As they do every year, the big California utilities released new rates effective January 1, 2013. Rates generally only move in one direction, and this year is no exception. The question is: how much are they going up?
This is trickier to answer than you might think. The main commercial tariffs for PG&E and SCE have similar time-of-use structures. During summer months, for example, three different use rates and three separate demand charges apply. The amount your bills will increase this year depends not only on the rates themselves, but also on the interaction between the rate structure and your pattern of energy use.*
So, for example, SCE has raised the peak summer demand charge associated with tariff TOU-8 by a whopping 12.5%. Summer use charges are on average going up by 8.7% (also a big increase), and the facilities-related demand charge is going up by a more modest 4.8%. Where does all of this net out?
The sample load curve we used for our simulation is a good approximation of office building load, but may not look exactly like your building.
The way to answer this question properly is to simulate the effect of the new rates using a sample load curve. So that’s what we did. The load curve in question is real data from a California office building. The exact size of the building isn’t especially relevant to this analysis, because we’re calculating changes on a percentage basis. However, the shape of the curve matters a lot. The building used for our simulation has very steady demand across seasons, with a nearly constant load factor of 53%. (Load factor is average demand divided by peak demand.) If your building differs significantly from our test building, you may want to adjust accordingly (see details below).
Our findings for the major C&I tariffs for PG&E and SCE are summarized below. Note that we calculate separate adjustments for the summer and winter seasons, because seasonal rate effects are quite strong. We also provide a blended average for simplicity.
PG&E
The PG&E summer season is May 1 through October 31. Summer charges are higher in an absolute sense, so the combination of higher absolute rates and larger percent increases means that summer months will make up an increasingly large percent of your total annual spend.
- E-20. Summer bills will rise by 4.6% and winter bills will rise by 1.0%. Overall, rate changes will add 3.3% to your annualized electricity spend. Note that E-20 winter demand rates are actually dropping, and the biggest overall driver of the rate increase is summer demand charges, so active summer demand management will help to mitigate the rate increase.
- E-19. Summer bills will rise by 4.9% and winter bills will rise by 1.4%. Overall, rate changes will add 3.6% to your annualized electricity spend. E-19 winter demand rates are also dropping, and once again biggest driver of the rate increase is summer demand charges.
- A-10 (TOU). Summer bills will rise by 4.3% and winter bills will rise by 2.7%. Overall, rate changes will add 3.7% to your annualized electricity spend. Demand charges in general make up a smaller portion of charges on the A-10 tariff, so in this case the large majority of the increase comes from summer use charges. Under A-10, load shifting is more important than managing peaks (although the strategies are related).
SCE
The SCE summer season is June 1 through September 30. SCE raised rates quite a bit across both summer and winter seasons, although again the higher absolute summer rates means that summer months have a disproportionate impact. That said, SCE has a short summer season, so winter rates factor heavily in overall annual spend.
- TOU-8-B. Summer bills will rise by 9.1% and winter bills will rise by 6.6%. Overall, rate changes will add 7.8% to your annualized electricity spend. The increases are fairly evenly distributed across demand and use charges, and across summer and winter seasons, so both load shifting and peak management are appropriate strategies for minimizing the effect of the rate increase.
- TOU-GS-3-B. Summer bills will rise by 8.7% and winter bills will rise by 6.0%. Overall, rate changes will add 7.3% to your annualized electricity spend. Again, the increases are fairly evenly distributed across demand and use charges, and across summer and winter seasons.
- GS-2-TOU. Summer bills will rise by 9.0% and winter bills will rise by 6.4%. Overall, rate changes will add 7.6% to your annualized electricity spend. For this tariff, increases are more heavily concentrated in summer use and demand charges.
How to use these rate adjustments
Many energy budgets factor in a straight-line rate increase, and you should feel free to use our annualized figures in this fashion. However, we encourage you to use the seasonal adjustments instead — for a tiny amount of extra work, you’ll get much more accurate forecasts.
One question is whether you should adjust our simulated rate impacts to better match your building’s pattern of energy use. To a first approximation, small differences won’t have a big effect. But if you have, say, a massive data center in your building, you may want to tune the numbers accordingly.
The first place to start is to calculate your building’s load factor, which is the average demand divided by the maximum demand. You can calculate this figure on a monthly basis, or you can keep it simple by using an annualized figure. Next, compare your number to the 53% figure for the building used in our simulation. If you’re much below 53%, then you tend to have high peaks relative to your average demand, and demand charges will factor more heavily into your overall energy budget. Demand charges tend to rise more sharply than use charges, so considering adding an additional percentage point to our rate increase estimate, especially in summer months. If, on the other hand, your load factor is much higher than 53%, then your energy use is characterized by high baseload. You’ll be less affected by the rate increases, which are concentrated on peak periods, and you should consider adjusting the estimates down by a percentage point.
* Utility tariffs also include configurable options that affect rates. Your voltage level, for example, might be secondary, primary, or transmission level. For our analysis, we found that different option values had very little effect on the percent change from year to year.
