Electricity Billing Considerations: Difference between revisions
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=Current contract and billing terms= | =Current contract and billing terms= | ||
It is important to know your current billing system and this is presented both in the utility provider contract as well as it is reflected on your bills. Although | It is important to know your current billing system and this is presented both in the utility provider contract as well as it is reflected on your bills. Although there may be better offers to the one that is currently enforced, it is good to know the current terms and how well your current consumption pattern fits them so you need to make some initial assessments before taking any action. | ||
Being informed of other offers from your utility company is helpful in finding out the best long term approach but you should not have extreme expectations. Consumption alone is still the biggest factor in the total cost. There may be some difficulty in moving from one billing choice to another from the same utility company such as a specific contract duration being passed or other limitations. | Being informed of other offers from your utility company is helpful in finding out the best long term approach but you should not have extreme expectations. Consumption alone is still the biggest factor in the total cost. | ||
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There may be some difficulty in moving from one billing choice to another from the same utility company such as a specific contract duration being passed or other limitations. | |||
Note that even though a flat rate based on consumption is the most obvious option and should be the cheapest, utility companies actively discourage such a choice by making the energy unit price much higher than on other ways of billing, if this option is still available. | Note that even though a flat rate based on consumption is the most obvious option and should be the cheapest, utility companies actively discourage such a choice by making the energy unit price much higher than on other ways of billing, if this option is still available. | ||
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A fixed monthly cost that is established through contract, based on the consumption profile agreed upon. Sometimes, agreeing to a demand or service charge can result in a lower energy unit cost agreed through contract, if an option for a only a flat rate energy unit consumption also exists. | A fixed monthly cost that is established through contract, based on the consumption profile agreed upon. Sometimes, agreeing to a demand or service charge can result in a lower energy unit cost agreed through contract, if an option for a only a flat rate energy unit consumption also exists. | ||
In other cases, as in Japan, the demand charge is mandatory and it depends on contracted maximum installed power tiers, being halved when there is no energy consumption | In other cases, as in Japan, the demand charge is mandatory and it depends on contracted maximum installed power tiers, from 10 to 60 Amps maximum current draw, being halved when there is no energy consumption recorded on location. | ||
==Energy cost or charge== | ==Energy cost or charge== | ||
===Energy charge rate ( | ===Energy charge rate (partial cost calculation)=== | ||
Previously, energy was charged only based on a flat rate per unit of consumption. The energy unit cost could be annually adjusted and was decided by the national government. None of the developed countries still use the flat rate alone to determine energy cost. | Previously, energy was charged only based on a flat rate per unit of consumption. The energy unit cost could be annually adjusted and was decided by the national government. None of the developed countries still use the flat rate alone to determine energy cost. | ||
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This system is devised to encourage consumers to use less energy. Commonly, there are three price tiers for the energy unit, and any consumption over a specific range is billed separately. The model below is based on Japan. | This system is devised to encourage consumers to use less energy. Commonly, there are three price tiers for the energy unit, and any consumption over a specific range is billed separately. The model below is based on Japan. | ||
Another European model | Another European model, for instance, partially subsidies the energy price ending in a discount of 47% at tier 1 and 25% at tier 2 from the full energy unit price, with different consumption ranges such as below 100 kw/h and between 100-300 kw/h. Consumption ranges and discounts can change over time. | ||
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The most important aspect is that night or off-peak consumption is | The most important aspect is that night or off-peak consumption is considerably cheaper than on-peak consumption, by as much as 50% | ||
===Free | ===Free market cost adjustment (mandatory)=== | ||
With liberalized energy markets in most countries, there is an additional adjustment either applied in the base energy unit price or separately represented by a fuel cost adjustment. It is proportional to the energy consumption in a given month. | With liberalized energy markets in most countries, there is an additional adjustment either applied in the base energy unit price or separately represented by a fuel cost adjustment. It is proportional to the energy consumption in a given month. | ||
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==Other costs== | ==Other costs== | ||
===Renewable energy power promotion | ===Renewable energy power promotion (mandatory)=== | ||
This cost is a subsidy being offered to promote building more renewable energy power production facilities. The subsidy is being directed by the government to cover the initial additional cost of investing in such expensive facilities. | This cost is a subsidy being offered to promote building more renewable energy power production facilities. The subsidy is being directed by the government to cover the initial additional cost of investing in such expensive facilities. | ||
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'''Renewable energy power promotion cost''' = rate x monthly energy consumption | '''Renewable energy power promotion cost''' = rate x monthly energy consumption | ||
Renewable energy promotion and free market cost adjustments, non-negotiable components established through contract, do have an influence in the total cost of energy that is billed but this is limited. | Renewable energy promotion and free market cost adjustments, non-negotiable components established through contract, do have an influence in the total cost of energy that is billed but this is limited. The largest influence is still due to energy unit price, based on tiered consumption, as well as the amount of energy consumption that directly increases other costs. | ||
The largest influence is still due to energy unit price, based on tiered consumption, as well as the amount of energy consumption that directly increases other costs. | |||
===Surcharges=== | ===Surcharges (mandatory)=== | ||
While renewable energy power promotion cost, fuel cost adjustments and various excises may be considered consumption surcharges, this is typically reserved for Value Added Tax that is applied to all partial costs. | While renewable energy power promotion cost, fuel cost adjustments and various excises may be considered consumption surcharges, this is typically reserved for Value Added Tax that is applied to all partial costs. | ||