NEW COMMERCIAL Rates. Understanding the. Commercial Customers

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1 Understanding the NEW COMMERCIAL Rates The Austin City Council increased Austin Energy s base rates, which pay for operations and maintenance, for the first time in 18 years. The new rates, which amount to a 7 percent system-wide average increase, will be effective beginning with October 2012 bills. Commercial Customers As part of the first rate restructuring since 1994, the increase in the Energy Charge (base rate) and the Demand Charge amounts to a 1 percent to 18 percent increase for commercial customers. Very large commercial customers generally will experience a smaller increase because they receive power at a very high voltage and own and operate their own equipment that steps down voltage to the proper level for their facilities. This means the cost to serve these customers is less than the cost to serve other commercial customers. Consolidation of Classes In the rate restructuring, Austin Energy consolidated its commercial rate classes from 24 to seven to align with industry best practices and better reflect what it costs to serve each commercial class. A customer class is a grouping of customers with similar energy-use characteristics. This is important because the cost to serve each class can vary substantially depending on customer service needs and electricity consumption. An industrial customer, for example, may receive electricity through a single high-voltage line extending directly from a substation, while a small business, like a home, receives its electricity through a series of lower voltage lines starting from a substation. Commercial Customer Classes (< 10 kw) ( 10 < 50 kw) ( 50 kw) (< 3 MW) ( 3 < 20 MW) ( 20 MW) Rates Better Reflect the Seasons Under the new rate structure, Austin Energy reduced the number of months classified as summer months from six to four. The cost of serving higher summer demand is more expensive for the utility, therefore summer rates are higher than non-summer rates. However, customers will now pay lower rates during eight non-summer months which will reduce the overall effect of the rate increase. For example, a customer with less than 10 kilowatts (kw) of demand, who uses 1,000 kilowatt hours (kwh) of electricity in both May and October, will save $32 because those two months are no longer classified as summer.

2 Commercial and Industrial Rates Bill Components Commercial Classification Customer Charge for Service of at least 10 days ($) Electric Delivery Charge ($/kw billed) Demand Charge ($/kw) Summer (Jun-Sep) Non-Summer (Oct-May) Energy Charge (cents/kwh) Summer (Jun-Sep) Non-Summer (Oct-May) Projected Power Supply Adjustment (cents/kwh) Regulatory Charge Community Benefit Charge (cents/kwh) Secondary < 10 kw Secondary 10 < 50 kw Secondary 50 kw Primary < 3 MW Primary 3 < 20 MW Primary 20 MW Transmission $18.00 $25.00 $65.00 $ $2, $2, $2, NA $4.00 $4.50 $2.50 $3.50 $3.50 NA NA NA $6.15 $5.15 $7.85 $6.85 $10.00 $9.00 $11.25 $10.25 $12.00 $11.00 $12.00 $11.00 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ /kwh $2.47/kW $2.59/kW $2.28/kW $2.92/kW $2.91/kW $2.48/kW $ $ $ $ $ $ $ Explanation of Charges Customer Charge The Customer Charge recovers the costs of metering, billing, collections and customer service incurred in managing customer accounts. Austin Energy incurs these costs for all customers. The new rates apply a Customer Charge to all customers on a monthly basis. Under the old rates, only residential and small commercial customers with a demand of less than 20 kw were assessed a Customer Charge. Austin Energy recovered these costs from other commercial customers through their energy and demand charges. Demand Charge A Demand Charge will be applied to all commercial customers with a peak demand of 10 kw and higher. Previously, the Demand Charge was applied to 20 kw and higher. The Demand Charge recovers fixed production costs related to building and financing Austin Energy s existing and new power plants. Using a Demand Charge best reflects the way in which these costs are incurred and provides an incentive for customers to decrease their load by making energy-efficiency improvements or controlling their demand. Customer Charge ($/month) <10 kw $ < 50 kw $ kw $65.00 < 3 MW $ <20 MW $2, MW $2, $2, Demand Charge ($/kw) <10 kw 10 < 50 kw 50 kw < 3 MW 3 < 20 MW 20 MW Summer Non-Summer (Jun-Sep) (Oct-May) NA NA $6.15 $5.15 $7.85 $6.85 $10.00 $9.00 $11.25 $10.25 $12.00 $11.00 $12.00 $11.00 Page 2

3 Power Factor Adjustment As part of the rate restructuring, Austin Energy increased the Power Factor Adjustment requirement from 85 percent to 90 percent. Customers with less than a 90 percent rating will see an adjusted charge. Power Factor is a measure of how efficiently a customer s operation uses electricity. Customers with low Power Factors draw more electric current over an interval of time than high Power Factor customers. A large draw from available electricity results in higher system losses and requires the utility to install additional capacity. Customers with high Power Factors have a lower cost to serve, and vice versa, which is reflected in the rates. When the Power Factor is less than 90 percent during the interval of greatest monthly use, billed kw will be determined by multiplying kilowatt demand during this interval by 90 percent and then dividing that total by the recorded Power Factor during this interval. For example: The kilowatt demand during the interval of greatest monthly use = 13.5 kw The Power Factor during the interval of greatest monthly use = 86.7% The billed kw = 13.5 kw x 0.90 Power Factor / Power Factor = 14.0 kw Power Supply Adjustment The Power Supply Adjustment (formerly the Fuel Charge), recovering dollar-for-dollar fuel and power supply costs, will continue to be reflected as a line item on the electric portion of the bill. Austin Energy makes no profit on this dollar-for-dollar pass-through cost recovery. The Power Supply Adjustment is typically adjusted, if needed, at the beginning of each calendar year to reflect changing market conditions, as well as the price of fuel and Austin Energy power purchases. Projected Power Supply Adjustment Regulatory Charge <10 kw 10 < 50 kw 50 kw < 3 MW 3 < 20 MW 20 MW (cents/kwh) cents cents cents cents cents cents cents The Regulatory Charge (including the current Transmission Service Adjustment Rider) recovers dollar-for-dollar Austin Energy s share of the statewide costs of managing and using the transmission grid and of expanding the state grid. That cost is based on Austin Energy s share of the summer statewide peak demand, which is about 4 percent of the statewide total. Statewide transmission costs currently include an $8 billion construction build-out, most of which will help bring more renewable energy from West Texas to the rest of the state. These costs are reviewed, approved and apportioned by the Texas Public Utility Commission for all electric providers in Texas. Regulatory Charge <10 kw $ /kWh 10 < 50 kw 50 kw < 3 MW 3 < 20 MW 20 MW $2.47 /kw $2.59 /kw $2.28 /kw $2.92 /kw $2.91 /kw $2.41 /kw Page 3

4 New Line Items Community Benefit Charge Some costs currently recovered within the base electric rates have been removed from the new rates and will be recovered through an individual line item known as the Community Benefit Charge. This line item and the other line items on the bill serve to provide greater transparency and understanding of costs being recovered through your electric bill. The Community Benefit Charge consists of three components: Customer Assistance Program (CAP): The City of Austin s CAP provides assistance to qualifying low-income and disadvantaged residential customers in the Austin Energy service territory with their utility bills. The program provides bill discounts, such as waivers of the Austin Energy and Austin Water customer charges and the City of Austin s drainage fee. The charge for commercial customers is 65 cents per megawatthour (MWh). This line item will enable the City of Austin to increase program funding so the number of eligible customers served can be increased from 10,000 currently to an estimated 25,000. Service Area Lighting: The Service Area Lighting component recovers the cost of maintaining and powering street lighting (except for those maintained by the Texas Department of Transportation) and the operation of traffic signals throughout the Austin Energy service area. The Service Area Lighting monthly charge is based on the customer class and the number of kilowatt-hours used, ranging from 51 to 96 cents per 1,000 kwh, depending on the customer class. Energy Efficiency Services: The Energy Efficiency Services component recovers the cost for energy-efficiency programs, including rebates offered to commercial customers to make improvements to their businesses and organizations to reduce their electric bill. The item also recovers the cost for solar incentives to encourage the installation of rooftop solar systems which help reduce the need for additional power plants by decreasing demand for electricity during the peak summer months. Likewise, the item recovers the cost for Green Building which promotes and implements policies to increase energy efficiency and sustainability in the construction of buildings. These programs have historically been funded through the base electric rates charged by Austin Energy. While removing these costs from the base rates and recovering them through a line item responds to community input for greater transparency, it also provides a focal point for any spending adjustments made in the future. Energy efficiency is the least expensive way to avoid building new power plants and is considered the first priority before new power generation sources are developed. The monthly Energy Efficiency Services charge is based on the customer class and the number of kilowatt-hours used and ranges from $1.58 to $3.00 per 1,000 kwh used, depending on the customer class. Community Benefit Charge (cents/kwh) Customer Assistance Program Area Street Lighting Energy Efficiency Programs <10 kw < 50 kw kw < 3 MW < 20 MW MW Page 4

5 ELECTRIC SERVICE Meter # Read Date 04/04/ /03/2013 Consumption Read Reading Difference 359 Meter Multiplier 400 Total Consumption in kwh Demand Usage Power Factor 0.86 Electric Commercial Secondary Greater Than 50kW Customer Charge $65.00 Electric Delivery kw at $4.50 per kw (winter rate) $2, Demand Charge kw at $6.85 per kw (winter rate) $3, Energy Charge 143,600 kwh at per kwh (winter rate) $2, Power Supply Adjustment 143,600 kwh at per kwh $4, Regulatory Charge kw at $2.59 per kwh $1, Community Benefit Charge 143,600 kwh at per kwh $ Capital Metro Sales Tax 1% $ City Sales Tax 1% $ State Sales Tax 6.25% $ Solar Production Based Incentive The solar Production Based Incentive (PBI) is designed to support and help commercial property owners install solar photovoltaic (PV) technology by offering incentives based on the technology s electrical output. The PBI program rewards system design optimization, longterm system maintenance and long-term operations. Customers who agree to participate receive a credit of 14 cents per kwh for the production of electricity by a PV system up to 200 kw in size per campus for a term of 10 years. If at least 60 percent manufactured or assembled in Austin Energy s service territory, a PV system may qualify for a PBI not to exceed 17.5 cents per kwh. The PBI payment is calculated by multiplying the kwh production of the PV system technology by the PBI rate with payment on a quarterly basis. TOTAL CUR RE NT CHARGES $15, GreenChoice Option Austin Energy s award-winning renewable energy program, GreenChoice, is offered to commercial and industrial customers at the same price as residential customers. Subscription requirements for large commercial customers vary with company size. GreenChoice acts as a hedge against the fluctuating price of fossil fuels by replacing the conventional fuel charge (now known as the Power Supply Adjustment charge) with a green power charge. The green power charge stays fixed for GreenChoice and is currently available to all customers at 5.7 cents per kwh. GreenChoice is certified by Green-e, the nation s leading independent consumer protection program for the sale of renewable energy and greenhouse gas reductions in the retail market. For enrollment details visit Net Metering Commercial customers who installed solar PV systems prior to the start of the Production Based Incentive program in 2010 will continue to be billed at a net metering rate. Any month when a PV system sends more power into the Austin Energy grid than the commercial property takes out, the difference, or net, will be credited on the customer s electric bill. The credit is determined by multiplying the net kwh of electricity fed into the grid by the Power Supply Adjustment charge. Jody Horton Page 5

6 Time-of-Use-Option A Time-of-Use option is available for all commercial and industrial customer classes. These alternative rates are designed to better reflect cost-of-service variations in Austin Energy s production costs (seasonally and at various times of the day). They also are designed to provide incentives to customers for reducing energy use during Austin Energy s peak demand period when costs to meet electric demand are higher due to the need for additional generation and higher capacity infrastructure. Houses of Worship Formerly on the Residential Rate, Houses of Worship will be billed on peak weekday demand only and will have a 12.5 cents per kwh cap on their bills under the new rate structure. Independent School Districts Independent school districts receive a 10 percent discount on their billed electric charges under the new rate structure. For more information about the Time-of-Use option rates available to all customer classes, visit Thermal Energy Storage Option Austin Energy offers a thermal energy storage Time-of-Use pricing structure to commercial and industrial customers who install this technology on their premise. Customers can qualify for the rate when shifting at least 20 percent of their normal on-peak June through September billed demand or a minimum of 1,000 kw if demand is 5 MW or more. The normal on-peak June through September billed demand shall be the maximum billed demand from the same time period recorded prior to taking service on this rate or as determined by Austin Energy. Investing in thermal energy storage technology can produce cost savings for the customer. However, a Time-of-Use pricing structure is necessary to maximize the economic benefit to the customer and to promote their investments. Austin Energy is committed to providing cost-based alternative rate structures for customers who wish to reduce their peak demand. For more information about the Thermal Energy Storage option, visit Thermal Energy Storage unit under construction at a municipal facility. Page 6

7 Energy Efficiency Programs Available Austin Energy offers rebates of up to $200,000 annually per customer site to help commercial customers make energyefficiency improvements to reduce their energy use and increase the value of their properties. Rebates are available on air conditioners, chillers, lighting, window treatments, reflective roofs, motors, variable frequency drives and other technologies. Small commercial customers with demand of 100 kilowatts or less are also eligible for a 20 percent bonus year-round, in addition to existing rebates. Austin Energy also offers small commercial customers, including churches and non-profits, a turn-key program that replaces inefficient lighting with new state-of-the-art lighting and is discounted up to 75 percent. Participating in the energy-efficiency programs is easy. Simply send an to commercialrebates@austinenergy.com or call to request an application or a free energy assessment of your property to determine the eligible technologies and rebates. Rebates Available Austin Energy offers lighting retrofit, motor and variable frequency drive rebates to increase energy efficiency and help increase Power Factor. A list of private vendors who can assess and install Power Factor correction capacitors is available at Energy Efficiency Help for Houses of Worship House of Worship customers billed at Austin Energy s Sanctuary rate under the new rate structure can participate in the following services and programs. FREE Load Profiler Subscription for One Year Load Profiler is a Web-based, energy-monitoring program that helps customers better track how and when energy is used by viewing, graphically or in data tables, the House of Worship Sanctuary s: Help for Power Factor The main contributor to a low Power Factor are motors operated at less than full load. This often occurs in facilities that have induction motors, compressors, conveyors, magnetic ballasted fluorescent lighting and various types of manufacturing equipment. Step-up, stepdown transformers can also cause a low Power Factor. Increase Power Factor Consider the following options to help increase your Power Factor: Resize electric motors Add variable frequency drives Install Power Factor correction capacitors Resize step-up, step-down transformers Replace older magnetic ballasts in lighting Energy usage Peak demand, including the recorded date and time Power Factor at time of recorded peak demand. This program is only free for the meter attached to the Sanctuary. Other facility meters on the campus are eligible for this service on a fee basis. FREE Energy Assessment Austin Energy staff will conduct a basic energy assessment free of charge, providing a customized report outlining energy-efficiency opportunities and any utility rebates available for energy efficiency upgrades. These energy assessments are a popular service and will be completed on a first-come, first-serve basis. Small Business Lighting Program Austin Energy now offers its Small Business Lighting Program to all House of Worship facilities. Austin Energy-registered lighting contractors will perform a complete lighting audit of the facility and provide a comprehensive proposal outlining the cost of the retrofit project, the amount Austin Energy will rebate and the anticipated energy savings. Page 7

8 Lowering Demand Electric demand is the maximum flow of electricity used at any one time by a customer and is measured in kilowatts by an electric demand meter. The highest level of electric demand during a billing month is called the peak demand. Demand charges can be a significant part of a business s utility bill. Austin Energy must have generation capacity sufficient to meet customers peak kw demand. The higher the overall peak demand on the electric system, the more generation capacity and equipment is required. The demand charge is designed to recover a portion of the cost for providing the additional generating capacity and equipment needed to serve the customer s peak demand. Tips for lowering demand: Minimize the simultaneous operation of high-wattage equipment and consider alternate cycling of air conditioning compressors and air handlers. If you have multiple HVAC (heating, ventilation, and air conditioning) systems, avoid concurrent operations when possible. Have HVAC equipment inspected and serviced as needed to ensure your system runs with maximum efficiency. Turn off lights, personal computers, copiers, etc. when they are not being used for extended periods of time. This will help control the amount of heat emitted by these appliances, reducing runtime for air conditioning units. Install energy-saving, high-efficiency and low-wattage lighting. Consider the installation of solar screens and film on windows facing east, west or south. Take advantage of Austin Energy s conservation and rebate programs. Questions about the new rates? Visit Questions about your City of Austin utility bill? Visit or call The City of Austin is committed to compliance with the Americans with Disabilities Act. Reasonable modifications and equal access to communications will be provided upon request. TDD RateCOMbrochure092112