Demand rate metering

[goldstar]

Can someone please explain "demand rate metering" for commercial buildings ? (Charlie this may be something you can elaborate on).

This is my (very basic) understanding of how it works. Residential metering is billed on a total usage basis and a flat rate per killowatt hour. Commercial billing is done on a per killowatt hour at a rate based on the the highest peak demand usage the building uses at a given point during any day. (I believe that point is measured by the meter every 30 seconds or so.) If, at any point in time, the meter senses that a building requires a higher demand for power, the billing rate per killowatt hour changes to a (predetermined and incremental) higher rate and is used to bill at that rate for the entire billing cycle.

Thanks in advance,

Phil

 

[charlie]

Re: Demand rate metering

You will need to check with the suppling electric utility for the way they do it. In Indiana, every electric utility has different rate structures. Also, the rate structure differs according to the type of service you have.

A residential service has steps where the more you use, the less per kWh it costs the user. Our RS (no electric heat or water heater) rate has more steps that our RC (water heater) or our RH (residential heat). Our RH has two steps, one rate for the 1000 kWh and a much lower rate for over 1000 kWh.

Our commercial and industrial services are similar. An SS (small commercial) has just an energy charge and steps similar to the residential service. An SL (large commercial) has less steps plus a demand and reactive component (our meters are now electronic, we used to have three separate meters to get this information).

We are now at the point of answering your question. We charge for all three components.
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• <font size="2" face="Verdana, Helvetica, sans-serif">energy, because we have to generate this component</font>
• <font size="2" face="Verdana, Helvetica, sans-serif">reactive, because we have to have the capacity to serve this component</font>
• <font size="2" face="Verdana, Helvetica, sans-serif">demand, because we have to have the capacity to serve this component</font>

<font size="2" face="Verdana, Helvetica, sans-serif">Your question was about the demand metering. We do take readings on a very small time scale to get a profile. Once a high demand is made, we will change for the peak demand for the entire next year. The reason for this is to get a return on our investment. We have to have facilities to be able to meet your peak demand whether or not you make use of it. If we install 1000 kVA to serve your building and you use 1000 kVA once a year, why shouldn't we charge you for our unused capacity for the rest of the year?

Sorry for the long winded answer but you did not ask a simple question.

 

[goldstar]

Re: Demand rate metering

Thanks Charlie, but I did think it was a rather simple question for which I never really expected a simple answer. I know the reading method and billing are rather complicated but if you could give an example of the method of billing for a small commercial building (using fictitious numbers if you wish) I would appreciate it very much. I'm trying to explain to a customer how demand rate billing works and I'm not sure I'm completely correct in my explanation.

Also, I was not aware that a POCO can bill for peak demand for the entire year. I was under the impression that it was only for one billing cycle.

 

[charlie]

Re: Demand rate metering

Sorry, no example. Please reread the first paragraph of my response. Also, the statement you made about the peak demand for a single cycle is why I gave you the reason our rate schedules are set up that way.

The marketing people from your local electric utility will explain how the rate works and even give you a copy of their rates.

 

[charlie tuna]

Re: Demand rate metering

in south florida commercial accounts will have a demand meter installed. it basically regesters the highest peak power rate you used during the month. there is a penalty rate multiplier figure that is multiplied times the total power consumed. the meter reader will "zero" this needle and install a new power company seal to protect the meter from being zeroed by others. the reason for this fee is explained above. i had a buddy that owned a big die cutting shop - years before we installed a coating machine that was full of large heaters - for years the coating machine remained very busy, but it's needs lessened and one month he didn't use it --- his power bill was almost three grand less than normal. this was due to the penalty imposed due to demand metering. he instantly required a minimum job size before the coater was used. he sold it within two years!

 

[luke warmwater]

Re: Demand rate metering

Originally posted by charlie:
If we install 1000 kVA to serve your building and you use 1000 kVA once a year, why shouldn't we charge you for our unused capacity for the rest of the year?

Charlie,
for argument's sake,
is there an up-front fee for the installation of this (hypothetical) 1000 kVA transformer?

Our local utility will install a demand meter on any commercial building, and they in turn charge a fee just because the customer has the demand meter. You could have a small office with half a dozen fluorescent lights and a couple of computers, and your electric bill could be higher than that same office located in a home (including the home use electric) because of the demand meter.

 

[charlie]

Re: Demand rate metering

for argument's sake, is there an up-front fee for the installation of this (hypothetical) 1000 kVA transformer?

Not on our system, Todd. We install transformation that is based on what the customer tells us they have on the service. Over a threshold amount, they are placed on a demand meter immediately and will not be removed from that rate for the first year. After that, if they do not hit the projected demand, they will go to a non-demand rate. The energy cost is quite a bit higher but there is no demand charge.

If they use it, the demand rate will save a customer a big chunk on cash.

 

[luke warmwater]

Re: Demand rate metering

Charlie,
If no up-front fee, then I would say ok to the unused capacity for the rest of the year.
I can't seem to figure out our local utility, as sometimes they will do as you stated, and other times they will want a fee for installing a transformer.
Although, now that I've thought about it, that is usually when they do not have a large enough capacity already installed. Or if they have single phase installed and a customer now wants 3 phase.