Rate changes and complex tariffs promise bigger increases and wilder swings in SCE customer rates
Gridium customers are a motivated lot, always looking for a competitive edge in lowering building costs. Unfortunately, CFOs and Asset Managers often look to the raw utility bill for proof of those savings. That perspective is about to get even more complex for buildings in SCE territory.
First, SCE is pushing through a fairly big rate increase that will swamp most small energy efficiency projects. System-wide, SCE estimates an 11% rate increase relative to April 2014 rates. Reasons cited for the increases include reinforcing the system to accommodate load growth, connecting more customers to the grid, and replacing aging distribution infrastructure. In calculating its future revenue needs (and therefore rates), SCE has included significant Operations and Maintenance savings from closing down the San Onofre Nuclear Generating Station.
Secondly, Phase 2 of SCE’s current rate case also requests CPUC approval to transition–by default–all small and medium sized commercial customers to “Critical Peak Pricing” tariffs. Customers will have the chance to opt-out. CPP is a form of Demand Response, where customers on these rates are charged $1.20 per kWh during 12 annual event periods, but save on demand charges during the summer. While the overall effect of these rates will be neutral over the summer, bill periods with multiple events will be significantly more expensive. It’s not uncommon to see bills jump 15% or more during months with multiple demand response events. The combination can be bewildering for a CFO or Asset Manager just looking at bills. With a potential average 11% rate increase, some months will see a total rate increase of over 25%. If you’re investing your organization’s money in energy efficiency, you can imagine the sinking feeling you’re going to get when someone calls asking why the bills are still going up.
A Gridium building on Wilshire Boulevard in Beverly Hills is a great example. This building’s August 2014 effective SCE rate jumped 37.8% compared to its effective rate in 2013 (an effective rate includes the charges for energy use and the charges for peak demand).
Thankfully, the building has deployed Gridium Billcast, and has fingertip access to reports that show energy savings, after correcting for issues of rates try this web-site.
Gridium Billcast normalizes variances in monthly utility bills, year over year, by disaggregating components that are out of your control (weather, rates, billing period) and leaving a clean signal of how the building performed. Thankfully for this Gridium building’s budget, the spike in rate was mitigated by a 13.0% improvement in operational efficiency compared to August 2013. While August 2014 bill-period calendar effects helped out to the tune of 6.9%, weather accounted for a year-over-year increase of 10.4%. In total, the August 2014 bill was 28.1% higher.
You can see how instantly this data turns the angry and suspicious into converts for energy efficiency. In one simple glance, it’s clear if there are energy savings hiding in higher and increasingly volatile bills.
If you have questions about your energy budget, SCE’s Critical Peak Pricing tariff, or how to improve your load curve and mitigate the impacts of rising SCE rates, please email us.