Sub-Metering and Monitoring Electrical Energy Use: Part 1 PDF Print E-mail
Written by John Alleman   
Thursday, 10 June 2010 11:34

Sub Metering and Monitoring Electrical Energy Use Part 1:

Understanding your Industrial Electric Bill

By John Alleman

This is the first of a three-part series to help food processors understand why they should evaluate the use of electrical energy sub metering in their industrial facilities. Sub metering is an often-used, but rarely understood, piece of the energy efficiency puzzle. The commercial building sector has used electrical sub metering for years to help understand which tenants, or functions, are consuming the most energy. Commercial and industrial facilities in California and other regions with high peak demand energy tariffs are using sub metering and energy monitoring to help understand how to best manage urgently high energy costs.

For food processors in the Northwest, the question is: “Why should we sub meter and monitor our electrical energy use?” There are several compelling reasons:
  1. Energy is a product cost and you cannot manage that which is not measured.
  2. Sub metering allows you to precisely assign energy costs to the correct function -- packaging, cold storage, processing, etc. -- instead of estimating those costs from a single utility-installed meter.
  3. At some point, sub metering and monitoring will likely be required for green house gas (GHG) reporting.
  4. Sub metering and monitoring can facilitate analysis for energy cost savings.
Reason 4 alone is an extremely powerful business case argument for sub metering. To really understand the opportunity, here’s a quick review of how electrical energy is billed by a typical required utility. Electric utilities normally bill industrial users in the following four categories:
  • Basic Charge: This includes the minimum connection and administrative fees, etc. There may also be sub-charges based on average monthly kWh load as measured over the previous 12-18 months.
  • Energy Charge: This is the traditional $ per kWh of real power consumed. This rate normally fluctuates with the market rate of electricity.
  • Reactive Power: This portion attempts to bill for any excess reactive power that the site may have. This is normally based on the maximum kVA observed in any 15 or 30 minute period within the billing period that exceeds 40% of the average kW demand.  
  • Demand Charge: This is a rate based on the maximum average kW observed in any rolling 15 or 30 minute period within the billing period.
Table 1 and Figure 1, show the typical breakdown of these charges for a typical mid-sized industrial user.
Table 1: Example Summary of Electrical Energy Charges for an Industrial User
practical submetering4
* Assumes there is no peak demand tariff applied.

Figure 1: Graphical Breakdown of Charges
john a graphic
The green portion of Figure 1, representing the demand charge is also referred to as the ratchet charge because the facility only has to reach this highest value once and the rate will be based on this value for the entire billing period. In the example in Table 1 and Figure 1, the plant averaged 1,600 kW of demand only once but was billed for it for the duration of the billing period. The utilities charge this rate based on the “spinning reserve” power that has to be retained in case this plant starts this combination of loads again.

In the next Catalyst, we will introduce a basic electrical energy sub metering and monitoring system.

Contact John Alleman ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) at the IPC with any questions.

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