Electrical Billing and Rates
MAE406
Energy Conservation in Industry
Stephen Terry
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
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
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 =
 Power  d (time)
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
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
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.
Demand Intervals
1200
Power, kW
1000
800
600
400
200
0
12:00 AM
4:00 AM
8:00 AM
12:00 PM
hour of day
4:00 PM
8:00 PM
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.
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.
Industrial Electric Bill
 Based on rates from CP&L Large General Service 97 rate
for a typical industrial plant energy and demand usage.
Charge Type
Usage
Rate
Service
Charge
$500.00
Energy
350,000 kWh
$0.036335
$12,722.50
Demand
1,000 kW
$11.25
$11,250.00
Taxes
Total
3% of bill
$734.18
$25,206.68
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.
Time of Use Rate Example
1200
Power, kW
1000
800
600
400
200
0
12:00 AM
4:00 AM
8:00 AM
12:00 PM
hour of day
4:00 PM
8:00 PM
TOU Example cont’d
• Energy used in the blue shading is charged at onpeak rates ($0.03048/kWh for CP&L Rate 97)
• Energy used in the red shading is charged at offpeak 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
Sample Bill – TOU Rate
Charge Type
Usage
Rate
Service
Charge
$500.00
On-peak Energy
150,000 kWh
$0.03048
$4,572.00
Off-peak Energy
200,000 kWh
$0.02548
$5,096.00
Demand (summer)
1,000 kW
$19.56
$19,560.00
Taxes
Total
3% of bill
$891.84
$30,619.84
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.
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.
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
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.
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.
“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?
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)
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!
Other Charges
• Fuel Riders – let power company adjust for highly
varying prices for their fuel
• Facilities Charges – extra equipment installed onsite, like a larger transformer or power fed from
two separate lines for redundancy.
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
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.
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.