Despite many years in the energy industry, this author is continually stunned by the number of end users and energy professionals who do not understand their utility rate structures or their implications for savings potential. Unfortunately, the status quo is for an energy services firm to identify energy waste, install a solution, and then incorrectly calculate “savings” based on weighted average unit costs, in $/kWh. The reality is that weighted average unit costs can greatly over or understate the true savings opportunity.
In eastern Massachusetts, the two main Investor Owned Utilities (IOUs) provide a stark contrast in rate structures for large commercial customers that have major implications for how an end user should invest in efficiency. NStar’s B7 rate is the most common rate for large commercial customers in the legacy Boston Edison service territory. It charges end users primarily based on peak demand, with particularly punishing demand charges during the summer months. National Grid’s G3 rate is the most common large commercial rate in its service territory. The G3 rate primarily charges consumers based on usage volumes in kWh. These differences are clearly evident by reviewing the invoice formats, excerpts of which are shown below.
