Submetering Specification Part 3: Rate Structures

Submetering Specification Part 3: Rate Structures

By: Allan Evora

When selecting a meter, how you get billed is just as important as what you want to measure.

Did you know the way you are billed by the utility could actually change which submeter you should purchase and install? Your billing structure is just one of the many points to take into consideration when specifying your submeter.

I like to go through a 3-step submeter selection process with each of my customers, which I have outlined in this three-part series:

  1. Understanding Your Goals
  2. Installation
  3. Rate Structures

In part 1 we realized how understanding your goals could seriously impact the type of submeter you’re looking for, and in part 2 we talked about how corresponding equipment during installation could influence submeter selection.

In part 3 we’ll discuss how your rate structure/utility tariff might affect the specification process.


Understanding Rate Structure and How You’re Billed

Most customers understand that they want to measure energy usage, but may not know that capabilities of a submeter should be greatly influenced by electric utility rate structure/tariff. A rate structure (sometimes known as a tariff) is simply how the utility bills a building owner for their electricity usage.

Every person/company has a rate structure. The difference is, if you’re in large commercial or industrial environments, your rate structure/tariff is more complex than a simple kilowatt per hour (KWh) fee arrangement paid by a residential homeowner or small commercial business.


Differing Rate Structures

In addition to the total energy consumption component (KWh) and fixed customer costs (normal monthly fees), industrial and large commercial customers can have:Peak Demand

  • Peak demand charges, also known as KWd (demand). With peak demand, a utility charges a customer based on the highest average energy use within a given month. For example, a customer may be charged for its highest 30-minute energy demand average for the month. Read how Charlotte Pipe and Foundry reduced their peak demand rates by relying on their SCADA system.
  • Fuel and transmission charges can be based on amount of energy used during a given timeframe.
  • Low power factor penalties, also known as high KVar (Reactive Power). A utility will sometimes charge (i.e. penalize) a customer by for consumption of excessive reactive power generally caused by inductive loads, such as motors. Some states, like North Carolina, do not have a penalty for low power factor. Instead, the electric utility works with owners on a case-by-case basis to add equipment like capacitor banks to reduce poor power factor.
  • Seasonal charges mean utilities will charge more for energy and demand during the parts of the year where the electrical grid is closer to capacity (i.e. summer and winter). If your location is in a natural gas-rich area, it’s possible to see winter electric rates actually reduce.
  • Time-of-use charges are variable charges based on time of day. Typically rates increase as energy usage across the electrical grid experiences maximum demands. For example, in June-Sept from 1pm - 9pm, Mon through Friday, you might be charged a higher rate. During off-peak months, days, and hours, you will be charged a lower rate.
  • Real time pricing. In this rate structure, the utility publishes same-day/next-day rates that change based on supply and demand. (Usually the only customers on this type of rate structure are large industrial facilities.) Under certain circumstances, it could be possible to see rates that are 5 to 10 times the normal rate based on conditions influencing electric grid capacity (e.g., a heat wave.) Typically, real-time pricing customers receive lower base rates in consideration for their ability to accept the risk of real time pricing. Generally, customers that negotiate real-time pricing have the ability to curtail or have onsite generation resources.

After understanding the rate structure(s) that apply to you, I can select or specify the submeter that matches up best to your goals and rate structure.


Important Submeter Features Based on Your Rate Structure

Based on your rate structure, you might need to meter with precise accuracy and/or ensure the submeter has onsite storage capabilities.

Interval Data
Owners governed by time-of-use rate structures must have a submeter that supports recording of interval data. Interval data is simply data collected via intervals (say, every 15 minutes), versus reporting total usage at the end of a given period.

It’s important to ensure the interval submeter actually records and stores data locally (onboard storage). If your submeter doesn’t have onboard storage and something happens to the network, you’ll have a big gap in your data. (What if peak demand occurred during that gap?) Onboard storage allows you to send the backed up data to fill database gaps.

If your rate structure is designed to only charge from the beginning to end of a period, or if you’re a light commercial user, you don’t need a submeter with interval data.

Additionally, you need to understand how the utility computes the demand. Is the interval a block calculation or a sliding windows calculation or combination of the two?

Power Quality Analysis
Some types of facilities with highly sensitive electronic equipment or processes, such as, data centers, hospitals or semi-conductor manufacturers benefit from a submeter with power quality capabilities. Since the quality of electricity can damage or affect the operations of equipment (knocking a CT scan machine offline), it’s important to have access to the information so accurate root-cause and remedy can be implemented.

Power quality allows you to identify potential electrical distribution problems like harmonic distortion, phase unbalance, and recurring sags and swells. Your submeter power quality data can help avoid finger-pointing that often occurs between you and your electric utility.

If you need a submeter with power quality, you’ll also want higher sensitivity/accuracy in your current transformers (CTs). As we talked about in part 2, it’s imperative your current transformers support your goals.


Submeter Integrator Checklist

There are so many details to understand about submeters, and that’s why you must trust that your control systems integrator will specify the correct one for your unique environment. Here’s a checklist of what you should be aware of when you choose your submeter vendor.

Ensure before you pick your vendor:

  • They understand the application of submeters in your environment.
  • They understand your goals, and how submeters allow you to accomplish all your goals.
  • They understand your rate structures and what submeters should work best with that rate structure.
  • They support open system integration (they work with a diverse number of manufacturers and submeters, and can provide you varying price points.) For example, Affinity Energy is an open systems integrator and has worked with GE, Schneider Electric, Eaton, Dent Instruments, Veris Industries, Electro-Industries, Emon, Satec, Continental Control Systems, Northern Design, Rockwell Automation, Quadlogic, Accuenergy, Leviton, etc.

Want to read more about submeter specification? Check out Submetering Specification Part 1: Understanding Your Goals and Submetering Specification Part 2: Installation.


Allan-SuitAllan D. Evora is a leading expert in control systems integration and president of Affinity Energy with over 20 years of industry experience working in every capacity of the power automation project life cycle. With a background at Boeing Company and General Electric, Allan made the decision to establish Affinity Energy in 2002. Allan is an alumnus of Syracuse University with a B.S. in Aerospace Engineering, graduate of the NC State Energy Management program, and qualified as a Certified Measurement & Verification Professional (CMVP).

Throughout his career, Allan has demonstrated his passion for providing solutions. In 1990, he developed FIRST (Fast InfraRed Signature Technique), a preliminary design software tool used to rapidly assess rotary craft infrared signatures. In 2008, Allan was the driving force behind the development of Affinity Energy's Utilitrend; a commercially available, cloud-based utility resource trending, tracking, and reporting software.

Allan has been instrumental on large scale integration projects for utilities, universities, airports, financial institutions, medical campus utility plants, and manufacturing corporations, and has worked with SCADA systems since the early ‘90s. A passion for data acquisition, specialty networks, and custom software drives him to incorporate openness, simplicity, and integrity into every design in which he is involved.