 rather than $750.

(60% x 800kW = 480kW , 480kW x $5 = $2,400)

This increase in demand cost of $1,650 ($2,400 - $750 = $1,650) is due to the ratchet clause in the rate schedule. This same ratchet will be charged in all the other warm months, even when demand is low.

Demand: The rate of electrical usage measured over increments of time (usually 15 or 30 minutes). Measured in kilowatts (kW).

The list below outlines several situations that can increase electrical demand. If they occur during peak or near peak conditions, they can cause a “spike,” or sharp increase, in the electric demand. Peak conditions occur when all or most of the facility lighting is on and there is a peak heating or cooling condition, such as morning warm-up during cold weather or afternoon cooling during hot weather. The reference to heating only applies if the heating is electric. A spike in the demand will result in additional costs on the utility bill and, with some utility rate schedules, may impact demand charges year round.

Factors That Can Increase Demand Costs

1. Turning on football field lighting if it’s on the same meter as adjacent facilities*

2. Operating electric kiln*

3. Operating a large motor such as on a sump pump or sewage lift station*

4. Turning on all the electric resistant heating units at the same time during warm-up

5. Extensive use of portable electric heaters

6. Providing 100 percent outside air for ventilation during cold weather conditions

7. A large electric domestic hot water tank that operates all (or most) heating coils any time it heats water 8. Starting all the kitchen electric ovens simultaneously 9. Starting engine block heaters simultaneously 10.The meter is read incorrectly

11. Incorrect multiplier applied to your demand reading

* if during facility peak load periods

Base or Basic Charge

The base charge is a “minimum cost of service” charged for each utility meter. A commercial base charge can range from less than $5 to well over $100 per month. The base charge could become important for those services that are not used for several

consecutive months, such as field lighting or irrigation pumping. It may be cost-effective to cancel service to save the base charge for the months of non-use. The re-activation charge should also be considered in your cost-effectiveness calculation.

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RESOURCE DISK

measures.doc: Annotated list of resource conservation opportunities.

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Power Factor

Power factor is a measure of the apparent power compared to the real power. This can be a difficult concept to understand. The important thing to note is that utilities will charge extra if a facility has a power factor problem (for example, below 90 percent). It may show up on the bill as “KVAR HOURS” or “PFA” (Power Factor Adjustment).

Facilities with a large number of motors, light fixtures with magnetic ballasts and other equipment that have capacitors, can have significant power factor charges. Some plug-in items, such as computers, can also have a negative impact on the power factor of a facility. If power factor is a big problem, you can install components on the electrical distribution system of a facility to help correct the problem. These devices can be quite expensive. But they may be cost-effective if power factor charges are a significant part of the bill. Contact your utility representative to discuss options for correcting power factor problems.

Analyzing Electric Utility Data

Electrical use profiles from different facilities can have different shapes based on the type of heating (electric or gas) and cooling equipment (if any), and the other electric loads (computers, pumps, dryers, etc.)

Base load consists of non-weather dependent loads such as

lighting, fans, plug loads (computers, etc.) and electric domestic hot water.

Variable loads are typically weather related, such as heating

and cooling loads. Other loads that could be considered part of the “variable load” are loads that are not a part of normal operations (electric kilns) and seasonal loads (stadium lighting). You can better determine areas of potential savings by graphically displaying monthly electric consumption and electric demand profiles. Figure 3.5 illustrates a demand and consumption profile with base and variable loads.

Base Load: Demand for electricity which is consistent and is unaffected by variables such as seasonal climate. Variable Load: Demand for a resource which fluctuates over a period of time, usually a year.

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APPENDIX

Technical Information: See “Reducing Power Factor Cost” for a more complete explanation of power factor

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This is the profile of an all-electric school. Note that the

consumption and demand are both high in the winter. However during the summer, consumption fell but demand rose. This was caused by cooling equipment used on just a couple of hot days. Even brief peaks can affect overall monthly demand, increasing costs. April and October are very close to representing the “base load” because minimal heating and cooling happens during those months. If this were a gas-heated facility, there would be much lower electrical consumption and demand during the winter. Electrical consumption would increase some during the winter due to longer periods of lighting and use of electric resistance heaters.

FIGURE 3.5

Sample Annual Demand and Consumption Profile

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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Natural Gas

The following is an overview of gas terminology and some insights into gas use analysis.

Therms

The therm is a unit of measure related to natural gas consumption. One therm is equivalent to 100,000 British thermal units (Btu). Like electricity, gas rate schedules for commercial accounts typically have a declining block rate. The more you buy, the cheaper it gets.

Base Charge

Similar to electricity, natural gas has an associated base charge or meter charge. This will vary depending on the utility and the size of the meter. If operations have changed significantly at a facility and a smaller meter could be installed, there may be considerable savings in base charges.

If the operation is seasonal, such as an outdoor pool, there may be some advantage to canceling service during periods of non-use. If you consider this approach, include the cost of re-activation in your cost-effectiveness calculation.

Rachet Charge

Some natural gas utilities have a “ratchet” on consumption. The charge in the rate schedule is based on a percent (say 40 percent) of the highest month’s consumption in the past 11 months. This type of rate schedule is typically reserved for large commercial users and is designed for facilities with a relatively even annual load. If, for example, a facility uses 20,000 therms during the coldest winter month, this would then “set” the charge for the next 11 months. During the summer months the boilers are turned off and gas is only used for some kitchen equipment and some domestic hot water heaters. The consumption may drop to 2,000 therms for a month. However, because of the 40 percent ratchet clause on the rate schedule, the facility is charged for 8,000 therms (20,000 x 40%). Study rate schedules and your facility gas use profiles closely to determine which rate schedule is best for each facility.

Firm vs. Interruptable

Natural gas companies are limited in their capacity to deliver gas by the capacity of the main gas transmission lines. During extremely cold conditions, shortages can occur. To accommodate customers with different needs, gas companies offer gas as a “firm” or “interruptable” commodity. A firm gas rate costs more than an interruptable rate. If you select a firm rate schedule, the utility will

not cut service to you due to high regional demands for gas. Some gas companies offer different degrees of “interruptability.” Those customers interrupted first, as specified in the rate schedule, will likely pay the lowest price for gas.

The price for interruptable gas is typically 15 to 30 percent less than firm gas, depending on the volumes used and the local gas company. Facilities that have, or can add, a back-up source of fuel (such as oil or propane) should consider buying interruptable gas. In the Northwest, gas interruptions have been rare. However, if you are on an interruptable rate, are notified of a curtailment, and you can’t comply because your back-up systems are not working, you will pay a penalty as specified in the rate schedule.

Factors That Can Increase Natural Gas Consumption Costs

1. Equipment is left on when not needed (is uncontrolled) 2. The energy management control system (EMCS) is not

programmed to match the occupancy patterns 3. The EMCS battery, which protects the

customer-programmed schedules, has failed and the factory installed default program is operating

4. HVAC system is providing 100 percent outside air for ventilation during cold weather conditions

5. Leaky ducts in gas-fired ducted systems

6. Gas kitchen equipment operating when not needed 7. There is a major leak in the heating distribution lines

from steam or hot water boilers 8. The meter is read incorrectly

9. Incorrect multiplier is applied to your meter reading

Fuel Oil

Fuel oil is typically sold in gallons. The two most common types of oil sold are #2 or diesel, which is a light oil and #6 or bunker C which is a heavy residual oil. The bunker C oil typically requires a heater to keep the viscosity low in the storage tank. Boilers that use the heavy oil usually have a second heater (electric) at the burner to further heat the oil before combustion.

Because oil is sold by individual dealers, the price can vary. Usually, the larger the volume purchased, the lower the price per gallon. For customers with large tanks (more than 10,000 gallons) the price reduction can be significant.

If you have a large oil-heated facility (greater than 40,000 square feet), it may be worthwhile to purchase oil on a contract that is put out for bid. Establishing a contract based on low bid will provide the best price as well as a price guarantee. Be sure to specify the type of oil needed. Low sulfur oil is the best, but is more

expensive. Also check the reliability of the bidders.

There may be other options available to get a good price for oil. It may be available to your organization through your state procurement office, such as the Department of General Administration, Office of State Procurement (OSP) in Washington State. OSP contracts with suppliers to get a good price for state facilities and other public entities that subscribe to OSP.

To track oil consumption, have a facility operator or maintenance staff “stick” the tank (check the level) daily or at least weekly, at about the same time, and record the level. This will allow you to profile consumption and make it easy to recognize problems that may occur.

Factors That Can Increase Oil Consumption Costs

1. Equipment is left on when not needed (is uncontrolled) 2. The energy management control system (EMCS) is not

programmed to match the occupancy patterns 3. The EMCS battery, which protects the

customer-programmed schedules, has failed and the factory installed default program is operating

4. HVAC system is providing 100 percent outside air for ventilation during cold weather conditions

5. There is a major leak in the heating distribution lines from steam or hot water boilers

6. A leak in the underground tank or lines to the boiler

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APPENDIX

See Helpful Contacts for a contact number.

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Propane

Propane or LPG (low pressure gas) is sold in gallons and is provided by a dealer. Some dealers have tanks available to lease. However, leasing the tank locks you into a commitment to one dealer and often a higher price.

Unlike oil, propane tanks are always above ground. Customers with large tanks (greater than 10,000 gallons) usually can get a very good price. If your facility is large enough, pursue a bid price for the best deal.

There may be other options available to get a good price for propane. It may be available to your organization through your state procurement office, such as the Department of General Administration, Office of State Procurement (OSP) in Washington State. OSP contracts with suppliers to get a good price for state facilities and other public entities that subscribe to OSP.

Water and Sewer

Water is typically sold by the local municipality. It can be sold in several different units. Hundreds of gallons, thousands of gallons, hundreds of cubic feet and acre feet are the most common. Although water is usually relatively inexpensive, local or seasonal water issues may impact the cost of your water. Penalties can also be incurred if you don’t abide by restrictions during critical water periods.

If your facilities are connected to a municipal wastewater system, sewer charges are usually based on the water consumption read from the meter. The reason for this is that water used at your facilities will end up in the sewer. Sewer rates can vary greatly depending on the type of wastewater treatment provided. Some sewer rates are more than four times higher than the water charge.

Water uses that bypass the sewer are: • Irrigation

• Most cooling tower make-up water

• Most boiler water make-up

• Condenser water that empties to a storm drain not connected to the sewage treatment plant

Factors that can increase propane consumption are the same as those for oil.

Make-Up Water: Water added to the system due to leaks, evaporation, blow-down or consumption (eg. humidifiers).

APPENDIX

See Helpful Contacts for a contact number.

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For these uses, a separate meter or a submeter may be

appropriate. Negotiate with your water provider to establish an agreement that allows for water that does not go to the sewer. A submetered water volume could be subtracted from the main meter reading to give a corrected volume for sewer charges. If this kind of disparity has been going on for some time (i.e. sewer charges on irrigation water), you may be able to negotiate a refund.

Factors That Can Increase Water Consumption Costs

1. Leaks (domestic use or irrigation) 2. Incorrect reading of the water meter

3. Plumbing fixtures stuck in the on (or flush) position 4. Auto-flush urinals with high-volume flushing

FIGURE 3.6

Sample Water Meters

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Garbage

Garbage service can be provided by public or private entities. For commercial-sized facilities, dumpsters are usually provided, and the charge is based on the volume of the dumpster used and the number of times emptied per week. The unit of measurement is usually cubic yards. Garbage service charges can be significant. Before you consider using a trash compactor as a way to reduce volume and costs, check with your refuse hauler. Garbage may be charged on a weight basis as well, and the compactor will not reduce the weight, only the volume. You could get a price break for fewer pickups. However, you may not get a reduction for a smaller dumpster if you are compacting and the facility remains on the same pick-up schedule.

Many garbage service providers also provide free recycling pickup. Separation of recyclable materials coupled with reduction in the dumpster size and/or pickup schedule can lead to substantial savings.

Factors That Can Increase Garbage Costs

1. Illegal or unauthorized dumping into facility dumpsters 2. Service provided for partially filled or empty dumpsters 3. Recycleable items in the garbage

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A P P E N D I X

Audits/Surveys.Conducting Waste Characterizations: How to conduct waste characterizations.

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RESOURCE DISK

wst_char.xls: Waste Characterization Data Sheet.

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