Sites may be able to reduce their reliance on the electricity grid and negotiate better utility rates by managing demand, implementing efficiency measures, and reducing peak loads. By modifying energy usage patterns, sites may lower consumption during more expensive peak periods of use, or qualify for an alternative time-based rate schedule.

Electric utility bills may be composed of the following four additive cost components:

• Fixed charge: Administrative charges such as meter reading costs and other recurring charges unrelated to the quantity of energy consumed
• Energy charge: Utility costs directly related to site’s energy consumption
• Peak demand charge: Cost based on the capacity of the service provided, which depends upon power demanded by site at peak times; the total peak demand on power providers determines the size of the plants and the provider’s investment costs
• Power factor penalty: Charge assessed for excessive reactive power consumption by loads with low power factor, often due to oversized motors and transformers; the best way to counteract these fees is with a comprehensive energy audit and properly engineered systems

Peak load shaving is the practice of reducing the amount of energy purchased from the utility company during the highest demand hours. This can result in significant savings when the utility rate schedule includes a high monthly peak demand charge, which is sometimes ‘ratcheted,’ and can persist for several months to a year past the occurrence of a new demand peak.

Consider the following opportunities for peak load shaving:

• • Sites may be able to use new or existing generators to offset the load that exceeds the daily average for short periods of time.
  • Schedule energy-intensive activities to occur during off-peak hours. Pre-heat and pre-cool the building, or schedule cleaning and maintenance to avoid peak hours (Resources: Demand Response | Dept of Energy ).
  • Implement on-site energy storage and renewable energy production to reduce demand on the utility provider during peak or off-peak periods (see Energy: Photovoltaics and Energy: Wind Power).

Forming collaborative partnerships with local utility providers can help identify opportunities both to reduce energy production demands on the utility providers and to optimize energy savings for post. Some utilities offer demand response programs, which provide financial incentives for participating customers who quickly reduce loads during periods of high demand.

When contacting the local utility provider:

• Negotiate the best possible rates, fees, and surcharges, based on successful implementation of applicable demand reduction strategies.
• Determine whether demand response programs exist, and whether alternative rate or demand schedules are available for time-based billing.
• Participate in available demand response programs, if offered. This requires sites to develop and implement demand response event plans.