Below, we’ve outlined the typical process in most modern buildings. As we said above, tenant billing varies a bit in every building. Once you’ve paid your bills, it’s time to recover expenses from tenants, assuming your leasing structure allows you to do so. These cover things like the cost of administration or maintaining infrastructure. As a result, building engineers work not just to reduce the total energy being consumed in a building, but also to keep the spikes - or “peak load” - down to a minimum.ĭepending on your state and a few other factors, bills may also come with a few other, generally small fees. In addition the cost per kWh, customers are also charged for the highest level of current that they drew during the billing period. They discourage spikes with peak load charges. A steadier demand means that electricity companies can better plan their operations, but a spikier one - especially if spikes come around the same time - may mean that peaking power plants have to be flipped on, which costs more money. The utility companies have a clear motive to cut down on consumption spikes. That spike may have not consumed many kWh, but it required a large current (kW) from the grid. (There are ways of storing energy, but they’re inefficient, slow, and expensive.) This is important because, when you look at a graph of your building’s energy use over the course of a day, you’re likely to find small “spikes.” During these periods, your energy use was much higher than the average, but perhaps only for a few minutes. Electricity isn’t like water you can’t store it in a tank when you aren’t using it, you have to generate it and use it at the same time. Conversely, electricity is often discounted during the low demand hours overnight. Electricity companies charge more during these hours to encourage customers to shift their consumption patterns. During peak hours - often in the afternoon during the summer and the morning and evening during the winter - electricity is in high demand. The only important distinction is that the time when energy was consumed may affect the cost per kWh. Total consumption is an intuitive measure - it’s simply the total amount of electricity consumed during the billing period. For those bills, the next most important numbers are total consumption and peak load, both of which are measured in kilowatt-hours (kWh). For electricity, things get a bit more complicated. For most resources - water, gas, steam - this is based on simple volume. Reading your bill, the most important number is obviously the total cost. With very few exceptions in commercial real estate, bills arrive for the entire building and it’s up to the property manager to recover the cost from their tenants. Depending on the resource in question and the utility provider, bills tend to arrive on either a monthly or quarterly basis.
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