The different rate structures you need to know

It’s important to understand the present energy use for your business because this can help you to be energy efficient. A good place where you can begin is to check your utility bills. Unfortunately, it can be hard to read these utility bills, but there are good chances that you can know energy use and costs with a little effort. Remember that a standard utility bill needs to have a customer charge, usage charges, rate charge, and many more. This article discusses the different rate structures you need to know.

Rates

The usage charges are a great way for you to understand energy bills. Keep in mind that most of the total energy costs are associated with usage charges. These can be calculated using different formulas like multiplying the usage by the energy rate. Also, different energy suppliers can have different rate plans and usage charges, so you need to compare energy suppliers at Utility Bidder.

For fuel oil or propane, charges related to the current propane of fuel oil cost tend to have either a simple or fixed rate structure. Therefore, there is a fixed amount that energy suppliers charge per unit of usage.

With natural gas, there are supply charges that also have a fixed rate structure. Hence, the energy supplier charges a fixed amount for any unit of usage. There can also be extra gas cost adjustments charges that cover for gas prices changes.

When it comes to electricity, it’s usually considered to be a bit of a complicated utility, especially for its rate structures. The rates and charges can depend on the consumption pattern. So it’s important to understand the various rates that energy suppliers may charge you. Some of the usual rate structures include the following:

Fixed rate 

A fixed electricity rate means that the energy supplier can charge you a fixed amount of cash for each kWh of electricity usage. Keep in mind that at a fixed rate, as energy usage increases, the cost of electricity always remains the same. 

Tiered rate

With a tiered rate, it means your electricity supplier can charge a higher rate when a specific threshold of electricity use exceeds. In other words, when energy usage increases, then the overall cost of energy tends to increase. In some cases, there can be situations where a tiered rate can be less expensive. 

Time of use

When it comes to a time of use rate, it means the energy supplier can charge you a higher rate, especially during the time of high power use in your area. Therefore, during the time when electricity is not in high use, the electricity tariff can be cheaper. Therefore, it makes sense to reduce the electricity usage during the high power use. Instead, you can use equipment that needs more power during off peak hours so that you can reduce the energy bill. 

Demand charges

With demand charges, the energy supplier can usually charge your business. You should remember that these are extra charges that come on top of your regular usage charges that depend on the maximum rate of energy use.

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