Do You Know How to Read Your Electricity Bill?

By: Koji Kitazume, 2011 EDF Climate Corps fellow at REI, MBA/MEM Candidate at Duke University's Fuqua School of Business and Nicholas School of the Environment

Distribution centers get me excited – the massive space with inventory shelves high up to the ceiling, forklifts honking horns and crisscrossing the floor, conveyors and sorters in sync –the whole scene is fascinating to watch. So I was thrilled when my supervisor at REI offered me the opportunity to work on energy management for its LEED Silver-certified, 525,000-square-foot distribution center in Bedford, Pennsylvania.

My primary task as an EDF Climate Corps fellow at the outdoor retail co-op this summer was to develop an energy management roadmap for its eastern region distribution center, ranging from identifying energy saving opportunities for the immediate term to exploring potential business continuity solutions in the long run. With this scope, I got to work on various parts of the facility with providers of cutting-edge energy-related technologies such as advanced lighting controls, material handling systems, demand response applications, solid oxide fuel cells, etc.

While gaining insights into such distribution center operations and energy technologies was certainly a rewarding experience, the biggest learning for me came from where I least expected: the electric utility. The Bedford distribution center is served by the local electric co-op which belongs to the PJM (Pennsylvania-New Jersey-Maryland) Interconnection zone, the largest competitive wholesale electricity market in the world. This landscape has an impact on the electric co-op's rate schedule – highly sophisticated with multiple types and tiers of energy and demand charges.

When you have such a complex rate schedule, it's not easy to figure out what's driving your electricity bill. What's more, working with averaged per-kWh rates (even for near-term future projections) could be risky, since that could completely change depending on your electricity usage and demand patterns. This becomes particularly critical when you're doing your energy project investment analysis and basing your project revenue on future energy cost savings.

So it turned out that in addition to identifying energy saving opportunities and investigating potential solutions, a large part of my work involved analyzing the distribution center's historical electricity usage and demand patterns, projecting future usage, and modeling how this would translate into electricity costs, given the electric co-op's rate schedule. I know models can often be incorrect, but this one presented a more accurate picture of how costs behave rather than using averaged per-kWh rates. Hopefully, this will help REI make better-informed decisions on its future energy saving efforts and investments.

With my summer experience, I've become somewhat obsessed with electricity bills and now know exactly how the rate schedule for my own home works. Do you know how to read your electricity bill?

EDF Climate Corps places specially-trained MBA and MPA students in companies, cities and universities to develop practical, actionable energy efficiency plans. Sign up to receive emails about EDF Climate Corps, including regular blog posts by our fellows. You can also visit our Facebook page or follow us on Twitter to get regular updates about this project."