City of Piqua Ohio Municipal Power System - Information About Power Consumption, Demand Charges, Demand Metering, Load Factor & Piqua's Electric Rate Advantage Over Surrounding Utilities

City of Piqua Ohio

Piqua Municipal Power System -

Information About Power Consumption, Demand Charges, Demand Metering, Load Factor & Piqua's Electric Rate Advantage Over Surrounding Utilities

Piqua Power Plant - Substation 1

Piqua Power Plant - Substation 1

Introduction

It may be a confusing task to try and understand the way you are billed for electrical energy. That is because, unlike some other products, electrical energy cannot, in a practical sense, be stored. Rather, it must be generated and supplied by your electrical provider on demand, day or night, instantly meeting your needs. Your demand for electricity, and the flexibility needed to supply this electricity during peak times leads to "demand charges:'

What is this thing called "Demand"?

Both consumption and demand charges are part of every electricity consumer's service bill. Residential customers pay one rate of charges for electricity service, covering both consumption of electricity and demand. This simple, combined charge is possible because there is relatively little variation in electricity use from home to home.

This is not the case among commercial and industrial energy users, whose electricity use-both consumption and demand-vary greatly. Some need large amounts of electricity once in a while, while others, almost constantly. Complicating this is the fact that electricity cannot be stored. It must be generated and supplied to each customer as it is called for - instantly, day or night, in extremely variable quantities. Meeting these customers' needs requires keeping a vast array of expensive equipment - transformers, wires, substations, and even generating stations - on constant standby. The amount and size of this equipment must be large enough to meet peak consumption periods, i.e., when the need for electricity is highest.

Utilities and public service commissions around the country have determined that the most equitable way to cover the cost of this equipment is to have those customers who create this demand and the need for power during these peaks pay for its availability. For this reason, utilities spread the costs of this extra equipment among all commercial and industrial customers as a separate charge for demand.

Comparing Demand & Consumption

On every demand-billed customer's energy service bill, charges for consumption and demand are separate. This exaggerated example illustrates how the two work: Suppose you have a commercial building with lighting, cooling, machinery, and miscellaneous electric equipment. Its fully installed load totals 15 kW. You are not using the building and have no employees. On the first day of each month, you come into the building and turn on all electrical equipment and leave it on for 15 minutes. Then you shut everything off again and lock up the building until the following month. What would your electric bill look like? It would show very little consumption in fact, only 4 kWh, at cost of about 36 cents. (Added to Piqua Power System's customer service charge of $8.56) But what about your demand charge? At an average cost of $14.65 per kW and the meter reading at 15 kW, the demand charge would be $219.75.

Example Bill from above example	Customer Charge	$8.56
	kWh Cost (4 kWh)	$0.36
	Electric Demand (15kW)	$219.75
	Total Cost	$228.67

Understanding Demand Metering

Much like your car's odometer records accumulated mileage, electric meters record consumption (kWh). Electric demand meters function like your speedometer - with an important difference.

A demand meter's needle advances as electricity consumption increases, just as your speedometer needle advances as your speed increases in a car. When you stop the car, the needle moves back to zero, regardless of the highest miles per hour reached on the trip. Unlike a speedometer needle, demand meters record the highest average kilowatts reached and maintained in a 15-minute interval within the billing period.

The Speedometer needle is similar to electric demand, except electric demand maintains the highest average kilowatts reached over a 15-minute interval.

The odometer records accumulated mileage similar to electric meters record consumption.

If your demand reaches 50 kW, for example and stays there for 15 minutes the meter needle remains at 50 kW unless or until your demand exceeds that level. If your demand later reaches 55 kW and stays there for 15 minutes, the needle will then stay at 55. The new index point is maintained, even when you are using electricity at below 55 kW, until the meter reader comes to record the demand and resets the meter back to zero.

Piqua's Advantage

The City of Piqua's Electric Rates have several distinct advantages over other surrounding electric utilities. The first advantage is the City of Piqua does not utilize demand ratcheting. Demand ratchet is a means of applying a minimum billing to a customer who may have inconsistent or seasonal energy requirements. For example, a ski resort may have significant energy requirements for only six months of the year. Thus, some utilities will apply a demand ratchet, which is a minimum monthly billing that is calculated based on a given percentage of their peak use. In the ski resort example, the resort will be billed at least 60% of their January billing (assuming that January is their peak demand for the year) every month of the year, even if the resort uses little or no energy during that month. Not using demand ratcheting allows for additional savings to the customers' of the City of Piqua.

Overall, The City of Piqua's Rates are significantly lower than other surrounding utilities. The table below is an estimated cost for a residential household using the City of Piqua's rates compared to a surrounding utility's rates.

Billing Units	Piqua Rates	Other Surrounding Utilities Rates	Customer Savings
Energy (kWh)	Total ($)	Total ($)	($)	(%)
2,000	184	244	60	24.5
1,500	140	187	47	25.1
1,000	97	130	33	25.4
750	75	101	26	26.7
500	53	69	16	23.2
250	29	36	7	22.2

As you can see, it compares several different monthly kWh usages and on average the City of Piqua's costs are 24.5% lower than the surrounding utilities rates.

Commercial and Industrial customers share a similar advantage. Below is a table that demonstrates the savings using six different examples. In these six examples, the savings for the City of Piqua's commercial and Industrial customers are 22.3%.

		Piqua	Other Surrounding Utilities Rates	Customer Savings
Demand (kW)	Energy (kWh)	Total ($)	Total ($)	($)	(%)
100.0	20,000	2,148	2,825	677	23.9
150.0	15,000	2,721	3,499	778	22.2
100.0	10,000	1,825	2,338	513	21.9
75.0	7,500	1,378	1,751	373	21.3
50.0	5,000	930	1,171	241	20.5
25.0	2,500	448	590	142	24.1

Load Factor

An additional attribute that some utilities track is load factor. Load factor is an indicator of how steady an electrical load is over time. Commercial and Industrial customers' electric billing rate includes both an Energy (kWh) and Demand (kW) charge, which are used to calculate load factor by using the following formula:

If your load factor is low, you should look for ways to even out your electrical usage (i.e., shift energy intensive processes to periods of otherwise low usage). By increasing load factor, you will reduce the impact of monthly demand (kW) charges on your bill.

Below is a table that has several examples of bills for a variety of load factors. This is to help you see the relationship between load factor and cost.

Billing Units		Piqua Rates	Surrounding Utilities’ Rates	Customer Savings		Load Factor
Demand (kW)	Energy (kWh)	Total ($)	Total ($)	($)	(%)	(%)
20.0	3,500	421	548	127	23.2	24.31%
20.0	9,500	637	841	204	24.3	65.97%
15.0	3,500	348	456	108	23.7	32.41%
15.0	1,700	264	368	104	28.0	15.74%
10.0	2,500	228	315	87	27.6	34.72%

For more information regarding rates and potential savings please call
Piqua Power System at 937-778-2077.

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