When looking to compare electricity charges you need to understand the various components making up an electricity bill. This can be challenge for some managers and business owners.

Below are explanations which will assist you in working out what you are being billed for as well as identify opportunities for you to reduce your electricity costs when investigating your power factor planning.

Ekurhuleni has various electricity tariffs applicable to businesses (B, C, D and E), depending on the amount of electrical energy used. Most businesses, in the area, are on Tariff E, which suits most small to medium size businesses and industrial customers.

Tariff E has a number of cost components. Let’s compare the various electricity charges you need to understand when planning to optimise your operations;

  1. Fixed charge:

This is your monthly service fee that is charged to recover the costs of the administration of your business account and includes services such as meter readings, billing and infrastructure (cabling, transformers, meters etc.)

This fee is fixed and is charged whether your business consumes electricity or not. No opportunities exist to reduce this charge when looking to save money on electricity.

  1. Demand charge

A charge based on the highest demand for electricity, typically the highest average power demand in a 30 minute window, during a billing month, and is measured in kVA. The maximum demand is only registered during peak and standard hours and not during off-peak hours.

So when looking to optimise your efficiency in your operations you need to consider reducing your demand charge through these 4 simple interventions when you want to compare electricity charges:

  1. Active demand management (also known as active load shedding):

This is whereby the operation of various large electrical equipment in a plant is managed to such an extent that the maximum demand of the installation gets “capped”.

  1. Load shifting:

By shifting large loads to off-peak hours, where no maximum demand is recorded, it is possible to reduce the demand charge.

  1. Power factor correction:

Electrical installations that have a poor power factor can reduce their maximum demand significantly by installing an automatic power factor correction system.

  1. Photovoltaic (PV) systems:
    Well-designed solar systems can help in reducing the demand charge.

Network Access charge

Based on the highest demand for electricity, this charge is typically the highest average power demand in a 30 minute window.

It is registered over a rolling 12 month period, during peak and standard hours. Expressed in kVA and similar to the demand charge, it is calculated over a rolling 12 month period. You can also make use of high-end data logging equipment to audit your usage and work on a ROI with power factor correction equipment.

The network access charge can be reduced through the same interventions as listed under the demand charge (see above), but cognisance should be taken of the fact that any demand reduction intervention will only result in a network access charge reduction, 12 months after the implementation of the demand reduction intervention.

Energy Charge

Is a charge based on the electricity consumed during a billing month and is expressed as your kWh. The energy charge differs when you compare electricity charges during summer (September to May) and winter months (June to August).

The reason for this price difference is that winter power consumption is significantly higher than in summer months. The higher price in winter is to incentivise consumers to reduce their electricity consumption during these months, when the whole electrical grid is under stress.

There is also a price difference for energy consumed during specific periods of the day and week.

  • Peak hours during summer months: weekdays from 07:00 to 10:00 and from 18:00 to 20:00. There are no peak hours on Saturdays and Sundays.
  • Peak hours during winter months: weekdays from 06:00 to 09:00 and from 17:00 to 19:00. There are no peak hours on Saturdays and Sundays.
  • Standard hours during summer months: weekdays from 06:00 to 07:00, from 10:00 to 18:00 and from 20:00 to 22:00. On Saturdays, standard hours are from 07:00 to 12:00 and from 18:00 to 20:00
  • Standard hours during winter months: weekdays from 09:00 to 17:00 and from 19:00 to 22:00. On Saturdays, standard hours are from 07:00 to 12:00 and from 18:00 to 20:00
  • Off-Peak hours during summer months: weekdays from 22:00 to 06:00. On Saturdays, off-peak hours are 12:00 to 18:00 and from 20:00 to 07:00.  Sundays are considered off-peak
  • Off-Peak hours during winter months: weekdays from 22:00 to 06:00. On Saturdays, off-peak hours are 12:00 to 18:00 and from 20:00 to 07:00.  Sundays are considered off-peak

The energy charge can be reduced by the following 4 top tips to cutting costs;

  1. Photovoltaic (PV) systems: well-designed solar systems can help in reducing the energy charge
  2. Well-designed variable speed drives can reduce the electricity consumption of certain motors
  3. Waste avoidance: switching electrical equipment off when not in use, attending to compressed air leaks, insulating hot and cold fluid reticulation and vessels as well as installing energy efficient lighting are some of the main interventions which assist in reducing electrical wastage
  4. Load shifting: by shifting large loads to standard and off-peak hours, it is possible to significantly reduce the energy charge, especially during winter months

Using proven scientific concepts concerning Active power, Apparent Power and Reactive Power you and your business are able to cut costs, become efficient and grow your operations through effective power factor planning.

Make sure you partner with a reputable company who not only understands your business but also understands your electricity rates and usage to ensure you get a measureable ROI.