Are You on the Wrong Utility Rate? (Hint: Probably.)

Ensuring your building assets are on the ideal utility rate is actually quite rare. When a building enrolls with a utility, the utility assigns it a rate based on its size and projected consumption and demand. But quite often that rate isn’t the most advantageous (read: cost-effective) for the building owner. Over more than a decade of working with portfolios and buildings of all sizes across California, we’ve found that many are routinely on sub-optimal rates and spending tens of thousands more on their energy bills than necessary. Here are a few of the most common reasons why:

1. Rates in California are complex. They now include multiple peak demand charges (i.e., the max kW you use in a 15-minute period during daily windows over the course of a billing cycle) and time-of-use (TOU) rates  (i.e., different costs per kWh at different times of day and days of the week), making it difficult to understand the right options.  
2. Energy usage patterns change. For example, we often encounter electricity meters that are put on a small commercial rate when a building is first built, only for that building to grow over time. Between when and how buildings use energy, each one has a unique load profile. Energy consumption patterns of buildings may evolve over time due to changes in occupancy, operational hours, or equipment upgrades. If the rate originally assigned to a building does not align with its current energy usage pattern, it can result in unnecessarily high costs.
3. Lack of expertise or awareness about the options. Many building owners and managers may not be aware of the available rate options or the potential savings associated with switching to a more suitable rate. They may lack the expertise– and time– necessary to navigate utility rate structures and options.
4. Utilities change rates. For example, beginning in 2019, utilities across California have shifted the on-peak period to combat the duck curve, completely changing the optimal rate structure for most office buildings. Without a rate engine it is impossible to see the impact of this shift.

Fortunately, there’s opportunity for even the most resource-constrained building teams to quickly get on a more optimal rate, and save significantly on their bills.

How to Ensure Each of Your Buildings Is On the Right Rate Every Year

In California, customers in an investor-owned utility territory (SDG&E, SCE, PG&E) can change their rate once per year. At Gridium, we take advantage of this opportunity to help our customers understand their current rate, needs, and options through a rate optimization process. 

Here’s how it works:

1. To find the optimal utility rate for that building, our team at Gridium takes the last twelve months of each building’s electricity data and runs it through our revenue-grade rate engine to model all the utility rates available.
2. The rate engine analyzes a whole set of complex eligibility requirements (e.g. did your building use over 500 kW during one 15-minute interval for three consecutive months in the past 12 month period?) to figure out which rates a building qualifies for, so customers don’t have to do that work themselves.
3. We communicate with customers to ensure we understand how they plan to operate the building over the next 12 months, if they expect big operational changes, and if the last 12 months were representative of how the building is run. Then we present customers with our recommendation and a savings projection. For customers, it can be as simple as that, with no work required on their side. 

Big Rate Savings, No Effort

This service is part of Gridium’s commitment to helping our clients cut energy costs in every way we can. The value to firms isn’t that we do something they can’t do themselves, it’s that Gridium makes it faster, easier, and less expensive than committing an internal analyst’s time to the job (if you even have the resource to spare!). These nuances are easy to overlook, even for those well-versed in energy management. We’ve worked with building owners and operators that are highly sophisticated when it comes to utility usage, and still found hundreds of thousands of dollars in savings through rate audits. 

What’s more, when there’s red tape to cut through with the utility, Gridium hacks away at it behind the scenes. We make sure the utility makes the rate change correctly and customers are getting their savings, which we’ve seen range from 5-10% of our customers’  total energy bill. 

Here are a few examples of recent rate optimizations and savings we’ve identified for customers:

Mixed-use office (PG&E)

• Issue Identified: Default rate was not optimal based on load profile
• Est. Annual Savings after Rate Change: $34,000 off a $580,000 annual bill

Medical office (PG&E)

• Issue Identified: Medical office building baseload was higher than commercial office
• Est. Annual Savings after Rate Change: $22,000 off a $240,000 annual bill

Life sciences portfolio (PG&E & SDG&E)

• Issue Identified: Unique load profile of lab spaces was not a fit for current rate
• Est. Annual Savings after Rate Change: $1.1M over ~20 buildings (mix of landlord and tenant control)

Office (PG&E)

• Issue Identified: Default low-usage rate was not a fit
• Est. Annual Savings after Rate Change: $15,000 off a $150,000 annual bill. (With support from Gridium, customer was able to request a retroactive billing correction resulting in an instant additional credit of $26,000.)

Office (SCE)

• Issue Identified: A shift in on-peak period meant the optimal tariff flavor changed
• Est. Annual Savings after Rate Change: $12,000 off a $140,000 annual bill

We reevaluate every building’s rates across every customer, every year. Savings tend to pop up year after year, as rate options change and new opportunities make themselves available.

The energy use savings we offer customers only start with rate audits. Our understanding of rate structures is the same understanding that enables us to coach customers to lower demand charges and improve building operations, driving deeper savings across the portfolio.

Interested in discussing how to optimize your utility rate? We’d be happy to take a look. Contact us below to start a conversation.