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Know what determines energy costs
Before you can decide how to best go about reducing energy costs, you need to know how energy costs are determined in the first place. The three most important things that contribute to a plant’s electrical consumption are:
1. Kilowatt-hour consumption
2. Fuel charge adjustments
3. Kilowatt demand
The kilowatt-hour consumption rate is the amount of electrical energy that has been consumed during a given billing period (usually monthly). Note that this rate does not differentiate between when or how the energy was used, it only measures how much energy was used. An easy way to reduce the amount of kilowatt-hour consumption is to either operate machinery for fewer hours per day, or to use premium efficiency motors, which by their design will use fewer kilowatts for any given period of time.
Fuel charge adjustments are given within the same billing period as kilowatt-hour consumption, and represent an adjustment cost based upon the utility’s cost of producing power, and may change several times per year based upon the utility’s production needs. While users can’t do much to influence the fuel charge adjustment rates of the local utility, premium efficiency motors and other cost-saving measures may qualify for discounts or rebates from the utility.
Kilowatt demand is based on the amount of power consumed during a given period of time, and is perhaps the least understood factor in determining energy costs. In many ways, it is analogous to the horsepower rating of a car: the engine is sized for the maximum amount of energy needed to accelerate the car at a predetermined rate at any point in time, although the actual amount of horsepower used at a given time might be relatively low, such as when cruising at a steady speed on the freeway. Similarly, kilowatt demand is not constant throughout the day, but can vary as equipment is turned on and off as needed. Note that kilowatt demand is never zero: even during periods of shutdown, certain constant-load devices such as lighting, HVAC, and security systems incur a demand.
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