Demand vs. Usage for Agricultural And Pumping Customers

As a business owner, you've got a lot on your plate. From inventory to staff to customer service, you expend a lot of time just staying on top of everyday needs. In any business, there's a lot to know. But did you know that understanding what components are included in your electric bill can help your business be more efficient and more competitive? Your business is unique, right down to the way you use electricity. That's why it's imperative to understand how your business is being charged for electricity. Familiarizing yourself with your bill can help you manage electricity costs, anticipate impact and provide you with more control. And that's great news for your bottom line. Now let's talk about some specific aspects of your energy bill. Did you know that the majority of electric bills are based on Energy Charges but some also include Demand Charges? All electric bills have energy charges, which is one of the components that determines how much you get charged each billing cycle. Your bill is partly based on the total amount of energy you use in a monthly billing period to cool your office, run a computer server, operate a water pump or an assembly line, or refrigerate a warehouse or display case. Your bill's energy charges are based on a cost per kilowatt-hour—and they can vary by the time of day, day of week and season . Your bill may also include what's known as a demand charges.... Demand is the measure of how much electricity is used at a single point in time. In general, demand charges are based on the highest amount of electricity used within any 15-minute period during specified time period. This will be considered a customer's maximum or "peak demand" For that period of time The unit of measurement is the kilowatt (kW). Demand charges come in two types -- Facilities-Related Demand Charges and Time-Related Demand Charges. The Facilities-Related Demand Charge is billed on a per- kilowatt basis throughout the year. It is based on the maximum registered demand during the billing period—no matter what season, day of the week or time of day. Where applicable, the Time-Related Demand Charge is applied only during SCE's summer season (June 1st through September 30thst) on Time-of-Use rates. This charge, which is in addition to and separate from a Facilities-Related Demand Charge, is a per- kilowatt charge based on your business operation's greatest demand for electricity during applicable peak period time frames. When you look on your bill, you will see that Demand is calculated in kilowatts. Another way of understanding demand and energy is using something we all readily understand—water pumps. Suppose you want to fill a 1-acre foot reservoir, with water from a canal. You can use 2 horse power pump providing 45 gallons per minute to fill it, and it will take 5 days. Or you can use a larger 10 horse power pump that provides 226 gallons per minute, and it will fill in just one day. The flow rate is equivalent to demand, and the amount of work it takes for the pump to deliver the water is equivalent to energy. In this case, whether you fill the reservoir up at a faster, or slower rate, it takes the same amount of overall energy to deliver one acre foot of water, but requires very different "demands". When you are using a lot of electricity at once, you are demanding more of the power grid. That means the grid must work harder to meet your needs, just like when you demand more power running two pumps instead of one to deliver water at a faster pace rather than a slower one. Why does a high-energy demand increase your costs? As your electrical energy provider, we must install sufficient transmission and distribution facilities to serve all business' highest demand throughout the month—similar to installing enough lanes on a freeway to accommodate rush hour traffic. The peak demand may occur because of running all or a majority of your equipment at the same time. So, the more equipment you use at once, the higher your demand and the harder the grid needs to work to meet your needs because unlike a backed up freeway that can sometimes grind to a halt, we must keep the electricity moving. Understanding the manner and the times of your electricity use can lessen the impact of peak demand charges and ultimately lower your operating costs. So you can pay less for energy and put more money back into your business. How can you lower your demand while still operating your business effectively? You can start by cutting back or staggering when you turn on or use equipment or machinery. If you still need to use equipment that requires a large amount of electricity, consider replacing or upgrading older equipment with more energy-efficient equipment. Moderating your energy use will have a positive impact on your bill and your business. When it comes to conserving energy and saving money for your business—knowledge is power. Want to find out more ways to lower your business' electricity demand? Contact your SCE Account Manager or log on to sce.com/tou for on-line tools and customized energy tips and solutions to help you more effectively and efficiently manage and take control of your energy use.