ARTICLE - Q1 2024

"Electric Rates and Understanding Them"
by Cliff Riegler, The Home City Ice Company

When was the last time you studied your electric bills?? Your electric is one of the top costs for production your company has, but have you looked into the details??
 
The power grid landscape is changing and because of increased demands put on the power grid, electric companies are looking for ways to charge for electric. Understanding your specific needs and usage patterns can help you optimize your costs.
 
Most electric companies have different rates or tariffs that are available to you. There are fixed rates, variable rates, rates for on-peak usage and for off-peak usage and rate for time of use - there are rates for demand that charge you for peak usage and sometimes these are carried forward for the next 11 months. Then there are some states that are unregulated – that is you are free to choose your supplier and there are those that are regulated – that is the state sets the rates usually through a public commission.
 
So understanding all the components and your operation’s energy consumption will help you properly selects options available to you. Then you can make decisions on how to most efficiently control these costs and possible save significant dollars.
 
 
The Rates
The electric (and gas) are not regulated in some states and can provide you with the opportunity to shop portions of your electric bill. Deregulation is intended to promote competition and hopefully provide better pricing to us, but we are not in the most desirable industry – our electric consumption is typically the highest when the electric grid is at capacity, but saving opportunities are there.
Here is a look at the marketplace.
 
Deregulated Electric

​The Details
I suggest you do a detailed analysis for your electric bills for the past 12 months. Collect your bills for each month and summarize the data so you have a comparison for each month. Collect the kWh or energy charge (the total energy used during the billing period), then look for the demand charges (this is usually shown as kW or kVa – this is the Peak power consumed during a certain interval of time).

​These are the main controllable segments on the billing – there are usually quite a few more charges listed like service fees, fuel charges, taxes, energy programs, etc. – Not much we can control on these items, but they are good to know.
 
Secondly, know what rate tariff you are being billed on – Tariff are divided by size of usage – plants under 200kW are considered small and typically charged by the kWh used, facilities in the 250kW to 750 kW will start to have various rates for all sorts of components – this is where most of the ice companies will find their tariffs, then larger facilities using over 1000kW have their set of tariffs and some negotiated rates with restrictions on when you can operate.
 
Look on your bills for some descriptions:

​Once you understand some of these basics, it’s time to reach out to your electric company rep. A simple phone call just might yield thousands of dollar savings. Review your current operating situation and discuss alternative tariffs that might be available to you. (On a side note – certain states allow you to be sales tax exempt on the electric used for production – make sure you understand these laws and know how you can qualify.)
 
The companies in the deregulated markets are now offering rates that provide substantial discounts if you are willing to choose some interruptible rates (that is shut the plant down when the electric grid is at max capacity). They might offer substantial discounts if you run off-peak. Have the Rep run some analysis for you to see the potential savings on the different rates.
Look at the way you currently run your plant – can you do something differently – operate off peak, run fewer compressors.
 
Once you understand the type of savings potential, this might be an opportunity to talk with one of the Industry suppliers – things like additional production capacity, storage bins and the like should be discussed along with their Return On the Investments.
 
Some of these states now have programs that will provide credits and tax incentives for installing efficient motors and lighting. Discounts are available for certain solar applications as well, so the conversation with your representative can provide some opportunities for you
 
Digging into these bills might take a couple of hours, but the more you know, the better decisions you can make on how a change in plant operation and how it’s billed can yield money to the bottom line.
 
The Operations Committee & the IPIA are bringing value to you for being a member. Let us know if this helps, let us know if you realize some savings by doing this process.