Are You Paying Too Much? Understanding your energy rate schedules

Written by:  Dawn Nall, Project Manager, Southwest Environmental Finance Center

For many water systems, the electric (or energy) bill is one of the largest expenses regularly incurred by the water utility.  It is also one of the most controllable expenses a water utility will have.  Most energy providers charge different rates for different types of customers, such as commercial and residential.  Understanding the energy rate schedule(s) charged to your water utility will insure that you aren’t paying for a service you don’t need.

How do you determine the rate schedule and what you are paying for?  Start with your energy bill.  Typically your energy provider lists the rate schedule associated with the bill.  If you have multiple bills, the rate schedules may not be the same for each location.  There are many different types of rate schedules, but here are some examples of what you might find in a rate schedule name: nonresidential, small general service, medium general service, municipal water pumping, general demand service, time of use, etc.  Oftentimes these rate schedules will be abbreviated.  Here is an example:

Once you’ve found the name of the rate schedule your energy use charges are based upon, it is time to understand what those schedules mean.  You can go about this in a couple of different ways.  You can look on your energy provider’s website to see if rate schedules are published and download the information to your computer to review.  Or you can contact your energy provider’s account manager and ask them to provide you with more information on the available rate schedules.  If you opt to do the research yourself, you will need to read the description of what is or isn’t covered by that particular rate schedule to determine if it matches up with what you are using energy for at that location.

Understanding your energy rate schedules will allow you to have a conversation with your energy provider to make sure that you are being charged at the lowest possible rate for the energy you use.  Recently a system we are working with contacted their energy provider to request more information about their energy use.  This conversation led to the energy provider reviewing their use and comparing it to the energy rate schedules.  The energy utility’s contract manager for the community found three accounts that were using less energy than the rate schedule was intended for.  By simply changing rate schedules for those three accounts, the energy utility estimates that the community will reduce their energy costs by more than $1,300.00 annually.

Some energy providers can compare costs for your account using different rate schedules.  Some energy providers allow you to do this comparison within your account on their website.  These comparison tools provide valuable information to you, they take very little time to use, and they do not require you to have a complete understanding of each schedule.

Finally, by going through the process of reviewing your rate schedules and what you are paying for, you will better understand what facilities your budget is paying for.  Occasionally, an account number may be incorrectly typed or assigned so that your budget is paying the electric bill for something that it shouldn’t be paying for.  For example, we worked with a system to better understand their energy use and while reviewing the accounts the water utility was responsible for, it became apparent that they were paying the energy bill for the local golf course quite by mistake.  Correcting this saved the water utility several thousand dollars each year.