Demand Charge Reduction - Case Study
We were pleased to have been able to assist a client reduce their energy expense by providing an engineering study.
The study was aimed at providing a manufacturing client with the opportunity to avoid inflated demand (kW) charges that their utility company imposes on facilities that close down but still have electricity service active, as might be required if the customer wants to offer the real estate for sale.
Most utilities have a delivery tariff rider that says that they can bill a customer delivery charges using the greater of their actual peak demand or at a minimum percentage of their greatest peak demand, over the last 12 months. For example, Oncor, (the incumbent utility in north Texas), has a delivery tariff that allows them to use the greater of the customer's actual monthly peak demand or 80% of their highest peak demand (kW) set over the last 12 months.
So what does this mean in English? It means that when a manufacturer closes their doors at a production facility, but still needs electricity service to keep the lights and air conditioning working to show the facility to a prospective buyer of the real estate, they are exposed to paying inflated demand charges for delivery because the utility is billing them at 80% of their highest demand (kW) value, set over the last 12 months, as opposed to using their actual demand for billing. When a 2,000 peak kW manufacturer shuts down a facility but still gets billed delivery charges based on 1,600 kW (80% of 2,000 kW), as opposed to 100 kW, for light air conditioning and to keep the lighting load available at their facility, it's a costly expense.
We were able to get the utility to accept that the customer has dramatically reduced their load, at the closed facility, and we made it possible for the customer to go back to being billed at their "ACTUAL" peak demand (kW) values. This engineering study cost the customer $2,000.00, but it should help this customer save over $10,000.00 a month or roughly $60,000 over the next 6 months. Not a bad ROI.
The study was aimed at providing a manufacturing client with the opportunity to avoid inflated demand (kW) charges that their utility company imposes on facilities that close down but still have electricity service active, as might be required if the customer wants to offer the real estate for sale.
Most utilities have a delivery tariff rider that says that they can bill a customer delivery charges using the greater of their actual peak demand or at a minimum percentage of their greatest peak demand, over the last 12 months. For example, Oncor, (the incumbent utility in north Texas), has a delivery tariff that allows them to use the greater of the customer's actual monthly peak demand or 80% of their highest peak demand (kW) set over the last 12 months.
So what does this mean in English? It means that when a manufacturer closes their doors at a production facility, but still needs electricity service to keep the lights and air conditioning working to show the facility to a prospective buyer of the real estate, they are exposed to paying inflated demand charges for delivery because the utility is billing them at 80% of their highest demand (kW) value, set over the last 12 months, as opposed to using their actual demand for billing. When a 2,000 peak kW manufacturer shuts down a facility but still gets billed delivery charges based on 1,600 kW (80% of 2,000 kW), as opposed to 100 kW, for light air conditioning and to keep the lighting load available at their facility, it's a costly expense.
We were able to get the utility to accept that the customer has dramatically reduced their load, at the closed facility, and we made it possible for the customer to go back to being billed at their "ACTUAL" peak demand (kW) values. This engineering study cost the customer $2,000.00, but it should help this customer save over $10,000.00 a month or roughly $60,000 over the next 6 months. Not a bad ROI.
posted by Max Hoover | 9:07 AM
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