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Introduction 

Best Management Practice Guide

Most businesses receive an electric bill, lookat the total amount, wonder why it is so high, quickly glance at the line items without fullyunderstanding them, look at the total again –pay it – and get on with the rest of the day. Ifthis sounds familiar, you are not alone.A recent survey showed that 79% ofconsumers in the United States do notunderstand their electric bill. This isunfortunate because electricity bills providevaluable information for energy managementprograms (e.g. how much energy a customeruses, how the local utility company calculatesa customer’s electricity charges, etc.). If youwant to finally understand your company'selectric bill and learn how to use it to improveyour energy program, keep reading.

Seventy-nine percent of energyconsumers in the U.S. do notunderstand their electric bill.

Understanding electricity bills canhelp with energy management andreducing energy costs.

Utility Landscape

establishing an energyprogram,training a team, or educating employeesabout energy bills?

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Kentucky PollutionPrevention Center!

Website: www.kppc.orgEmail: info@kppc.orgPhone: 502-852-0965

Despite what you would expect, the first stepto understanding one's electric bill does notactually begin with the bill. It starts with firstunderstanding the utility landscape andknowing how utilities are regulated.

Kentucky is home to more than 30 utilities;two of which are Regional TransmissionOrganizations (RTO). RTOs are independent,membership-based, non-profit organizationsthat ensure reliability plus they optimizesupply and demand for wholesale electricpower. RTOs operate bulk electric powersystems across much of North America and asignificant portion of Kentucky.

Most utilities in Kentucky are regulated by theKentucky Public Service Commission (KY PSC);the exceptions are the Tennessee ValleyAuthority (TVA) supplied cooperatives andmunicipalities. Utilities regulated by the KYPSC must file their tariffs to be reviewed andapproved by the KY PSC. Tariffs for municipalutilities are approved by the local authority,such as a local board or commission.

Tariffs

Rate Plans

General Service Rates represent rates that are based simply on energy usage ($/kWh).Power Service Rates represent rates that are based on a facility’s electric demand ($/kW or kVA) aswell as it’s usage ($/kWh). Power Service Rates typically apply to customers whose demand is greaterthan 50 kW.Time of Day or Time of Use Rates represent charges based on the time of day. Flexibility in schedulingis key here. You can schedule activities to take place during a specific time of day (i.e. when rates arelow).

It is important to understand tariffs because the pricing structure used to calculate a customer’s electricbill are directly linked to a specific tariff. Pricing structures differ across utilities and are calculateddepending on the customer’s rate plan. Rate plans specify the rules for how customers’ bills arecalculated. Utilities typically offer multiple types of rate plans. Common rate structures include:

Depending on electricity usage patterns, customers may pay more or less for the same amount ofelectricity under different plans. Review the available rate plans to see if you fit the criteria for a planwith a lower pricing structure. A new rate plan may be more cost effective, depending upon yoursituation. For example, your location may have previously been used as a large manufacturing buildingbut now it is a warehouse. In this such a case, you may be on an old rate plan with a flat rate charge forhigh demand (i.e. a demand that is higher than what is currently used as a warehouse). Contact yourutility company to discuss/change your current rate plan.

Simply put, a tariff is a pricingschedule that determines how yourbill is calculated. Tariffs outline theservice agreements between thecustomer and the utility. Theseservice agreements include billingand payment information, as wellas the rights and responsibilities ofeach party in the agreement.Utilities use tariffs to establish thepricing structure of the electricity,capacity, and services they canprovide to their customers.          Tariffs filed with the KY PSC areapproved if the tariff is deemed tobe fair, just, and reasonable toconsumers. Tariffs approved by theKY PSC are posted on their website.Many utilities will include links totheir tariffs on the rates section oftheir website.

Find your tariff online in Kentucky Public Service Commission'sTariff Library!

Website: https://www.psc.ky.gov/Home/Library?type=Tariffs

Utilities in Kentucky

Using Electric Bills To Improve Energy Management

Usage ProfilesUnits Matter

Bill Breakdown

Account Number: This is the number thatreferences the particular billing account.Meter Number: This is the number of the meterthat is collecting the electricity information. Anaccount may have one or multiple meters.Billing Period: Time period of the billed electricusage in days. Typically a starting and endingdate is included in the billing period.

Energy Usage (kWh): Measure of the totalenergy used over a specific period of time (i.e.billing period).Meter Multiplier: Electric usage can be too highfor the meter to record. In this case, thenumber recorded by the meter is multipliedby the meter multiplier to get a measurement.Demand (kW or kVA): The rate at which youconsume electricity or the amount needed topower your facility at any point in time.

An electric bill is comprised of many things, someof which are linked to a specific tariff. Bills areoften broken down into sections. The names andcontents of each section can differ depending onthe utility. Below are some common items.

General Information:

Electric Usage:

Service/Customer Charge: This is a flat charge perbilling period or day that is set by the tariff.Energy Charge ($/kWh): This is a charge per kWhset by the tariff.Demand Charge: This is a charge per kW or kVA.This is based on your tariff. Some tariffs includea demand charge, while others do not.

Demand Side Management (DSM): Electricdemand side management charges are addedto the customer’s bill to support the utility’senergy conservation programs.Environmental Surcharge: Typically, a percent ofservice/customer charge, energy charge, anddemand charge to support approvedenvironmental projects.Fuel Adjustment: Based on fluctuating prices fornatural gas, coal, or other fuels. This may resultin a credit instead of a charge.

Electric Charges:

Potential Monthly Adjustments:

Taxes and Fees: This includes any state and/or localtaxes that may apply as well as miscellaneous fees.

Unmetered Charges: These are charges that areapplied independently from what is recorded bythe meter. An example is a charge for a pole with alight that is owned by the utility.

Depending upon location, a facility's electric billcan come bundled among other municipal bills.Check the units to make sure you know what youare looking at. A water bill is measured in gallonswhile natural gas is measured in British ThermalUnits (BTUs), Therms or hundreds cubic feet(ccf). Electric charges typically have two meteredcomponents: energy and demand. Energy is theamount of electricity consumed over a period oftime and is recorded in kilowatt hours (kWh).While demand is the rate at which electricity isbeing consumed at a given time and is recordedin kilowatts (kW) or kilovolt-amperes (kVA). Unitsof measurement should serve as an easyindicator of where your electric bill ends, andother bills begin.

Usage profiles are visual representations of howmuch electricity one consumes. Such profiles canshow total consumption for each month over thepast year or daily usage over the past month. Usageprofiles can also compare the current usage to thatof the past. Utilities often provide a usage profile inthe bill, however you can create your own bygraphing the energy and/or demand data providedin your electric bills.

Take time to verify the data used in your usageprofile is accurate. Review your rate plan and tariffsto ensure your usage is correctly calculated. Alsomake sure you are measuring/assessing your usageon the same period of time that you are billed on.For most, this will be monthly billing. 

Kentucky Division of Compliance Assistance

After analyzing your data, develop andimplement an action plan. One way to achievethis is by using a team approach. The teamapproach can be one team per facility or anetwork of teams. A team approach assists withbuy-in from all levels of the organization. Fullmanagement support is key for success. Ifworkers feel that management is disrespectfulto their efforts, there will be a reluctance tocontinue which will ultimately derail theobjective.

Additional Resources

https://www.energystar.gov/buildings/facility-owners-and-managers/existing-buildings/use-portfolio-manager

https://www.energystar.gov/buildings/tools-and-resources/energy-tracking-tool

https://psc.ky.gov/psc.consumer.inquiry@ky.gov1-800-772-4636

www.kppc.orginfo@kppc.org502-852-0965

ENERGY STAR©Portfolio Manager 

Energy Tracking Tool 

Kentucky Public Service Commission

Kentucky Pollution Prevention Center

Recognition Opportunity...Kentucky Excellence in EnvironmentalLeadership (KY EXCEL) is a program thatrecognizes environmental achievementsthroughout Kentucky.

For details, contact KY EXCEL!Email: envhelp@ky.govPhone: 502-782-6189

Implementing ChangeRecordkeeping and Tools

Data Analysis

Kentucky Energy and Environment Cabinet 300 Sower Boulevard, 1st Floor, Frankfort, KY 40601Assistance Hotline: envhelp@ky.gov | 502-782-6189

Also make sure to internally recognize thecontributions of teams and individuals. Evensimple acts of recognition will encouragegreater improvement and maintain motivation.Note: External recognition from a third partywill provide additional validation for energymanagement endeavors, provide satisfaction tothose who earned the award and enhance thecompany’s public image.

Recognize Achievements

An essential component of any energymanagement program is a continuing account ofenergy use and cost. Use data from your electricbill to keep up-to-date records of monthly energyconsumption and associated costs. This data canbe used to help create a baseline to which energysavings measures can be evaluated. When utilitybills are received, record the energy use and costsfor ongoing monitoring. One potential tool fordoing this is Portfolio Manager which wasdeveloped and maintained by EPA’s ENERGYSTAR© program. ENERGY STAR© also designed atool specifically for industry to track energy use,cost and intensity (energy per unit of production).This tool is called the Energy Tracking Tool and issetup to use Microsoft Excel.

Looking for patterns and trends in yourdata.Comparing current data against a baseline.Using an energy modeling tool to evaluate afacility's energy performance versuspotential performance.Comparing current usage data to abenchmark.

Analyzing your data will facilitate data-drivendecision-making. The level of analysis requiredwill depend on the detail of the data collected. Afew basic analysis techniques include:

Energy Management Ideas Strong energy management is a strategic asset that creates a

competitive edge by reducing energy costs. Understanding one'selectric bill is vital. Below are a few addtional ideas.

Facility Energy Assessments

Sub-Metering Devices

Plug Load Management

Equipment Shutdown/Load Strategy

Demand Reduction Strategies

300 Sower Boulevard, 1st Floor, Frankfort, KY 40601Assistance Hotline: envhelp@ky.gov | 502-782-6189

Kentucky Division of Compliance Assistance

Organize facility walk-throughs to assess energy use and find energy savingopportunities. Assessments are powerful tools for involving employees andencouraging buy-in. These events are also opportunities for hands-on learningand to see best practices in action. After an assessment, an in-depth report shouldbe written and a summary circulated internally.

In order to reduce energy, one must know how much energy is being used atspecific points throughout the process. Sub-metering can be an expensiveinvestment, but there are simple, in-line, manual sub-meters available that arerelatively inexpensive when compared to the digital, PLC based models. Sub-metering helps a facility develop a more accurate understanding of where energyis being consumed for a particular process or equipment.

Conduct an assessment of non-essential items being left plugged in during timesof non-use or shutdowns (i.e. nights and weekends). Electrical power consumed byelectronic appliances while switched off or in standby mode is called phantomload. Approximately 1-3% of the company’s annual plug load usage is due tophantom load. Take inventory of non-essential equipment left plugged in andaddress these items with the appropriate department teams.

Investigate equipment being left on during temporary shutdowns, longershutdowns, and times of non-use. Once equipment is identified, develop a policyto turn off or reduce the load on select equipment. By turning off processequipment when not in use, the company can reduce their energy usage anddemand load. Identify the equipment that is critical to the production process first,and then consider ways to reduce the load from other equipment.

High demand charges can result from a high rate of energy usage for even a shortperiod of time. Plant production schedules and the economics of each situationshould be considered. One possible solution may be to distribute the facility'selectrical usage over alternate shifts. Another possibility is to schedule theoperation of high demand electrical equipment to when overall demand is lower.Coordinating these times could reduce the amount of equipment operating at anyone time, thus decreasing the billing period's maximum demand.

300 Sower Boulevard, 1st Floor, Frankfort, KY 40601Assistance Hotline: envhelp@ky.gov | 502-782-6189

X =

Total Miles Traveled

Miles Per Hour

Energy (kWh)The total distancetraveled by a carover a period oftime is recordedby the odometer.Instead of distancetraveled, energy isthe amount ofelectricityconsumed over aperiod of time.

To manage electricity, one must understand energy and demand. Energy iskilowatt-hours (kWh) while demand can be measured in kilowatts (kW) orkilovolt-amperes (kVA). For simplicity, demand is addressed as kW below.

Energy Vs. Demand

X X

X X

100,000 miles

Speedometer

Odometer

ANALOGYA car analogy can beused to help understandthe relationship ofenergy and demand.Think of a car'sdashboard; specificallythe odometer andspeedometer. Anodometer records thetotal distance traveled(i.e. energy) while a car'sspeed (i.e. demand) isrecorded by thespeedometer.

Kentucky Division of Compliance Assistance

Consider a customer has ten 100-watt light bulbs andall ten are turned on at the same time for two hours. REAL WORLD

DEMANDDEMAND

=

=

ENERGYENERGY

X =

However, if the customer assured that only 5 of the 10 lightswere on at any one time during a two hour period.

Demand (kW)A car's speedometerrecords speed (i.e. how fastit is traveling at a giventime). Similar to speed,demand is amount ofelectricity which is beingused at a given time.Demand depends on howmuch electricity-consumingequipment a customer runssimultaneously.

If the car is moving, the odometer is turning and the speed can change momentto moment. The higher the speed, the faster the odometer turns. You glance atthe speedometer while driving. Each time you look, the needle points to yourcurrent speed or actual demand. You may have gone different speeds duringyour trip, but when it was over, imagine the needle moving to the highest speedtraveled. This highest speed would be the trip's maximum demand.