13 ways to painlessly improve profitability: Time of Use (TOU) Pricing

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This is a portion of a post on MultiBriefs Exclusive.

Demand chargeThe law of supply and demand is perhaps society’s most basic principle. When supply exceeds demand, prices fall and, conversely, higher demand means higher prices. In restaurants, that principle underlies happy-hour and early-bird specials that are all based on bringing in customers during slow portions of the day.

In some areas of the country, your utility may price energy the same way, using what is known as “time of use” (TOU) pricing. Under TOU pricing structures, when the demand for energy is highest, generally noon to 6 p.m., the cost per kilowatt-hour is higher than during the late-night and early-morning hours.

Check with your local utility to find out what’s happening in your area. Then, with knowledge comes power, so use it to save money. Here are a few tips to help you save if you are in a region with TOU pricing.

  1. Ice machines — This is among the easiest changes. Determine how much ice your operation uses during a day and, assuming you have ample storage capacity, make that ice during the overnight hours. It’s just like storing energy. And because the heat that results from the ice-making process won’t be emitted into the kitchen during peak hours, the kitchen cooling load during peak hours is also reduced.

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