RCM Exchange

Resource Billing Basics


All electricity used at a facility goes through a meter. Study your billing rate schedules and learn to read your electric meters. At facilities that do not have an energy management control system (EMCS), use direct meter data to spot-check energy consumption for a specific period so you can develop daily load profiles.

Some equipment may have a separate meter, such as large irrigation pumps, stadium lighting, or a scoreboard. Many portable buildings have their own electric meters.

Rate Schedules

Electric utilities typically offer several different rate schedules: residential, commercial, large commercial, industrial, irrigation, and sometimes a separate street lighting rate. Utilities charge different rates for different services; for example:

  • Residential rates do not typically include a charge for electric demand
  • An industrial rate may include charges for consumption, electric demand, and power factor (which indicates an electrical system’s efficiency)

Some utilities may have more than one rate that is applicable to a particular facility. Get copies of all rate schedules that apply to your facilities. You may need to develop additional materials, such as a load profile — a chart showing electrical demand over time that documents the distribution of building heating, cooling, and electrical loads.

Electricity charges can be complicated – you will need to be familiar with the following terms:

  • Basic or base charge
  • Block charge
  • Consumption charge
  • Demand charge
  • Ratchet demand charge
  • Power factor
  • Power factor adjustment
  • Base load
  • Variable loads


Natural Gas

Natural gas consumption is measured in units called therms. A therm is equivalent to 100,000 British thermal units (Btu). Natural gas has a base charge or meter charge. The base charge will vary depending on the utility and the size of the meter. If facility operations have changed significantly since the meter was installed, replacing it with a smaller meter may produce considerable savings in base charges.

If gas consumption is seasonal, such as with heating an outdoor pool, there may be an advantage to canceling service during periods of non-use. However, there may be a charge for reactivation.

Ratchet Charge

Some natural gas utilities have a ratchet on consumption. The charge in the rate schedule is based on a percent (e.g., 40 percent) of the highest month’s consumption in the past 11 months. This type of rate schedule is typically reserved for large commercial users and is designed for facilities with a relatively even annual load. If, for example, a facility uses 20,000 therms during the coldest winter month, this usage sets the charge for the next 11 months. During the summer months, the boilers are turned off and gas is used only for some kitchen equipment and domestic water heaters. The consumption may drop to 2,000 therms for a month. But because of the 40 percent ratchet clause, the facility is charged for 8,000 therms (40 percent of 20,000). Study rate schedules and your gas-use profiles closely to determine which rate schedule is best for each facility.

Firm versus Interruptible

Natural gas companies are limited in their capacity to deliver gas by the capacity of the main gas transmission lines. During extremely cold conditions, shortages can occur. To accommodate customers with different needs, gas companies offer gas as a firm or interruptible commodity. A firm gas rate costs more than an interruptible rate. If you select a firm rate schedule, the utility will not cut service even when regional demands for gas are high. Some gas companies offer different degrees of “interruptibility.” Those customers interrupted first will likely pay the lowest price for gas.

The price for interruptible gas is typically 15 to 30 percent less than for firm gas, depending on the volumes used and the utility. Facilities that have, or can add, a back-up source of fuel (such as oil or propane) should consider buying interruptible gas. In the Northwest, gas interruptions have been rare. However, if you are on an interruptible rate and are notified of a curtailment, but you cannot comply because your back-up systems are not working, you will pay a penalty as specified in the rate schedule.

Fuel Oil

Fuel oil is typically sold in gallons. The two most common types of oil sold are No. 2, or diesel, which is a light oil, and No. 6, or bunker C, which is a heavy residual oil. Bunker C oil typically requires a heater to keep the viscosity low in the storage tank. Boilers that use the heavy oil usually have a second heater (electric) at the burner to further heat the oil before combustion.

Because oil is sold by individual dealers, the price can vary. Usually, the larger the volume purchased, the lower the price per gallon. For customers with large tanks (more than 10,000 gallons), the price reduction can be significant.

If you have a large oil-heated facility (greater than 40,000 square feet), it may be worthwhile to purchase oil on a contract that is put out for bid, which will provide the best price and a price guarantee. Be sure to specify the type of oil needed. Low sulfur oil is best, but it is more expensive. Also check the reliability of the bidders. Other options may be available to get a good price for oil, such as through your state procurement office. The Washington Office of State Procurement contracts with suppliers to get a good price for public facilities.

Have a facility operator or maintenance worker check the level of the tank at least weekly, at about the same time each day, and record the level. This will allow you to profile consumption and recognize problems as they occur.


Propane or low-pressure gas is sold by the gallon, and the tanks are always above ground. Tank purchase options may be available through your state procurement office. The Washington Office of State Procurement contracts with suppliers to get a good price for public facilities.

Water and Sewer

Water is typically sold by the local municipality in several different units: hundreds of gallons, thousands of gallons, hundreds of cubic feet, and acre feet. Local or seasonal water issues may impact your costs. Penalties can also be incurred if you do not abide by restrictions during critical water periods.

If your facilities are connected to a municipal wastewater system, sewer charges are usually based on the water consumption read from the meter because this water will end up in the sewer. Sewer rates can vary greatly depending on the type of wastewater treatment provided, and can be several times higher than the water charge.

For water uses that bypass the sewer (such as water used for irrigation, cooling towers, boilers, and condensers), a separate meter or a sub-meter may be appropriate. Negotiate with your water provider to establish an agreement that allows for water that does not go to the sewer. A sub-metered water volume could be subtracted from the main meter reading to give a corrected volume for sewer charges. If this kind of disparity has been going on for some time (such as sewer charges on irrigation water), you may be able to negotiate a refund. 


Charges for garbage service can be significant. For commercial facilities, Dumpsters are usually provided, and the charge is based on the volume of the Dumpster and the number of times it is emptied per week. The unit of measurement is usually cubic yards.


If the facility compacts its waste, it might get a price reduction for using a smaller Dumpster and needing fewer trash pick-ups. But first check with your refuse hauler because the facility may be charged on the weight, not the volume, of trash.


Many garbage service providers also provide free recycling pick-up. Separating recyclable materials and reducing the Dumpster size or pick-up schedule can lead to substantial savings.