Energy Cost Analysis in IESVE using the Tariff Tool

“Time-of-Use” (TOU) Electricity Rates

Most of the electricity utilities in North America use the “Time-of-Use” (TOU) rate schedules for commercial and industrial sectors. In the TOU rate structure, the cost of electricity (usage and demand charges) varies based on the hour of the day and the season of the year (E.g. summer and winter). Typically, the cost of electricity in the afternoon is higher than the cost of electricity at night. As an example, Figure 1 below shows the TOU energy usage ($/kWh) for a Southern California Edison rate schedule TOU-GS-1 Option E for Summer and Winter weekdays¹.

Figure 1: Example of Time-of-Use (ToU) rate schedule

As shown, the cost of the electricity is high in the late afternoon, between 4 pm and 9 pm. The reasoning behind the peak in the cost of electricity during the afternoon can be explained using the “Duck Curve.”

A conversation about the electrical rate schedule is incomplete without the “Duck Curve,” Figure 2 below. The Duck Curve represents the predicted demand for the dispatchable generation source and can be broadly divided into three sections.

Figure 2: Duck curve from CAISO²

 
These three sections are explained below.

a) Early-Morning operation: The demand is relatively flat and low during the early morning. 

b)  The midday dip (the belly): As the sun rises, solar power generation increases, causing the demand for electricity from the utility generation plants to decrease. This arch, approximately from 9 a.m. to 4 p.m., is called the “belly.” 

c) The afternoon ramp (the neck & head): Finally late in the afternoon and evening, approximately between 4 am to 9 pm, the sun sets and the demand for electricity shifts from solar to utility generation plants, creating the duck’s “neck” and the “head.” This sudden increase in the demand for dispatchable generation sources is the reason for high energy costs, as reflected in Figure 1 (on-peak period for Summer weekdays and mid-peak period for winter weekdays).  

Natural Gas Tier-based Rates

Unlike electricity charges, Natural Gas (or Natural Methane Gas) charges are much more straightforward. They are Tier-based charges, i.e., the utility charges a flat rate for the Terms of Natural Gas the building consumes and vary based on seasons only. Table 1 below shows the Gas rate schedule for Southern California Gas Company, rate schedule GM-E³. This rate schedule has a Tier based costing, where the cost of Gas ($/therm) is fixed up to certain “baseline” therms, and above this “baseline,” the cost of Gas is higher.   

Predicting Energy Costs with IESVE Software

To accurately predict the operational energy cost of a building or of a community of buildings, IESVE Software will need to model the TOU of electricity cost and Tier-based cost for Natural Gas.  For this, IESVE Software uses the “Tariff Tool” in the VistaPro App.  This tool post-processes the operational energy data (.aps file to a .app tile) to calculate the energy cost of the building. 

Figure 03: Tariff Tool in IESVE Software (VistaPro App)

For the electricity rate schedule, the tool imports rates from OpenEI⁴. The OpenEI is a database with electrical rates structure from more than 3,700 US utilities. IESVE users can import and edit these rates to apply to the fuel demands. 

Figure 04: Operational Energy Costs Predicted with IESVE Software

No such utility database is available for the Natural Gas (Natural Methane Gas) rate structure. To solve this issue with the IESVE Tariff Tool, default gas rates may be customized to represent any Tier based rate structure. By default, IESVE includes gas rates for Pacific Gas & Electric and Southern California Gas. 

A step-by-step Video Tariff Tools Tutorial is available to show how to Import/Edit/Customize these utility rate schedules, which are also explained in User Guide. 

_{1 As of 27th October 2023 SCE Tariff Books}

_{2 California Independent System Operator (CAISO)} 

_{3 As of 27th October 2023: Schedule GM, Multiple Family Service}

_4 OpenEI