3 Ways to Reduce Your Electricity Bill

3 Ways to Reduce Your Electricity Bill
20 Nov 2015

While most electric bills are correctly calculated, many customers and consultants have found that 1 percent or more contain errors. In some cases, customers are on the wrong rate and are being charged taxes not appropriate to them, getting hit with equipment

charges already paid off years ago, receiving estimated – not metered – bills because of meter problems, failing to receive pertinent discounts or being charged for a demand level seen in a prior month. To help find such mistakes and collect refunds, several hundred firms off “utility bill auditing” services.

A variety of technical options exist for controlling and reducing electric bills. They include:

Minimizing consumption through a range of permanent physical improvements, such as lighting upgrades or more efficient HVAC and energy management systems. Continuous training and oversight of building operations personnel is also possible.

Cutting consumption by a given amount each day can be more effective than doing so at night, because rates are typically higher during days. If your strategy is more night-based, perhaps it would be beneficial to review that approach.

Limiting peak demand through conservation measures and through demand-response controls that sense kw at least every 15 minutes and automatically reduce noncritical loads, such as lobby lighting and cooling in unoccupied spaces, to hold peak demand at a defined level, is also a possibility.

That might also help avoid a ratchet charge. If you are unfamiliar with what a ratchet charge is, you might want to sit down to read this, “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.

Examples of a ratchet demand charges:

  • 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 percent of 800 kW is 480 kW, times $5 per kW, equals $2,400)

This increase in demand cost of $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.”

It doesn’t sound like the kindest practice, does it? So, avoiding a ratchet charge, if that is relevant to your billing situation, might be quite an advantage.


Rob Washington

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