This is part two of a three part series. Part one dealt with identifying errors on your utility bills. Part two will help determine which of the existing utility rates is best for your business.

When was the last time you thought about your electric rate? If you are like most business owners and managers, the answer is "a long time ago". This is because most business people believe in one of the following myths:

-There is only one rate available.
-Power companies are legally obligated to put each customer on the lowest available rate.
-All electric rates are about the same.

According to Brian Coughlan, PE, President of Utility Management Services in Wilmington, "these myths are very costly to many businesses. Depending on the type of business you run, you may save 20% or more by learning about the various electric rates and determining which is the best for your particular pattern and level of electric usage." It is your responsibility to select the most appropriate rate for your business. If you don't have the time or technical inclination to do the necessary research, consider hiring a utility consulting firm who will do it for you. These firms have the technical staffing and computer software necessary to accurately determine the lowest rate for your particular business. Also, most of them operate on a contingency basis-if they don't save you money, their services are free.

RATES AVAILABLE

The typical electric utility offers 10 or more electric rates. Also, utilities have "riders" that increase or decrease the rate for many customers. Most businesses qualify for three or more rates and one or more riders. Some businesses even qualify for "experimental" rates that are offered by utilities when they wish to test out anew rate structure.

In our area, CP&L and Duke Power serve most customers. CP&L has 12 commercial rates and 18 riders. Duke has 14 commercial rates and 4 riders.

Commercial utility rates are designed for specific types of customers with particular usage patterns. There are general service rates that apply to very large groups of customers and time of usage rates that provide discounts to customers who use a lot of energy during off peak hours. There are also rates intended for schools, churches, customers with electric heat, customers with electric hot water, customers with primarily industrial equipment, agricultural businesses, and seasonal businesses.

Utility rates are very complex. Switching to the correct rate can significantly reduce your bill. Switching to the wrong rate can increase your bill.

A word of caution, when you switch rates the power company typically requires you to receive service under the new rate for at least 12 months. Therefore, it pays to thoroughly check out the rate for your particular usage pattern before you make a change.


GENERAL SERVICE

Many businesses are served under a general service type of rate. These rates are designed to be appropriate for many types and sizes of businesses. Unless your request something different, your business is likely to be served under a general service rate.

General service rates charge a fee for the peak demand measured in KW, established every month. Also, these rates charge for a percentage of the highest peak demand established in the prior 12 months. Therefore, if your business hits a high peak demand this month, you will pay a percentage of that demand each month for a year. Therefore, businesses with widely varying monthly peak demands may not be wise to stay on a general service rate.

General service rates also charge for the total energy, measured in kilowatt hours (kwh), that is consumed during the month. CP&Ls general service rates charge a fixed amount for all kwh used during the month. Duke's general service rates follow a formula that charges a declining amount per kwh for larger energy users.


TIME OF USAGE RATES

Most power companies, including Duke and CP&L, offer time of usage rates. These rates charge a higher amount for energy consumed during the peak hours and a lower amount for energy consumed during off peak hours. These rates are especially well suited for customers who consume a lot of energy at night and on the weekend. Also, these rates are ideal for consumers who can transfer some of their usage to nights and weekends. Some customers can significantly reduce their bills by switching to time of usage rates. However, these rates are not for everyone since some customers will see higher bills on these rates. According to Bryan Wilson, Sales Representative for Utility Management Services, "It pays to do your homework before switching rates. Switching to the wrong rate can be a costly, 12 month experiment."

Part three of this article will appear in the next issue of Wilmington Business to Business Magazine. It will look at the expected benefits from deregulation.