Trying to benchmark retail clients against industry standards here in Texas but Oncor's demand charge structure is throwing everything off. Client has 200 kW peak demand but only hits it for maybe 30 minutes per month during afternoon cooling. Their effective rate ends up at $0.18/kWh when similar stores in other territories run $0.12-0.14/kWh. How do you normalize for demand charge impacts when comparing against national retail benchmarks? The kWh usage is actually efficient but the cost per square foot looks terrible.
Oncor demand charges killing retail benchmark comparisons
Howard, welcome to Texas electric markets! Here in San Antonio with CPS Energy, we deal with similar issues. For benchmarking, I separate energy costs from demand costs in my analysis. Look at kWh/sq ft for efficiency comparison, then evaluate demand management separately. What's their load factor? If it's below 40%, there's definitely room for demand optimization regardless of total usage efficiency.
Angela makes a great point about load factor. Up here in New Hampshire with Eversource, demand charges aren't as brutal as Texas, but I still see the same issue with retail clients. Short duration peaks kill the economics. Howard, have you looked into demand response programs with Oncor? Some of my Texas colleagues have had success with automated load shedding during peak periods.
Thanks Angela and Yvonne. Load factor is exactly 38%, so definitely room for improvement there. The peak usually hits when all the HVAC units kick on during the 4 PM heat. Haven't looked into Oncor's demand response yet - didn't know they offered automated programs. Will investigate that option. For now, thinking about recommending thermal storage or at least some basic load scheduling.
Howard, just a heads up from Illinois - Ameren has similar demand charge issues and I've found that benchmarking against $/kWh can be misleading in high-demand-charge territories. Better to benchmark total energy cost per square foot and then break down the components. Also consider time-of-use rates if Oncor offers them - might be better than straight demand charges for retail operations.
Darlene, that's a good approach - total cost per sq ft makes more sense than trying to normalize the rate structure. Oncor does have TOU options but the peak period pricing is pretty steep. Might still be worth modeling though. What time periods does Ameren use for their TOU schedules? Trying to see if there's a pattern that might work better for retail operations.
Ameren's peak period is 1 PM to 6 PM weekdays June through September, which sounds similar to your Oncor territory. The key is shifting non-critical loads outside that window. I had one retail client save $2,800/month just by running their water heaters and some display lighting on timers to avoid the peak period. Simple changes, big impact.
This Texas demand charge discussion is bringing back memories. Used to work in Dallas before moving to Charlotte. Oncor's demand structure is brutal but the good news is Texas retail choice means you can shop for better rate structures. Howard, have you looked at suppliers offering demand caps or different demand charge methodologies? Some offer 12-month ratchets instead of monthly billing demand.
Derek, great point about retail choice! I've been so focused on the Oncor delivery charges that I forgot about supplier options for the energy component. Will definitely shop around for better demand charge structures. The 12-month ratchet might actually work better for this client since their peak demand is pretty seasonal. Thanks for the reminder about the Texas market advantages.
Howard, one more Texas tip - some suppliers offer "demand holidays" for retail customers where they waive demand charges for a certain number of months per year. Perfect for seasonal peaks. Also look into thermal energy storage systems if the client has adequate space. With Texas heat, ice storage can shift significant cooling load to off-peak hours and flatten that demand profile.
Angela, thermal storage is definitely on my recommendation list now. Client has a decent sized mechanical room so space shouldn't be an issue. The demand holiday concept is new to me - that could be a game changer for managing seasonal peaks. This thread has given me a whole new approach to the Texas retail market. Thanks everyone!
Great discussion everyone. Howard, since you're new to Texas markets, I'd recommend connecting with the Texas Association of Energy Auditors - they have some excellent resources on navigating ERCOT and the various utility territories. Also, don't forget about the federal tax credits for demand reduction technologies. Thermal storage and automated demand response systems can qualify for significant incentives that improve the project economics.