Translating Your Electric Bill, Part 1

If you’ve never spent any time thinking about electricity rates, you’re not alone.  For the past century electricity consumers have been supplied with cheap, reliable electricity on the unspoken condition that we don’t notice that our local utility is a monopoly.  That’s changing now for a lot of reasons, chief among them de-regulation of electricity markets and efforts to limit carbon emissions.

Now most electricity consumers have at least some choices about how they pay for power.  At Genability, we want to enable consumers to make informed choices about their electricity by building a comprehensive database of electricity pricing.  Currently, if you want to understand what you truly pay for electricity, you need to dig through cumbersome legal documents filled with industry-specific jargon.

We’re currently collecting the price data, but that doesn’t help the consumer understand the language utilities use to describe their services.  When it comes to pricing, the terms to understand are consumption and demand.  These two terms describe two different methods of calculating your electricity usage and thus your bill.

Consumption is the most common method used by utilities to measure your electricity usage.  As the name suggests, consumption measures the total amount of power you consume.  It’s recorded in kilowatt hours (kWh).  The utility can easily account for this using the traditional meters, the series of clock-like dials.

Demand is a little trickier.  Demand measures the peak period of usage during the month (measured in kilowatts (kW)) and then uses a multiplier set by the utility to determine what you pay for electricity.  So in that one brief 15 minute period when you’re running the air conditioner and the dishwasher and the dryer and have all your lights and TV on, that moment determines what you’ll pay for the entire month.  These rate plans are designed to limit peaks, and thus reward the customer for using as much electricity usage below your peak.

Like most things, this is easiest demonstrated in an example.  Let’s look at two rate schedules offered by Georgia Power, one that charges according to consumption and another according to demand.  Using a generic load profile (a data structure that models electricity usage throughout a month, broken-down by day and hour) for a small business of 5000 kWh, we can look at what your bill might look like on both a consumption-based and a demand-based rate plan.

The default plan for Georgia Power is a consumption-based plan called General Service. It charges a base fee of $14.25 and 8.74¢ per kWh.  Using our 1000 kWh load profile, this results in a total bill of $451.25 ($437 for the electricity).

An demand-based alternate plan called Power & Light Small.   This plan charges the customer a variable rate on their consumption, based upon their demand.  This means that the same exact amount of electricity consumption could be charged two different rates.  In the table below is a comparison of two different scenarios and the resulting bill.

Example 1 (High Peak) Example 2 (Low Peak)
Demand (peak usage) 25 kW 15 kW
Total Consumption 5000 kWh 5000 kWh
Demand Limit (200 times Demand) 25 kW * 200 = 5000 15 KW * 200 = 3000
Consumption under 200 times Demand 5000 kWh @ 8.76¢ 3000 kWh @ 

8.76¢

Consumption between 200 and 400 times Demand 0 2000 kWh @ 

0.95¢

TOTAL BILL $438.00 $281.80

In this example, the high peak customer pays roughly the same amount as the customer on the default consumption-based rate plan, but the low peak customer saves almost $2000/year by choosing the demand-based rate plan.

As we collect the pricing data from around the country we are constantly uncovering gems like this, options that allow electricity consumers to save a lot of money just by switching plans and having some awareness of their electricity use.

You might be paying too much for electricity right now.  You can check with your utility or send us an email at feedback at genability.com with your zipcode.  We’ll alert you when we have electricity rates available for your area.

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