Solar Power Purchase Agreement (PPA) Services
How We Calculate Your Energy Costs
New York has hundreds of Energy Service Companies (ESCOs) from whom you can purchase energy. (See the directory of ESCO's in New York State here: There are currently over 260 nonresidential electric companies, and over 350 companies that provide non-residential gas, according to the NYPSC Competitive Electric and Gas Market Sources Directory.
Understanding your energy costs require that you consider costs of several types, usually from more than one company. When calculating the business cost for energy consumption, at least two bills, not simply one, need to be considered in order to obtain the true cost per kilowatt hour (kWh). Energy bills are more than just a simple supply charge. We pay for:
- The energy we use (from the ESCO or supplier, sometimes more than one),
- Delivery of the energy (from the utility), and
- Demand Change: the maximum amount of energy (the Peak) we use at one time.
As an example, if you are getting your energy from NYSEG you may be spending approximately 7 cents a kWh. However, you are also paying National Grid a power delivery charge of 7 cents a kWh. So, in this scenario, the New York business owner is paying 14 cents a kWh hour.
Defining Your Bill
There are three parts to a typical electric bill: delivery, demand and supply.
The delivery charge is based on the cost of getting the energy to you. It is what you pay for the use of the pipes and power lines. It can be a fixed charge based on the supply option your choose. If we were comparing it to a purchase of building supplies, the 'delivery charge' would be for truck rental, gasoline used, and tolls.
The demand charge is based on the peak amount of power a business uses for a 15 minute period over the past 30 days. The electric utility uses demand meters that measure flowing and peak electricity. Demand meters register the highest rate of electrical flow (or current) during a billing period. The reason for a demand charge is that it costs the utility a lot more to provide the facilities to deliver large amounts of energy at one time. To illustrate this, imagine that you were providing your own power. If you use 10 kilowatts steadily, you would need an inexpensive 10 kilowatt generator. If, though, you use 1 kilowatt steadily but, on Monday morning, you need 100 kilowatts for 15 minutes while you start up your machines, you need a much larger 100 kilowatt generator.
Understanding the sources of your demand charges can be a key to supporting the investment in solar and other renewable generation systems. For example, if your demand charge is based on air conditioning loads; highest when the sun is out, then solar panels not only reduce your energy requirements, but also your demand charges.
The electric supply charge is the price the business owner pays for a 30 day average of the hourly Electricity Supply Charge. In other words, National Grid will develop a 30-day weighted average kilowatt-hour cost by averaging the prices for each hour of each day in the 30-day period. For example, if your meter is read on March 29, your weighted average price would be based on the previous 30 days' prices.
When US Light Energy does a cost analysis, these factors are taken into consideration to effective project energy costs and savings.
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