There is penalty in our local electricity company's rate structure, for each kW you are over your base demand, so can we include this penalty in the saving we got in the modelling then?
E.g. proposed building peak demand is 5000 kW, baseline is 6000 kW, and there is a $1 fine for every kW over the set demand.
So can we set the demands for both the proposed and baseline models to be 5000 kW, and claim the additional $1000 fine as our savings?
Or we can only set the demands to be 5000 kW and 6000 kW in proposed and baseline building respectively, and the penalties incurred in both cases are minimum?
Marcus Sheffer
LEED Fellow7group / Energy Opportunities
LEEDuser Expert
5868 thumbs up
August 21, 2012 - 8:40 am
That does not sound like it would be allowed as you described but there is insufficient detail in your post to say for sure.
You must model the same electric rate in both models. You can enter a simple cost/unit as a rate or enter a complex electric tariff. If this"penalty" is part of a published tariff you can use the entire tariff but can't use just part of it.
James Chueh
93 thumbs up
August 21, 2012 - 10:42 pm
It is a part of the tariff, which is stated very clearly as follow:
There is a base demand charge that is agreed, in kW value, between the utility company and the customer. Every month the customer purchase electricity from the company, if the monthly peak demand goes above the agreed kW, if it is over, but <110% (10% overuse), you will pay double the demand charge for the overuse. If the overuse is more than 10%, the demand charge would be tripled.
Take the original example in my question (assuming demand charge is $200 per kW):
Electricity base demand agreed: 5,000 kW
Monthly base demand charge = 5,000 kW X $200 = $1,000,000
If the peak demand is 5300, which is > 5,000 kW, but < 5,500 (110%) kW, the total demand charge is = $1,000,000 + 300 kW X $200 X 2 = $1,120,000
If the peak demand is 5800, which is >5,500 (110%) kW, the total demand charge is = $1,000,000 + 500 kW X $200 X 2 + 300 kW X $200 X 3 = $1,380,000
Obviously the baseline model's peak demand (e.g. 6000 kW in my original question) will be more likely to be higher than the proposed model, so if the base demands are set to be equal in both cases, baseline model will have to pay a lot more, hence more savings.
Marcus Sheffer
LEED Fellow7group / Energy Opportunities
LEEDuser Expert
5868 thumbs up
August 22, 2012 - 8:43 am
As long as it is part of the tariff and you use the whole tariff in the model you can claim the savings. The word "fine" threw me a bit since I am sure the utility would not use that term. I would suggest you provide a copy of the tariff when submitting your modeling results.
There are similar charges in electric tariffs I have run across. Some are referred to as a ratchet, they are often set on seasonal peaks. For example the summer peak (May to September) demand can set the peak demand for the rest of the year. So these demand penalties do occur. There are also declining rate blocks based on the demand level (the higher the demand the more expensive kWh you buy). So these charges based on demand levels are not uncommon. Out of curiosity how is the kW limit agreed to? Is there a negotiation or does the utility dictate it?
James Chueh
93 thumbs up
August 22, 2012 - 10:03 pm
Well, you simply tell the utility company what your demand would be, I think you need to tell them in the application form for the installation of the meter.
Thanks for the help Marcus, you're the man!!