Is It Time For Your Business to Switch Utility Rate Schedules?


Taking a close look at your current rate schedule and energy usage patterns is essential to finding the ‘best fit’ for your business as it operates today.  

Ready? Let’s dive in.

RATE SCHEDULE BASICS.

While specific rate schedules vary from utility to utility, there are generally four buckets a commercial entity will fit into: Small, Medium, Large or Industrial. Categories are defined by a specific range of kilo-watts (kW) consumed by the facility and these ranges vary by utility as well.

Utilities may also offer pairings of these general categories with more dynamic options such as Time-of-Use (TOU) and Tiered rate schedules. 

Time-of-Use and Tiered Rate Schedule Definitions.

Regardless of rate schedule type, if your facility’s usage is trending up or down, it may justify a change in rate schedules. These usage fluctuations may not be closely monitored so it’s a good idea to regularly check your energy usage against current rate schedules to make sure you’re in the right place to maximize savings.

As suggested above, the ‘best fit’ rate schedule is entirely based on energy usage patterns. For instance, a TOU schedule may be an overall better deal if your facility uses more energy during off-peak hours when demand and energy charges are lower.

Sample Demand Charges for Winter/Summer On Peak and Winter/Summer Off-Peak. Demand charges for energy usage during off-peak hours are significantly lower than during on peak hours.

On the flipside, a TOU rate schedule may not pencil out if most of your facility’s energy consumption happens during on-peak hours when demand and energy charges are higher.

Spring Clean Your Rate Schedule.

So, when was the last time you dusted off your rate schedule and took a good look?

Utilities typically update their rate schedules on an annual basis, so it may be time to compare your business’s current schedule with any utility updates that have occurred. It is possible to switch rate schedules if you find one that will save more money.

We are currently working with a business whose energy manager conducted a comparative analysis on their facilities.

Going case by case, they determined that switching the majority of their facilities from a Time-of-Use (TOU) to a flat-rate schedule allowed the organization to optimize their energy savings.

Your business may not have a dedicated energy manager to take on this kind of project. If that’s the case, contact your utility account manager and request a comparative analysis.

Considering an On-site Solar System? Keep that Rate Schedule Handy.

Let’s explore the comparative analysis we recently ran for the above-mentioned organization when they decided to integrate on-site solar into their long-term energy strategy.

When comparing a single facility’s electric bill, it’s clear that the TOU schedule saves nearly $500 more than the flat-rate option.

Example of Annual Electric Bill Totals for TOU and Flat Rate schedules without solar. The TOU schedule saves nearly $500 more than the flat-rate schedule.

It’s a small difference, but savings are savings. Case closed, right?

That depends.

Let’s see what happens when we add solar to the mix.

In our example, where solar offsets close to 80% of the facility’s energy usage, you can see that the total kilo-watt hours (kWh) of energy sourced from the grid drop significantly.

Energy use comparison - with and without onsite solar. Annual energy use without solar = 689,250 kWh. Annual energy use offset by on-site solar=164,187 kWh.

Plug the new energy use numbers into each rate schedule and you can see that, while TOU is slightly more cost effective without solar, the flat-rate schedule is the clear winner with solar – by over $6000 annually. 

Image illustrates the annual cost difference between a flat-rate schedule with solar and a time-of-use rate schedule with solar.

That’s a great reason to switch rate schedules when installing on-site solar. But what about the business case for adding solar in general?

Flat-Rate Schedule energy use & electric bill comparison with and without solar.

Annual electricity savings of over $37,000 make it hard to argue with the value solar offers and the value of conducting a comparative analysis between available rate schedules.

So, Why Switch?

Whether considering solar or not, taking the time to compare utility rate schedules gives you an opportunity to uncover increased savings on your energy usage. And in these uncertain times, controlling costs wherever possible is vital to the well-being of every business. 

Disclaimer: The examples used in this blog are for illustration purposes only. Rate schedules, charges & electric bills will vary by utility & facility.

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