Wednesday, March 16th, 2016
“Hey APT! Aren’t utility electric rates and tariffs really just the same thing?” Well…yes, I mean no, I mean…not exactly.
While electric rates and tariffs often end up in the same discussion they are not one in the same, and understanding the definition of both (but more so the latter) is the first step in taking control of your utility bill.
The problem is, when you place a tariff in front of someone you’ll immediately see their eyes glaze over as their mind drifts to more pleasant thoughts. Tariffs are terribly wordy, contain all sorts of strange nomenclatures and acronyms, and usually outline several possible charge structures that will have you navigating a proverbial maze. The good news is however, that the electric rates within the tariff may change dollar values occasionally, but the tariff verbiage itself rarely changes. This means there are long-term rewards for staying mentally sharp as you review the documentation.
But there I go mentioning both electric rates and tariffs in the same discussion, so let’s get back to the point and define what they are. Tariffs are a collection of electric rates (among other charges that will not be covered in this post) that are applied per the verbiage of the tariff for determining your final utility bill. Electric rates simply indicate how much the utility will charge per unit of electricity consumed (usually defined in terms of kilowatt hours). Another common name for an electric rate is a consumption charge.
As mentioned tariffs will contain consumption charges and several other types of charges. There are a number of ways to structure and layer the aforementioned charges which creates multiple types of tariffs. APT’s utility (PG&E) has over 70 tariffs split between residential, commercial, agricultural, and industrial customers. Despite the sheer number of tariffs there are reoccurring categories throughout, including: General, TOU (Time-of-Use), and Interruptible.
General tariffs will charge predictably and consistently with flat rates. TOU (Time-of-Use) tariffs will charge different rates based on time of day and time of year. Time of day is typically broken down into peak and off-peak hours, which lends itself to consumption strategies (discussed further below). Interruptible tariffs pertain to customers with interruptible loads (can reduce consumption during high demand periods and or emergencies).
If this all sounds complicated it’s because it is, or at the very least extremely tedious, and this is one of the many value-adds that APT brings to a business relationship. APT works closely with customers to understand their applied tariff and electric rates, and then implements a power monitoring infrastructure that provides insight as to how a company’s cost reduction steps are progressing. Additionally APT’s RECIPE analytics platform can assist in developing further cost mitigation strategies, such as shifting identified loads to different hours where a lower TOU rate would apply.
As mentioned, understanding your tariff and electric rates is the first step in taking control of your utility bill. APT will work closely with you to take that first step, and then continue to work closely with you throughout the cost mitigation process now and into the future.