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Generic Rate Components

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Tariff rates, especially electric rates, can have multiple cost components including demand, consumption, transmission, generation, distribution, and so on. Create A Rate was developed with seven generic cost components that can be mixed and matched to model published tariff rates. Each generic rate component can be manipulated to meet specific rates.

Any single generic rate component or combination of components can be used in a given rate. In fact, it is common for a single component to be used multiple times in the same rate when different schedules or rates apply a single component.

Each of the generic rate components has an icon to remind you of the type of cost component after the name has been changed. For example, shows the name of each component was changed as it was entered, to match the nomenclature used in the rate from the utility. In the left pane of the illustration, the seven generic components are listed. In the right pane, under “Rate Components”, several rate cost components are added and renamed to match those names found in the published rate. There are four Fee Per Unit charges that you can identify by their associated icons.

Figure 3-15 Rate Icons

The generic rate components include the following:

• Fixed Fee

  The Fixed Fee component is for monthly charges. This fee never varies regardless of the consumption levels. It is most commonly be used for monthly service charges.

• Fee Per Unit

  This is a charge per unit of consumption (this includes reactive/apparent energy). The consumption can be any commodity or measurement unit including kWh, KBTU, BTU, Therms, CCF, Gallons, etc. This cost component can be used anytime there is a constant charge for consumption. This component can also be used when credits (negative charges) are given per consumption unit.

• Scheduled Fee Per Unit

  This rate has all the same features as the Fee Per Unit rate component but, in addition, it provides several properties that are used for calculations when there is a rate change at some time during the billing cycle. With this rate, you enter an “Original Fee”, a “New Fee”, and a “Transition Time” and choose from two available methods of calculation: Pro-Rated or Absolute.

• Peak Charge

  The Peak Charge cost component is used for demand (this includes reactive/apparent power) and only when there is a peak charge or flow charge. It will generally only be used with electric rates, but when flow charges on gas or other commodities exist in a rate, can be seen in other commodities. The component looks at peak times of usage and applies charges to the highest record in the time period. For electric charges that have changing peak charges seasonally or over the course of a day or week, there can be multiple peak components including on-peak, off-peak, partial-peak, summer, etc.

• Scheduled Peak Charge

  This rate has all the same features as the Peak Charge rate, but in addition, it provides several properties that are used for calculations when there is a rate change at some time during the billing cycle. With this rate, you enter an “Original Fee”, a “New Fee”, and a “Transition Time”.

• Ratchet

  A ratchet is a charge by the energy provider to the customer that was created to help reduce the asset risk of the utility provider. It is the floor, or lowest level of demand (including reactive/apparent power) that will be charged in a given period. Energy providers implemented ratchet clauses to protect themselves from highly volatile consumption patterns. Because the energy provider is required to provide power 24/7, substantial capacity is unused during off peak periods and assets are under utilized. The greater the range between peak and minimum, the greater unused infrastructure an energy provider must accept. As a hedge for required infrastructure (generation, transmission, distribution, substations) energy providers created a minimum level of demand that will be billed on a monthly or seasonal basis.

  There are two types of ratchets: Contract and Historical.

• Contract Ratchet

  The first ratchet is contract demand, which is based on the size and type of a building, not the historical data for the specific building or account. The energy provider determines the contract demand ratchet when an account is setup, and although the kW level generally doesn't change, different percentages of the kW level may be applied over the course of a year. Contract demand is a generalization that categorizes buildings and accounts into categories such as mid-size fast food service, general use office, and northeast large retail. Because it is a categorization based on generalizations and not historical data, efficient buildings are grouped with non-efficient buildings with similar characteristics, thereby penalizing the more efficient buildings in the category. shows that a fee of $3.20 is used to apply to the peak demand. If the peak demand for the specified period is higher than 250 kW, then that “higher” demand will be used to calculate the ratchet. Otherwise, the contract ratchet amount will be 250 kW times the fee, or 250kW x $3.20 = $800.

Figure 3-16 Contract Ratchet Details

• Historical Ratchet

  This is (most often) a twelve-month ratchet, which is based on historical data of a specific account. To determine a twelve-month ratchet an energy provider must determine the highest peak over the previous twelve months. Once a peak is determined, a percentage is applied to determine the ratchet level. If the highest peak over the previous twelve months was 2,000 kW and the percentage applied is 50%, the customer will never be charged for less than 1,000 kW. When users reduce their peak, they reduce the minimum they will be billed for. For example, if a 70% factor is used for a 12-month ratchet, and peak kW goes from 2,000 to 1,500, the customer will be charged for 350 kW less (2000 - 1500 x 0.7). This reduction could save the customer tens of thousands of dollars annually.

Figure 3-17 Historical Ratchet Details.

To determine the ratchet level, annual peak must be identified. If less than a year of data exists (new account), the highest peak to date will be the peak and remain in effect for a period of time equal to the “Ratchet Lifetime” setting or until it is surpassed.

• Percentage

  This helps determine the ratchet level. The twelve month peak is multiplied by a factor to determine the lowest level kW the customer is charged throughout the year. This percentage is user definable. If different percentages are used throughout the year, the appropriate percentage may be applied to corresponding times. For example, if the user runs a report for an account to determine annual costs, Cost Profiler assigns different percentages to the same point during different periods. If the percentage were 50% in the summer versus 60% in the winter, Cost Profiler would adjust accordingly.

• Ratchet Lifetime

  A twelve-month peak is valid for twelve months from the time it occurs unless it is surpassed over the course of the subsequent twelve months. As a result, Cost Profiler determines when to replace an existing peak with a new one. For example, if 2000 kW is set in June 2001 and isn't surpassed for twelve months, then the highest peak that occurred between June 2001 and June 2002 is the new peak. If that occurs in August of 2001, that peak is only valid for July and August of 2002. As a result, it is important to understand the billing cycle and what month a peak occurred.

• Combination Percentage Fee

  The Combination Percentage Fee is a component that applies a percentage charge to any cost component or combination of components of charges already entered in the rate. This component will commonly be used for taxes and applied to all or most of the cost components in the rate. This component can not be entered until after components its percentage fee will be applied to be entered.

  Note: It is possible to set up a looping condition error with the combination percentage fee component. Make sure that the percentage fee that you set in your rate component does not apply to a component that uses a percentage fee that refers back to this parent component. Refer to "About Component Looping Error" for more details.

  • About Component Looping Error

    Combination Percentage Fee components may legitimately refer to other Combination Percentage Fee components. However, to avoid a looping condition error, two Combination Percentage Fee components cannot both have each other as target components in their percentage (cost) calculation. One may refer to the other, but both may not refer to each other. For example, Component A may refer to Component B or Component B may refer to Component A but Component A may not refer to Component B if Component B refers to Component A.

• Choice Component.

  You can add a Choice Component the same way that you add any other component. However, there are properties of the choice component that you can set to enable comparisons, between “child components.” You add a child component to a Choice Component by copying it from the available components list and pasting the child component directly on the Choice Component in the Rate Component window.

  • Using the “Use Highest” or “Use Lowest” Option

    These two options provide you with a way to select the highest or lowest cost from the list of child components that are entered under the Choice Component. When “Use Highest” is selected, the report uses the child component with the highest cost. When the “Use Lowest” option is selected, the report uses the child component with the lowest cost.

    For example, if there is a rate that states that a fee will be applied to EITHER a fee based on the peak kW (demand) OR a fixed fee of $500, whichever is higher, you would use the Choice Component and add two child rate components. The “Use Highest” option uses the child component with the highest cost.

    In , the user has configured an “either/or” rate component by adding the generic “Choice Component”, then adding two child components: Peak Charge and Fixed Fee. In this example, the Choice Component configuration will compute the peak charge, then compare to a fixed fee and use the higher of the two.

Figure 3-18 Choice Rate Component Details.

• Using the “Use Sum” Option

  Another way to use the Choice Component is with the “Use Sum” option. When selected, this option causes the Choice Component to use the cost that is the sum of all its child components. This is useful if you want to have a single line on your bill reconciliation report for a component that consists of multiple sub-components totalled together.

• Using the “Use Difference” Option

  Another possible use of the Choice Component is the “Use Difference” option. This option, when selected, causes the Choice Component to use the cost that is the difference of all its child components. In this case, the sum of the second and all subsequent child components is subtracted from the first child component.