13 ways to painlessly improve profitability: No surprises

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This is a portion of a post on MultiBriefs Exclusive.

Utility BillImagine opening your electricity bill and finding it was $1,000 more than last month even though you didn’t use any more energy. It’s caused by what utilities call “demand charges.” Don’t confuse demand charges with “time of use” (TOU) pricing, in which utilities charge more for electricity during times when ratepayers, as a whole, use more energy (generally 12-6 p.m.).

Demand charges are based strictly on your business’s highest rate of usage or energy spike in a 15- or 30-minute timeframe — any time of day (or night). Utilities impose this fee on businesses because they need to cover the cost of providing sufficient infrastructure — generation, transmission, distribution — to deliver enough power at any given time to meet your business’s peak power needs.

Your peak energy demand will likely occur during the height of your busiest time and busiest day of the week. You’ve probably got all of your kitchen equipment, ventilation, refrigeration, heating/air conditioning and lighting running at full tilt. It’s those few minutes of your highest demand that utilities are measuring. In some cases, demand rates are fairly low, perhaps only a few dollars per kilowatt. But they can range up to $20 or more per kilowatt. A peak demand of 90 kilowatts and a rate of $12/kW will add $1,080 to a monthly bill…

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