Lowering Your Utility Bills Part 3: Demand Response

The Practical Matter of Controlling the Operating Costs of Your Utility Bills Part 3: Demand Response

This post is for large end-users of power, generally speaking if the electricity bill of your business approaches $50,000 a month, Demand Response (DR) opportunities may be worth considering.

Demand Response (DR) is a commitment between a business with significant power consumption and the regional grid operator. The end-user commits to curtailing energy consumption, or load, at times of peak grid stress.  The regional grid operator offers monthly consideration for this commitment by the business.  The monthly checks from the regional grid operator to the business can be substantial.

DR programs have been implemented locally in an effort to tackle the issue of increased consumer demand for electricity and the difficulties of building new power plants able to meet that demand. Particularly at times of peak demand for power, the stress on a regional power grid can be tremendous. DR programs are an effective way of lowering regional grid stress during that peak demand. In New England, peak demand times usually occur during summer heats waves in the late afternoon during the work-week, when building envelopes are struggling to contain comfortable interior temperatures and air conditioning units are working at full capacity.

Businesses that need significant power to operate and have already invested in back-up generation in case of power outages are ideal candidates for exploring DR opportunities.  Contact inCharge Energy at (800-268-8576) if you believe your business may be appropriate for a DR program.

LoweringYour Utility Bills Part 2: Procurement

The Practical Matter of Controlling the Operating Costs of Your Utility Bills Part 2: Procurement

Understanding the alternative procurement options in front of rate-payers requires an explanation of the three parts of an electricity bill. One of those sections, the supply of electricity, has a complex retail marketplace that many consumers do not fully understand, despite the potential advantages of participation for your business or home.  Like any marketplace, however, risks of participation are inherent.

The rate-payer's electricity bill can be divided into three parts, supply charges, delivery charges and tariffs. Supply charges are the fees that the end-user pays for the generation of electricity. In New England, these charges have tended to be extremely volatile and historically the most expensive part of the rate-payer’s bill. Delivery charges are the fees the utility company receives for maintaining and repairing the transmission and distribution lines of the electrical grid. Tariffs are charges that the end-user pays for legislated utility upgrades and investments.

In 1998, the electricity markets in New England were restructured. Until that time, utility companies had complete vertical control of the rate-payer’s utility bill. These utility monopolies owned entire regional power grids from power plants to transmission lines to distribution lines. In 1998 utilities were required to sell most power plants to private companies, but maintained ownership of transmission and distribution power lines and the obligation to service and repair those lines. Legislation also obligated the utilities to the open transmission of power for generation plants (roughly 350 in New England alone).

For large end-users of electricity there are a number of private companies who own diversified types of power plants that may be willing to offer a variety of products, prices and terms on the supply portion of the rate-payer’s electricity bill. The utility company’s limited options of 3-6 month supply terms can create difficult budgeting challenges for large end-users of power. Planning a budget a year in advance for one of the largest expenses many businesses have using the utility companies short terms and sometimes volatile pricing is daunting for the best number crunchers to face.

Fortunately, since 1998 the utility supply charge is not the only option for large end-users. For most large end-users of power, terms of up to three years are available, locking down budget certainty for a considerable period. 

There is also a retail marketplace starting to emerge in Massachusetts for residential end-users. Currently this marketplace can best be described as “immature”.  Although customer choice is a positive development for residential end-users, participation is best for consumers who understand the specifics of the marketplace and willing to keep track of supply charges on their electricity bills. Compelling “teaser rates” can quickly sour if the residential end-user does not monitor their bills carefully.  Many Massachusetts residential end-users may be wise to have the market mature a bit before participating.

Glossary of Energy Efficiency Terms for End-Users

Carbon Footprint: The quantity of carbon emissions emitted by a vehicle or a building over time, typically a year. By averaging the mix of fuels powered by New England’s electricity generation plants, it is possible to calculate a building’s carbon emissions with its electricity usage. Adding this to the emissions burned by the buildings heating unit(s) one can calculate the total carbon footprint of the building. 

Carbon footprint can also be a calculation of an individual or households total carbon emissions. In 2008 the average U.S. household’s carbon footprint was 48 tons of CO₂ per year. Transportation (driving, flying & small amount from public transit) is the largest overall category, followed by housing (electricity, natural gas, waste, construction) then food (mostly from production of red meat, dairy and seafood products, but also includes emissions from all other food production), then goods followed lastly by services. The carbon footprint of U.S. households is about 5 times greater than the global average, which is approximately 10 tons of CO₂e per household per year. 

Competitive Supplier: An alternative electricity and natural gas choice for end-users. Utility companies are limited in their ability to offer customers price and term alternatives; competitive suppliers can offer alternative term and price options that may be advantageous to consumers. This market was, until recently, almost exclusively for large end-users of energy. Recently in Massachusetts several competitive suppliers have entered the market place for residential rate-payers.

Distributed Generation: Self-sufficient end-user generation of electricity, typically by a solar array, in a residential or commercial setting. 

Dynamic Pricing: The changing price of a commodity that reflects actual supply and demand. The current pricing of New England’s utilities for residential end-users only reflects fixed pricing in three or six month periods. The residential consumer is not currently able to take advantage of dynamic pricing alternatives.  Dynamic pricing can potentially lower a customer’s utility bill and may lessen the stress on both the environment and the electricity grid in times of peak demand. See Smart Grid.

Electricity Bill: The end-user's electricity bill can be divided into three parts, supply charges, delivery charges and tariffs. Supply charges are the fees that the rate-payer pays for the generation of electricity. In New England, these charges have tended to be extremely volatile and historically the most expensive part of the end-user's bill. Delivery charges are the fees the utility company receives for maintaining and repairing the transmission and distribution lines of the electrical grid. Tariffs are charges that the end-user pays for legislated utility upgrades and investments.

Energy Audit/Assessment: An assessment of a building’s energy efficiency that typically includes an analysis of the building envelope, lighting, heating and cooling systems.

Energy Star: A government-backed program helping businesses and individuals protect the environment through superior energy efficiency. It was created in 1992 by the Environmental Protection Agency and the Department of Energy. Appliances or heating and cooling systems that have Energy Star logos are substantially more energy efficient than the US federal government standards for like kind appliances or systems. Although these units are typically more expensive than the average, they are designed to pay back the initial investment with utility savings over time. New construction can also receive an Energy Star rating for a home or building. If a home has an Energy Star rating you will find the Energy Star logo inside the door of the electrical panel.

Enterprise Green Communities: Enterprise Community Partners, formerly The Enterprise Foundation, is a nonprofit organization with offices nationwide. Founded in 1982 Enterprise has worked with community-based nonprofit organizations to develop over 240,000 affordable homes and invest over $9 billion throughout the United States. On October 8, 2009, Enterprise Community Partners announced a $4 billion commitment to the next generation of its Green Communities initiative. Enterprise said its efforts will result directly in the creation, preservation, or retrofit of 75,000 green homes and community and commercial buildings over the next five years. The group will provide loans to owners of existing multi-families in key markets for capital purchases that will reduce energy and water consumption or will lead to more healthy living environments.

Green Communities Act: On July 2, 2008 Governor Deval Patrick signed comprehensive landmark legislation to reduce energy consumption and motivate clean energy technology. The law encourages the creation of green communities. A Green Communities Division within the Massachusetts Division of Energy Resources expends $10 million annually to stimulate higher energy efficiency in cities and towns or to encourage investments in renewable energy. No-interest loans are one of the incentives. Local communities participating in GCA include: Arlington, Boston, Cambridge, Lexington, Medford, Melrose, Revere, Somerville, Watertown and Winchester.

Geothermal heating and cooling: Geothermal energy originates from the heat retained within the Earth since its origins, and from solar energy absorbed at the surface.  Most high temperature geothermal heat is harvested in regions close to areas of volcanic activity. However, even cold ground contains heat, below 10 feet the ground is consistently 55 °F in moderate climates, heat may be extracted with a heat pump.

HERS Rating: Home Energy Rating System. A certified measurement of a home’s energy efficiency by an independent third party.

ISO NE: Independent System operator of New England. The non-profit market monitor of the electricity grid and wholesale electricity market. The price of electricity in New England changes 288 times daily; ISO NE monitors correct wholesale pricing for New England’s 350+ power plants. 

HEAT Loan: The HEAT Loan Program provides customers the opportunity to apply for a 0% loan from participating lenders to assist with the installation of qualified energy efficient improvements in their homes. The loans are available up to $25,000 (depending on utility & lender) with terms up to 7 years. To qualify for the loan, the customer must own a one-to-four-family residence, obtain a Home Energy Assessment, and install qualified energy efficiency measures.

inCharge Energy: An energy management and procurement firm located in Somerville, MA.

Interconnection: The process of formally connecting a distributed generation unit to the grid through the utility company.

LEED: Leadership in Energy & Environmental Design (LEED) is an internationally recognized green building certification system, providing third-party verification that a building or community was designed and built using strategies intended to improve performance in metrics such as energy savings, water efficiency, CO₂ emissions reduction, improved indoor environmental quality, and stewardship of resources and sensitivity to their impacts.  Developed by the US Green Building Council (USGBC), LEED is intended to provide building owners and operators a concise framework for identifying and implementing practical and measurable green building design, construction, operations and maintenance solutions.

Mass Save: Mass Save is the program administrator for energy efficiency incentives and energy savings programs to residents and businesses in Massachusetts.

MPG Rating (for buildings): A new rating for the energy efficiency of a building by the MA Department of Energy Resources (DOER). It is currently in prototype stage for rating all commercial buildings in the Commonwealth. The intention is to give prospective tenants or buyers of commercial buildings an estimate of a building’s energy efficiency in a way that is more readily understood by the average consumer.  A building may be rated a ‘Toyota Prius ‘or it may be rated a ‘Dodge Durango’; obviously these ratings will have an effect on the marketplace.

The City of Boston is considering mandating MPG building ratings on all buildings in the city’s limits, commercial and residential.

Municipal Light Department: A municipality that has decided to become its own electricity company. The municipality takes over the local utility company’s obligation to maintain and repair local distribution lines in exchange for the ability to aggregate its customers’ electricity consumption for bid to competitive suppliers of electricity. Muni’s may not have access to Mass Save incentives for energy efficiency upgrades. Local municipal light departments include Reading and Wakefield.

National Grid: A utility company that serves customers throughout the Greater Boston area with transmission and distribution of natural gas and electricity. Service territory includes Melrose, Medford, Andover and Malden.

Natural Gas (NG):  A fossil fuel used to heat roughly 52% of Massachusetts homes, and power over 50% of New England’s electricity generation. Natural Gas burns 40% more efficiently than coal burning power plants and produces fewer carbon emissions per megawatt of electricity produced. The wholesale price of NG has dropped 80% from its high in 2008. The federal Energy Information Administration (EIA) reported that the average American homeowner paid only about $732 to heat their home with gas during the 2011-2012 winter season (October 1 through March 31) versus a $2,535 for oil heat.

Net Meter: A utility meter measuring not only the end user consumption of electricity from the grid, but excess electricity fed to the grid by a distributed generation source, typically a solar array. Standard utility meters only measure the amount of electricity being pulled from the grid by the end user.

Next Step Living, Inc.: A residential energy assessment company offering customers free home energy assessments and access to MassSave utility incentives for energy efficiency upgrades.

Net Zero Home: A home with zero net energy and carbon emissions annually.

NSTAR: A subsidiary of Northeast Utilities and a utility company serving customers throughout the Greater Boston area with transmission and distribution of natural gas and electricity. Service territories include Somerville, Cambridge, Arlington, Winchester, Stoneham, Boston and Lexington.

Power Purchase Agreement (PPA): An agreement with a third party in which the end user can lease roof or land rights to a third party for the purpose of installing distributed generation (typically a solar array). The third party then takes ownership of the renewable energy generated from the site and any SRECs produced.

Price Responsive Demand: Customer reaction to dynamic pricing. When a customer sees the actual retail price of electricity changing in real time, a certain percentage of customers will adjust their consumption in order to take advantage of low demand times when prices are cheaper. See Smart Grid.

Regional Green House Gas Initiative (RGGI or pronounced “Reggie”): A commitment by several Northeastern US states and provinces in Canada to reduce greenhouse gas emissions. RGGI is a cap and trade system for carbon emissions from power plants in the member states. Proceeds are used to fund energy efficiency and renewable energy initiatives.

RE/MAX Heritage: A real estate brokerage with five locations. RE/MAX offices include teams of realtors (Green Teams) from each office whose expertise combine a superior knowledge of energy efficiency with considerable residential and commercial real estate market proficiency.

Smart Grid: A system of grid improvements that will include Advanced Metering Infrastructure (AMI) for all end users. Smart Grid System pilot projects are currently being installed in Worcester, MA by National Grid and in Burlington, VT by Vermont Electric Company. Residential end users will be given access to their actual electricity usage and retail dynamic pricing so that the consumer has the ability to adjust consumption away from times during escalated retail prices—generally at times of peak demand.

Solar Power: A renewable fuel source. With a small scale solar photovoltaic (PV) installation, active solar arrays convert sunlight to electricity for use to power equipment and appliances. In the past, residential end users wishing to install a solar array on their home were confronted with large up-front investment costs. With current legislated incentives offered by utilities, there are now many opportunities for the residential end user including no money down lease options.

Solarize Massachusetts: A program administered by the Massachusetts Clean Energy Center and the Green Communities Division (GCA) to accelerate the adoption of solar PV with residencies and businesses in Massachusetts. Communities currently participating in this program include Acton, Arlington, Boston, Hopkinton, Melrose, Mendon, Montague, Newburyport, Palmer, Pittsfield-Lenox, Shirley, Millbury-Sutton, and Wayland-Sudbury-Lincoln. In each of these communities you may hear the program referred to Solarize (Community Name). 

SREC: Solar Renewable Energy Credit. One of the legislated incentives offered to customers wishing to install solar systems. The end user has the ability to cash the credits or transfer the ownership to a third party in a Power Purchase Agreement (PPA).

 

Stretch Code: One of the requirements for communities participating in GCA. The community must ensure that any new d residential housing developments built under Stretch Code guidelines. The stretch code appendix offers a streamlined and cost effective route to achieving approximately 20% better energy efficiency in new residential and commercial buildings than is required by the base energy code.

Watt, Kilowatt, and Megawatt: Measurements of electrical power typically generated by a power plant and consumed by an end user. One thousand watts equals one kilowatt; one thousand kilowatts equals one megawatt. If a 100 Watt light bulb is on for 10 hours it has burned one kilowatt hour (kWh) of electrical power.

Lowering Your Utility Bills, Part 1: Energy Efficiency

The Practical Matter of Controlling the Operating Costs of Your Utility Bills Part 1: Energy Efficiency

In order for a homeowner to control the operating costs of their energy consumption, let’s start with separating energy consumption from a building’s inherent energy efficiency. The person paying the utility bills likely has control of their own and their families’ energy consumption habits. They have the ability to control their utility costs simply by committing to best practices of using heating, AC,lighting and appliances in a more reasoned way. An easy way to start is to replace incandescent light bulbs with equivalent CFL or LED lamps. Installing a programmable thermostat can help a automatically adjust their heating and AC units to consume less energy when no one is home. Unplugging that second refrigerator that only is used for the holidays is a no-brainer.

A building’s energy efficiency performance has an even more significant impact on the rate-payer’s utility costs.  An energy assessment of your home is recommended to help you understand your home's energy performance. The assessment should address the tightness of your building envelope, the homes heating and cooling systems and lighting. A high performance building can significantly cut operating costs; in fact, some net zero buildings are designed so efficiently that they have the ability to negate utility costs entirely.

It is important to note that a rate-payer whose energy consumption habits are poor can have a negative impact on a high performance building, as well as the fact that excellent end-user consumption habits can mitigate the effects of a low performance building. In terms of relieving rate-payer, environmental and regional grid stress, however, nothing compares to a high performance building occupied by an end-user who is committed to lowering their energy consumption.