In order to provide the electric energy requirements to a facility, and to maintain the electric Utility grid reliable, the energy suppliers need to know the company’s peak electric demand. When providing electricity to a facility whether it is powering a pharmaceutical, air condition systems or Medical building, electricity is demanded at a given billing rate. In most cases, the initial electrical energy required to start up the systems exceeds the amount of electricity needed to keep the system running.

 

On the company’s electric utility bill there are energy consumed in Kwh, and two types of demand recorded. One in Kilowatts (Kw), which is the amount of real power, and kilovolt-amps (Kva) or the apparent power of the system. If a company is using or consuming power inefficiently, it will have a negative effect on their power factor, increasing the client’s utility bill, because the power factor will affect the Kva demand.

 

Demand charges cover the electric utilities’ costs of delivering a maximum level of energy to their customers. Utilities must maintain enough electrical generation and distribution infrastructure (including substations, transformers, and wires) to satisfy the highest spike in demand, even if it occurs over a short period of time. Maintaining infrastructure to satisfy this peak demand is extremely expensive. Demand charges help offset these costs. In addition, assessing demand charges helps to allocate the associated cost to consumers that contribute to causing the inconsistent spike in usage and encourages users to reduce demand spikes in their load profile. If there are demand charges on the rate tariff, it is extremely important to understand how they are calculated.

 

In addition, it is important to analyze the load profile or usage patterns to understand when the facility is setting its peak demand and what equipment is causing the spike in usage. In many cases, demand charges can represent 20 to 50 percent of commercial and industrial customers’ electric bills Reducing energy costs can be beneficial to any operation. However, before making investments in energy efficiency and renewable energy equipment, it is important to understand how you are charged for electricity.

 

Taking the time to investigate the tariff rate, and analyze their consumption patterns will help to prioritize potential energy savings solutions providing greatest return on their investment. For more information and orientation, contact us. We can analyze your utility bill to see if savings can be achieved.