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UCM was hired as a subcontractor to review the utility bills for a 520-bed hospital that had a 4,200-kilowatt natural gas cogeneration system.  The hospital was frustrated that, despite generating more than 90% of the power it needed, it continued to pay more than $1.4 million per year to the local utility for “standby” service, to cover its electricity needs during those periods when the cogeneration system was down because of maintenance, or because of unplanned outages.

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UCM researched the utility company’s method for calculating electricity demand for standby customers, which involved complex calculations that took into account the generation output of the cogeneration system, the electricity imported from the utility, and the rated capacity of the system.  UCM discovered that these calculations – which were performed for every 15-minute period of every day, more than 35,000 periods per year – were performed manually on large spreadsheets, raising the likelihood of errors in determining the appropriate demand levels.

 

Sure enough, after scrutinizing the utility company data, UCM discovered that 18 months earlier the utility had estimated demand inappropriately during a period when the electric meter malfunctioned.  Because of a demand “ratchet” in the utility’s tariffs, the high demand affected charges for a full year.  At first, the utility denied there was any problem with its calculations, but eventually it admitted that it had overcharged the hospital, and paid a refund of $490,000.