Default Title For energy utility rates, average calculations are bad

For energy utility rates, average calculations are bad

When reviewing electricity costs with a contractor or a utility salesperson, you may hear something like, “You’re spending an average of 15 cents per kilowatt hour (kWh).”

Averages may be good to get the energy efficiency analysis conversation going, but they don’t tell the whole story. Starting an energy savings project based on average numbers could mean that you save a lot less money than you thought you would save.

The amount that you use, and pay, for energy isn’t static

Energy cost and usage is changing all the time.

There’s a number of energy analysis factors — the hours your building is open, seasonal considerations, if you’re using energy during peak demand times — that all impact how much your energy costs.

That means that sometimes you’re paying $0.15/kWh sometimes, other times $0.10/kWh and still other times $0.20/kWh at times, too.

If you started an energy savings project (e.g. shutting off lights earlier), you may have calculated your savings by using an average of $0.15/kWh. In reality, though, the savings could come at a time when it actually cost $0.10/kWh.

That means that you could’ve been told that you were going to save $9,000, but only saved $6,000 — all because of an average calculation.

A new way of calculating energy efficiency savings

A certified energy auditor or utility salesperson who uses average calculations likely isn’t trying to mislead you. It’s very complicated, if not impossible, to do truly accurate utility rate calculations by hand.

So rather than considering all the various factors that will determine your final energy savings, they use a number that is available to them: an average.

It’s going to take a while to get rid of the average calculation, but we’re trying our best. Bay Efficiency uses LightBids software during business energy audits to quickly calculate a more accurate number.