The Electric Power Research Institute and the U.S. Environmental Protection Agency estimate that 3-4% of national energy consumption is used for drinking water and wastewater services in the United States. Pumping – raw water, treated water, and wastewater – demands the bulk of that energy. While the industry has little control over its wastewater pumping load, it has more control over when and how it pumps raw and treated water into and within its system. Through modification to pumping schedules, water utilities across the country have an enormous potential to reduce peak load on the country’s electricity grid and subsequently save quite a bit of money. In other words, water utilities can use most of their energy at night, when energy is relatively abundant and less expensive, to fill reservoirs and elevated storage tanks. Operating this way, the country can use its water infrastructure as a battery for its electric infrastructure.
But in order for this to take place, energy utilities need to make available a rate structure that financially incentivizes this type of energy management, and water utilities need to understand and manage their electricity use and demand to take advantage of them. The Environmental Finance Center has been working with groups of small water systems in Utah, Alabama, and North Carolina to do just this. As part of this effort, one utility has captured the financial benefit of understanding and managing energy use according to a time-of-use rate structure.
The investor-owned electricity utility that sells the City of Centerville (Utah) its energy has general service tariff that charges non-residential customers a seasonally-adjusted charge for power (demand charge) and a seasonally-adjusted charge for energy on top of a base customer service charge. As an alternative to this tariff, the energy utility also offers an energy time-of-day option. Under this option, the utility bills the non-residential customer considerably less for energy consumed (kWh) off-peak ($0.114/on-peak kWh versus $0.034/off-peak kWh in the summer). The non-residential customer also has a demand charge that is less than that under the general service tariff. Non-residential customers must purposely opt into this rate structure.
The Public Works Director assessed this option and realized that, with operational adjustments and no disruption to his service levels, he could take advantage of this energy time-of-day option and reap great savings for his utility. The following graph displays the difference in electricity costs between the two rate tariffs for a utility that is taking great measures to maximize the benefit of the time-of-use energy rates.
The water utility’s great measures include:
- Filling reservoirs at night
- Carefully monitoring when electricity meters are read
- Running one pump instead of two at booster stations that have two pumps. This insures that the peak kW will be half of what it might have been when two pumps run
- Permanently taking unnecessary pumps off-line
- After determining monthly pumping needs, turn off unnecessary pumps for a given month
Centerville estimates that it could save an addition $2,600 per month by transitioning to a demand time-of-day option that eliminates demand charges all together for off-peak demand and charges a relatively low energy power charge. However, the electric utility has a stipulation in their tariff generally referred to as a “ratchet charge” that would charge for any on-peak demand for twelve-months out. With public health, fire protection, and quality-of-service at the top of the utility’s priority list, the financial risk associated with this tariff outweighs the benefit.
Has your organization evaluated your energy rate structure?