As everyone knows, the arrival of summer means not only longer days and warmer weather, but higher energy costs due to increased air conditioning loads. In fact, energy costs are typically much higher during the summer than any other time during the year due to higher consumption and higher electric rates. As a follow-up to a recent Burton webinar, this blog post focuses on several actionable things you can do to help manage your electric demand to ensure lower operating costs not only during the summer but throughout the entire year. Following are a few steps you can take:

1. Understand the Difference Between Usage and Demand

  • Energy (kWh) is the total amount of electricity your building consumes over a billing period
  • Demand (kW) is the amount of power your facility is using at any
  • given time during the billing period – i.e. the rate of power use
  • Demand rates may vary seasonally, with higher charges typically during the summer season
  • Demand charges can be a significant part of your bill, which may be over 50% of the total charges in some markets
  • Know your current rate schedule and how the utility charges for both kW Demand and kWh Usage

2. Understand How Demand is Billed

  • Electric utilities use demand meters that measure the highest rate of use during a billing period
  • A facility is typically billed for the highest average kW interval recorded during the billing period each month (i.e. peak actual demand)
  • However, some utilities may bill either the maximum demand for the current month or a percentage of previous months in the year – i.e. “Demand Ratchet”
  • The monthly Billing Demand may be the maximum of current month’s actual kW, or a percentage of the previous 11 months maximum kW (or similar) based on rate schedule
  • If you have this type of schedule, whatever kW level you set during the Summer, you may pay for a lot of that kW year-round, even if you only use it for one month
  • Managing demand may also help with better supply contract pricing

3. Look for Ways to Reduce Demand

  • Controlling or limiting the maximum demand, much of which is
  • associated with cooling equipment, can significantly reduce your electricity costs during summer
  • Implement demand-limiting strategies either automatically through a building automation system or manually
    • HVAC equipment that can be shut down
    • Reset strategies
  • Shift loads to off-peak hours, if possible, to reduce kW demand and
  • potentially higher energy ($/kWh) rates depending on rate schedule
  • Turn off equipment or set back temperatures
    • Lights, air conditioning, fans, pumps, etc.
  • Consider enrolling in utility sponsored demand response programs

So, knowing the importance of electric demand, give some thought to the items above to help minimize your electric costs. Remember that decisions you make about how to operate your equipment can have consequences for not only this summer season, but throughout the entire year. Also, remember that Burton can help if you have questions about your rate schedule or specific ideas about how you can reduce demand, so let us know how we can help!