Question-and-Answer Resource for the Building Energy Modeling Community
 | 1 | initial version |
If you use 1000 kWhs in a month and your utility bill is 100 USD, then your average electricity rate is 100/1000 = 10 cents/kWh. If your bill contains a monthly fixed charge of 20 USD that is independent of how much electricity you consumed, then the marginal electricity rate is (100 - 20)/1000 = 8 cents/kWh.
If you simply used the average electricity rate of 10 cents/kWh in a tool like BEopt, you'd get incorrect results. For example, for a month with 2000 kWhs consumption, you’d incorrectly calculate a utility bill of 2000 * 0.10 = 200 USD when it is instead 20 + 2000 * 0.08 = 180 USD. In other words, it’s important to calculate utility bills using fixed charges and marginal electricity rates, not average electricity rates.
| | 2 | No.2 Revision |
If you use 1000 kWhs in a month and your utility bill is 100 USD, then your average electricity rate is 100/1000 = 10 cents/kWh. If your bill contains a monthly fixed charge of 20 USD that is independent of how much electricity you consumed, then the marginal electricity rate is (100 - 20)/1000 = 8 cents/kWh.
If you simply used the average electricity rate of 10 cents/kWh in a tool like BEopt, you'd get incorrect results. For example, for a month with 2000 kWhs consumption, you’d it’d incorrectly calculate a utility bill of 2000 * 0.10 = 200 USD using the average rate when it is instead 20 + 2000 * 0.08 = 180 USD. In other words, it’s important to calculate utility bills using fixed charges and marginal electricity rates, not average electricity rates. rates.
