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Jewel in the Rough

Brian Reinke, Robert Eppich, Cindy Belt

Those pesky electric bills just keep coming. The things are impossible to understand. They are some of your highest expenses and there is nothing you can do about it. Just a cost of doing business, right?


Precisely because it is one of your largest expenses, it could be very worthwhile to give that monthly aggravation a little extra attention. After all, any savings would go straight to the bottom line to improve profit.  

So, what do you look for?  

First, let’s establish that the purpose of your monthly bill is to notify you of how much you have to pay the electric company. It is not to help you manage how you are using the electricity. Let’s also understand the basic information contained in the bill.

Your electric charges are basically in three areas:
•    HOW MUCH electricity you used in the billing period (kWh).
•    HOW FAST you consumed it (in 15- or 30-minute intervals, during the entire billing period [KW].)
•    Various taxes and service fees.

It turns out a large portion of your bill (often 30% or more) comes from HOW FAST you consumed the electricity. This can be referred to as Demand, Maximum Demand, Peak Demand, etc. by your electric utility. Of course, most monthly electric bills give you no idea how that cost is determined.  

Demand is recorded by your electric meter (usually every 15 minutes). Each 15-minute value is likely different because it reflects the total kilowatts of electricity being used at the same time, by every device attached to that meter. The largest recorded Demand during the billing cycle for that meter is then used to calculate the Peak Demand part of the monthly bill.

How your electric utility actually calculates your Peak Demand cost can be dramatically different for each utility company. You have to dig into the authorized tariffs for your utility to understand that.  Some are simple, others very complex.

The following is an excerpt from the Wisconsin Electric Power Company (page 47, Volume 19—Electric Rates):

“Customer maximum demand shall be the maximum measured demand, not adjusted for power factor, which occurs during either the on or off-peak period, in the current or preceding 11 billing periods.”

This is also known as a “ratchet clause,” because it ensures you will pay for your highest recorded Peak Demand for the next year. Record an even higher Peak Demand and the clock resets using the higher number. The excuse given is that since the electric company has to provide electricity instantly, they must be able to meet such maximum demand requirements.  

A Jewel in the Rough?

You are very aware of your operations and procedures, and you may easily see opportunities to reduce the Peak Demand being recorded.  

Imagine turning all your furnaces on at exactly the same time. Big demand is being registered. Is any other equipment also being turned on at the same time, like compressors, machine shop, or other areas Remember, the total power required during the highest 15-minute period sets your Peak Demand for billing purposes.  

Does everything need to be running at the same time? Perhaps not. If your operations allow you to start equipment in a more staggered fashion, slight scheduling changes of when equipment is used could result in a lower Peak Demand value and a significantly smaller electric bill. Such a simple procedural change could be your jewel in the rough. So, how can you find out more about when your peak demand is happening?

Remember those demand readings taken every 15 minutes by the meter? Your utility company might be able to provide the data that was recorded every 15 minutes—but you have to ask for it. Loading such data into a spreadsheet might allow you to see exactly when big spikes in demand are occurring. Other analytical tools may also provide greater insight.

Peak Demand Charges Can Have Major Impacts on Your Bill   

So, how much can you save? Each foundry is different, but in one example a foundry was able to reduce their peak demand by 5,000 kW—resulting in monthly savings of more than $60,000 in charges, more than $720,000 per year.

A greater understanding of your operations, plus significant savings, can be gained by knowing how—and when—you are actually using your electricity.
If your utility company cannot provide your meter data, other companies can install meters to provide similar data. Some metering companies may also offer analytic software to guide your understanding of the metrics being gathered. Contact Brian Reinke, Manager of the AFS Energy Solutions Program, for additional information  

Click here to see this story as it appears in the November 2018 issue of Modern Casting