How is the installation electric bill calculated?
July 24, 2013
ROCK ISLAND ARSENAL, ILL. (July 24, 2013) -- How does the power company calculate the installation's monthly electrical costs? Perhaps an answer to this question may make you a little more aware of the energy that we consume and be more thoughtful of its use.
Let's look at the May 2013 bill to try to answer this question. The installation is charged at an industrial rate (number 53) because of the factory is the primary utility user. Several cost components are considered in the installation's monthly electric bill:
Basic Service Charge
These are charges that occur every month that remain the same from month to month. The basic charge or customer service charge is intended to recover the distribution and billing-related costs, which include having an electrical distribution system in place, plus the cost of the meter, servicing and reading the meter, mailing the bills and maintaining customer records.
On and Off Peak KWH
The kilowatt hours (KWH) is considered the energy charge and together amounts to 50.3 percent of the total bill which is the largest component of the bill for the month of May. The on peak time is Monday thru Friday from 8 a.m. to 8 p.m., and we are charged $0.03187 for each 1,000 watts of electricity that we consume in an hour (KWH). The off peak time is Monday through Friday from 8 p.m. to 8 a.m. and includes Saturday and Sunday and six legal holidays, and we are charged $0.02027 per KWH. The more equipment that is turned on and the longer we use it, the more kilowatt hours are consumed. The rate may seem less expensive than you pay at home, but as you can see, the monthly cost really adds up.
On Peak Demand Charge
Sometimes called a power charge. The demand charge is measured in kilowatts (KW). This is a measurement of capacity or the rate at which you use energy. Demand represents the greatest amount of energy used in 30-minute intervals during a billing cycle. To measure demand, electric meters record the average demand usage over each 30-minute period and record the highest (peak) period for the month. Within a customer class, if two customers use the same amount of energy but one has higher demands, the customer with higher demands will see higher bills. Eight months of the year, the demand charge for us is $4.98 per KW, but in the months of June, July, August, and September the charge is $9.14 per KW. The summer is the time of highest demand due to air conditioning, and the rate is higher during this time and becomes the largest component of our bill of around 35 to 45 percent. It is during this time that our factory does their best to limit high demand equipment such as electric arc furnace use during peak time and if possible to schedule their use during off peak times (second and third shifts). The billing demand for any month is the maximum demand that occurs between 8 a.m. and 8 p.m., Monday thru Friday on Rate 53.
Reactive Demand Charge
Reactive power, measured in kilovolt-amperes (KVAR), results from equipment that draws more current from the electrical system than usual. Examples of this type of equipment are motors, fluorescent lights and induction furnaces. Because this equipment causes greater electrical draw and has a higher impact on the electrical system, it usually requires larger transformers, wiring and additional generation. Customers that have high demands are charged for this service. In our case, this is a minimal charge.
Fuel Adjustment Charge
The Fuel Adjustment Charge is amount that utilities apply on bills based on varying price of fossil and nuclear fuel. The price of fuel changes every month based on supply and demand thus cost of producing electricity changes accordingly. The electricity generation companies pass on this cost to distribution companies who then pass it on to consumers. This charge is calculated based on the peak and off peak hours (KWH) and together amounts to 27.5 percent of our bill.
Any volunteers want to pay our electric bill for the month of May? If not, let's do our best to eliminate energy waste and be good caretakers of our diminishing resources. Turning things off when they are not needed is the easiest and most effective way to save energy and reduce costs. During the furlough days, please turn off all lights and equipment in areas that are not occupied. Let's all do our part to eliminate energy waste and reduce our electric bill.