Understanding electricity rate structures

Although they vary by utility, most electricity rates fall into the residential, small general service or large general service categories. Health care facilities generally fall into the large customer category, but could be placed on different rate structures depending on a number of factors, including size and ability to deploy different assets at certain times.

These rate structures include time of use, interruptible service and others, and they have a significant impact on the cost of services.

For instance, interruptible service rates allow the utility company to take a customer off the grid for a specified amount of time in exchange for a reduced rate of service. In areas where interruptible service rates are available, health care facilities are excellent candidates to take advantage of this rate because of the backup infrastructure already required to be available on their campuses.

The benefits of this service vary depending on several factors, including the price of electricity compared with that of diesel fuel, a facility’s ability to store the required fuel on-site, and its ability to manage the transitions on and off the grid; however, this option is often advantageous when it is available because of the cost savings associated with the reduced rate structure.

Facilities professionals can learn about their rates through a number of resources. An updated rate book often is available through the utility company’s website. Professionals must understand this information, or engage an engineering firm or another third-party resource to explain the options available.

A facilities professional also should build a relationship with the utility company representative who can explain the intricacies of each rate and rationale for the selected rate for a particular institution or facility.

Rachel Poff and Garrett Hensley  are energy analysts at Bernhard TME, Little Rock, Ark. They can be reached at rpoff@bernhardtme.com and ghensley@bernhardenergy.com, respectively.