Electrical Billing and Rates

1. Electrical Billing and Rates MAE406 Energy Conservation in Industry Stephen Terry

2. Where Does Electricity for Industrial Plants Come From? • Most from Investor Owned Utilities (IOU’s) like CP&L and Duke Power • Electricities and NC Co-ops in small towns and rural locations • May be generated on-site in Combined Heat and Power CHP) applications

3. How is Electricity Generated? • Nuclear plants are baseloaded since they are cheap to operate and need long hours to pay back initial investment • Coal / Oil / Gas Boilers – moderate cost • Natural Gas Turbines – expensive to operate, used only for peak use

4. Power vs. Energy • Power is a rate quantity - 1 kW = 1 kJ/sec • Energy is measured using kJ or kWh Note: 1 kWh = 1 kJ-hr/sec = 3,600 kJ Energy =

5. Parts of an Electric Bill • Service Charge: Constant regardless of electrical energy use. Typically between $5 and $500 per month • Energy Charge: charge based on amount of energy (kWh) used • Demand Charge: charge based on highest power required during interval • Taxes, Rebates, and Other Charges

6. Residential Bill • Small service charge: for CP&L = $6.75 • Energy Charge: about $0.095/kWh for energy used in the summer and $0.085/kWh for winter. • Demand Charge: does not apply since household is small user • Taxes, Rebates: varies with user

7. Commercial / Industrial Billing • Industrial plants can use 1,000 kW or more of power. • Power company must build capacity to meet the maximum load, even if it is used only a few hours per day  air conditioners in the summer. • Peak loads occur infrequently and must be met with expensive generation equipment (i.e., gas turbines), which increases cost to generate power.

8. Demand Intervals

9. Billing Demand • The demand interval is usually 15, 30, or 60 minutes (see rate schedule). • The maximum value of the power for all intervals in a month is the peak demand. • Billing demand = peak demand, unless it is well below historical peaks or contract demand.

10. Demand Ratchet Clause • Some older rate schedules specify that the billing demand is the maximum actual demand for the last 12 months. • It can also be either the current month’s peak demand or 80% of the contract demand. • This is so power companies can recoup investment in power generators.

11. Industrial Electric Bill • Based on rates from CP&L Large General Service 97 rate for a typical industrial plant energy and demand usage.

12. Time of Use Rates • It’s more expensive to make power during the day when everyone wants it rather than at night. • Time of Use rate rewards customer using power at night with lower rates at night. However, rates during the day (on-peak) and the peak demand rate is usually higher.

13. Time of Use Rate Example

14. TOU Example cont’d • Energy used in the blue shading is charged at on-peak rates ($0.03048/kWh for CP&L Rate 97) • Energy used in the red shading is charged at off-peak rates ($0.02548/kWh) • On-peak times are for non-holiday weekdays. Weekends / holidays are off-peak • Billing demand is determined to be maximum power used during any on-peak interval

15. Sample Bill – TOU Rate

16. Notes: • TOU bill is more in this case. What is usage factor (is this a 1, 2, or 3 shift plant?) Usage Factor = kWh / kW demand = 350,000 kWh/ 1,000 kW = 350 hrs/month = 16 hrs/day Plant probably operates two full shifts, maybe three shifts – with lower production at night.

17. Notes: • Time of use benefits companies that work seven days per week and manufacture at night. • Costs can be reduced by scheduling operations around peak periods – load shifting. • Costs can be reduced by utilizing thermal storage for HVAC system and operating equipment during off-peak periods.

18. Other Types of Rates • Tiered Rate: Example: Energy Charge – First 10,000 kWh - $0.05/kWh Next 25,000 kWh - $0.04/kWh Above 35,000 kWh - $0.03/kWh Plant using 100,000 kWh would have an energy charge of $3,450 or $0.0345/kWh

19. Duke Rate I • Double tiered schedule based on ratio of kWh/kW demand, then sub-tiered based on energy usage within kWh/kW tier. • These rates are difficult to compute, but generally reward companies that operate more hours and have flatter power profiles.

20. Average Energy Charge • Many plants will use an average energy rate in evaluating projects, which includes energy and demand costs. • This is not accurate since equipment affected may not operate all of the time.

21. “Average” Errors • Example 1: Turn lights off at night. For a time of use rate, what is proper energy charge if lights are turned off at 11 pm and back on at 6 am? How about demand? • Example 2: Adding a new air conditioner to handle peak cooling. When does unit operate and what is energy cost? How about demand?

22. Power Factor • Some utilities will charge for power factor. • Power factor is the phenomenon of peak current draw being out of phase with peak voltage draw. • This causes the power company to have to supply more power than is registered on the meter. • Major causes  electric motors that draw current for magnetizing the windings (inductive loads)

23. Power Factor • Solution: install capacitors to offset inductive loads • Check to see if you’re charged for power factor first, most NC companies aren’t!

24. Other Charges • Fuel Riders – let power company adjust for highly varying prices for their fuel • Facilities Charges – extra equipment installed on-site, like a larger transformer or power fed from two separate lines for redundancy.

25. Deregulation • Over the past 15 years, some state have deregulated electrical power. • This means that billing for the three basic components are separate and users may choose their own suppliers: • Generation • Transmission • Distribution

26. Deregulation • Virginia has partially deregulated its markets and will fully deregulate in 2010. • NC has no plans to deregulate anytime soon • Experience has shown that most people see an increase in costs with deregulation because companies must compete with high cost of electricity to places like California.

27. Conclusions • Most power companies bill energy and demand. • It is important to know your rate, on-peak hours and all costs. • Use proper energy and demand rates for computing energy costs and savings.