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TransActions - March 2001 (Vol
201)
THE COST OF ELECTRICITY HAS WATER UTILITIES IN SHOCK! The water and wastewater treatment industry has a problem. Revenue erosion is a concern, but simply raising rates to cover losses is a very unpopular solution. As a result, Water and Wastewater utility managers are scrutinizing their operations to find any "fat" that can be trimmed to curtail the need for rate increases. One major concern is that of electricity usage and its cost impact to the O&M budget. It can be quite a shock! Electricity can cost Water a bundle! Fully 20%-25% of the water and wastewater utility O&M budget is the cost of electricity. One quarter of the entire budget! It is understandable, then, why this one line item is getting so much attention. It is an easy target to identify as a culprit, but there are no easy fixes! The cost of electricity is cumbersome to evaluate due to the intricacies of electric rate schedules, demand charges, and billing mechanisms. The local electric energy supplier may sometimes help Water and Wastewater managers with energy conservation reviews, rate reviews, and efficiency reviews, but the fact remains...these friendly and helpful associates are in the business of supplying energy, not in saving you money. They cannot afford to trim their own revenues too much! It's just business. And in business, what's good for the goose isn't always what's good for the gander. Water and Wastewater utilities managers must understand that and probe deeper for energy cost savings. The 'iceberg' goes deep. Most utilities do have the expertise and manpower to evaluate monthly electric bills and to understand the seasonal cost variations due to temperature changes and electric utility supply. However, these factors can be just the tip of the iceberg. When it comes to a thorough analysis of electric usage, a manager or his staff must recognize that the monthly bill is made up of several metering locations, and that these locations may bill to any number of rate schedules dependent on variations in usage, capacity demands, ‘time of day’ usage, and overall plant energy demands. The manager must address the whole iceberg if he or she is to find real opportunities for sizable cost savings. Unless you are familiar with the development, applications, and intended use of rate schedules, any examination of them can be frustrating. Many rate schedules seem to favor the user, such as real time pricing (RTP) schedules. However, rate schedules also typically include cost factors that may be affected substantially by a single day use excursion from the “average” base usage…especially in hot summer afternoons. When that happens, the Water and Wastewater utility manager finds himself doing a delicate balancing act between using more energy to meet water demands through pumping or using more storage maybe approaching a critical storage level. Equally frustrating, some standard commercial rate schedules contain provisions for calculating the billing demand based on previously established demands. One month of high demand can cause the billing demands to remain high for many future months. An excursion demand set in July can still be paid for the following June! How can this happen? What causes such an excursion? There are several possibilities: growth of the system needs without periodic review of the rate schedule…extreme summer conditions that place great demand on the water system…operators who do not pay close attention to energy usage. (This last possibility can happen when an operator becomes concerned that water storage is being depleted during peak demands. Instead of looking at the real water use pattern, the operator arbitrarily decides to fill storage right in the middle of the peak usage period. Or, a worker may turn on a motor or pump right after repairs or maintenance and unknowingly set the high demand. A motor running for just 15-30 minutes may be all that’s needed to cause a demand that must be paid for, for the next 12 months!) The Before and After Story. With professional-grade energy management, your savings can be sizeable. Consider the Before and After charts below. The first chart shows how costly premium real time price periods can be if there is no response to price. The second shows how managing of load in response to price through various methods could have a significant impact on electricity cost. The $1600 saving s demonstrated is very realistic!
A couple of 'For Instances'. Many water and wastewater utilities have electric usage that is billed from a number of rate schedules. For instance, the main office complex may be on a small commercial account that reflects an averaging of usage across many customers with similar energy and capacity demands. The same utility may also have operating facilities such as treatment that are billed according to large commercial accounts. The Real Time Prices may be assigned to the treatment or raw water pumping station. Certainly, it should be possible to save money by aggregating the loads! Many of the demands and meter points should be grouped into a larger coalition to provide pricing incentives from the energy supplier. The plot thickens with the second ‘For instance.’ Perhaps it is time to review operations, to modify or reengineer the system…or utilize more storage…or add distributed generation to shave peaks…or evaluate real time forecasting of water demands that would directly impact the use of electricity. Traditionally, most utilities have only picked ‘the low hanging fruit’ when it comes to energy management. Maybe we have to climb higher in the tree…to where real savings on electricity can be realized. When we do, we may find solutions that bear fruit with the natural gas industry as well. GDS Associates, Inc. is heavily involved in energy supply and water utility operations. We maintain rate documentation from nearly all energy providers in the United States that are regulated by Public Service Commissions and Public Utility Commissions. Our case studies of water utilities have identified small, medium, and large cost savings through bill analysis, rate review, meter aggregation and operational optimization…all of which are far too detailed to present in this newsletter. However, because the cost of electricity can have such an impact on the Water and Wastewater industry, we will conduct a number of workshops for utility managers and operations personnel. The only purpose of these workshops will be to help these people understand opportunities and implement real cost savings programs. The workshops will be interactive, involving both case studies and specific examples from attending utilities. Swapping ideas, practices and experiences will give attendees a sense of what cost-saving opportunities exist…as well as some, perhaps, that are just beginning to take form. To maximize the technology interchange between attendees, we will limit the number of attendees per workshop. (GDS will send notices of the workshop schedule, Summer and Fall 2001, when it is complete. If you are interested in the workshops, let us know now. Tell us what you, personally, hope we’ll discuss. Call or e-mail us using the information below or drop us a line at GDS Associates, Inc. 1850 Parkway Place, Suite 720, Marietta, GA 30067.) For more information on energy management, rate and billing analysis, and the integration of both, contact Larry Hensley or Jake Thomas at 770-425-8100 or e-mail: info@gdsassociates.com.
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