Case Examples | UCM | Utility Cost Management LLC

Discover how UCM met a variety of challenges with expertise & determination.

Since 1991, UCM has advocated in many ways for many clients to solve the common problem of utility cost overpayment.

Utility regulations have become so complex and burdensome, billing errors occur more often than not – especially for major utility customers, where the larger the bill, the larger the likelihood of overcharges. The following case examples illustrate in detail how UCM resolved this issue for a wide variety of clients:

Large Grocery Chain

Over 440 short-term rate changes, all approved by PG&E.

UCM was retained by one of the nation’s largest grocery chains to analyze electricity costs at more than 220 stores in Northern and Central California. UCM analyzed 15-minute “interval data” for each location and discovered that the stores would realize savings if electricity service were temporarily provided under rate schedules that used revised “time of use” (TOU) periods. In most cases, UCM’s analysis showed that the new TOU rate structure would be beneficial for only one or two months.

In order to take advantage of this opportunity, UCM had to obtain a waiver from the PG&E requirement that rate changes occur only once every 12 months. In a series of meetings with utility personnel, UCM established the rationale for the waiver, and then worked with PG&E to obtain California Public Utilities Commission approval for the new policy. The CPUC allowed the short-term rate changes to occur, and UCM handled all aspects of implementation, both to and from the new rates – more than 440 rate changes in all.

In the end, UCM’s client reduced electricity costs by more than $460,000 in less than 90 days. These savings were achieved with no capital outlays, no changes in how electricity was used, and no client time. UCM took care of everything, including providing the client with a detailed breakdown of actual savings after the project was complete – a truly winning project in every sense.

Hospital

UCM's research & scrutiny of interval data leads to a sizeable refund.

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.

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.

Commercial Office Building

UCM secures over $500,000 in refunds & $220,000 in annual ongoing savings.

UCM was retained by the asset manager of a 50-story, 600,000 sq. ft. office building to analyze gas, electricity, water, and sewer expenditures. UCM discovered that sewer charges were too high because they were based on water consumption, even though a significant amount of water evaporated through the building’s cooling towers. UCM worked with the water and sewer provider to quantify the appropriate reduction in sewer fees.

UCM then turned its attention to municipal surcharges and taxes that were being assessed on gas, electricity, and water bills. Based on the city’s municipal code and provisions in the state constitution, UCM determined that the building owner was exempt from the assessments. When UCM brought its findings to the city’s attention, the city refused to correct the error because it was unfamiliar with the legal provisions that supported UCM’s view. However, after several months, the utility approved the exemption, and UCM worked with the building’s utility providers to recover refunds of more than $500,000, and to eliminate the taxes and surcharges going forward to reduce ongoing costs by more than $220,000 per year.

Senior Communities

UCM corrects billing errors that had gone unseen for decades.

A major owner and operator of senior communities hired UCM to reduce utility expenditures. The company had tried to work with its utility providers for many years, mostly to no avail, and finally decided to give UCM a chance to show what it could do. Within six months, UCM implemented various gas and electricity billing changes that reduced ongoing costs by more than $200,000 annually.

But UCM didn’t stop there. Some of the largest opportunities involved gas billing errors that resulted in excessive charges because large facilities were incorrectly classified as residential customers, rather than commercial customers. UCM established that the gas utility had violated its regulations and that it knew, or should have known, that the accounts were being overcharged. UCM used email correspondence, various municipal ordinances, and the utility’s tariff language to prove its case. UCM’s argument was so compelling that it was able to negotiate recoveries dating back several years, far beyond the three-year period normally allowed, and its client received refunds totaling more than $1,000,000.

Cotton Ginning

UCM files a formal complaint with the CPUC, leading to $9 million in refunds and savings of $2 million per year.

UCM identified a billing issue that was systematically increasing electricity charges for cotton gins throughout California. After PG&E refused to alter its policy, UCM worked with the ginners’ trade association to bring together a group of 33 ginning companies with more than 70 facilities – virtually the entire industry in the state.

UCM filed a formal complaint at the California Public Utilities Commission on behalf of this group. UCM handled all aspects of the complaint process, including discovery, attendance at hearings, oral argument, witness testimony, cross-examination, and the preparation of numerous briefs explaining the justification for the relief the ginners were seeking, and rebutting the utility’s arguments. The process was delayed for more than a year because of PG&E’s bankruptcy, which raised new issues that UCM had to navigate, but eventually the CPUC ordered the utility to pay more than $9 million in refunds to UCM’s clients, and to reduce their ongoing electricity charges by more than $2 million per year.

Mid-Sized City

UCM cites a 25-year-old regulatory decision to justify cost-reducing rate changes.

UCM analyzed electricity costs for a mid-sized city and identified more than 20 accounts that were being overcharged. In less than four months, UCM had implemented all of the billing changes, reducing the city’s electricity costs by more than $400,000 per year.

Over $100,000 of this total came from two pump stations that were used by the city’s water department. UCM believed the sites qualified for special rate designations offered to certain agricultural and water pumping customers under the local utility’s tariffs. However, the utility disagreed, insisting that incidental electricity use for exhaust fans and circulating pumps disqualified the customer because the incidental use was not for water pumping.

UCM provided the utility with a Public Service Commission decision from 25 years earlier in which regulators established the principle that electricity uses that support a qualifying end use should be treated like that end use. After UCM presented the decision and explained its significance to senior utility personnel, the utility reversed its position and approved the desired rate reductions.

City Streetlight System

UCM teams with utility company to draft new policy reducing electricity charges for UCM's clients.

UCM discovered that several of its municipal clients had electricity accounts that were classified as “general service” even though they served streetlights. When UCM brought this issue to the utility’s attention and requested the lower streetlight rates, the utility refused, insisting that low levels of daytime electricity use for irrigation controllers made the accounts ineligible for streetlight service.

UCM elected to represent one of the cities in the utility’s “rate case,” a proceeding that occurs every few years in which regulators evaluate rate design issues. As part of its in-depth research, UCM discovered that the utility was applying the existing tariff inconsistently, already granting the streetlight designation to hundreds of customers with significant daytime electricity use. Moreover, UCM established that it made no sense from a public policy perspective to prevent a customer from qualifying for a rate class simply because there is minor use for different purposes.

Eventually, the utility company came around to UCM’s position. Together, UCM and the utility company drafted a new policy, presented it to regulators, and obtained approval, reducing electricity charges for UCM’s clients by hundreds of thousands of dollars each year.

Beverage Manufacturer

UCM's restructured water rates eliminate penalties paid by a beverage plant.

UCM worked for a beverage manufacturing plant that was the largest user of water in the city. The plant worked hard to use water efficiently, but there was only so much that it could do, given the amount of water used in its product and the water needed for cleaning operations.

UCM noticed that the city’s “tiered” rate structure, in which higher levels of water usage were billed at successively higher rates, penalized large customers. Through additional research, UCM discovered that the rate structure violated regulatory provisions that required water rates to reflect the cost of service.

UCM brought its concerns to the city’s Director of Public Works, who administered the water department. Over a period of 18 months, UCM worked with the city to design a new rate structure that treated UCM’s client more fairly, and to obtain approval for the new plan from the City Council. In the end, the beverage plant reduced water costs by roughly 20% because of UCM’s efforts.

Low-Income Housing

Despite utility company opposition, UCM prevails and reduces costs for low-income customers.

When electricity regulators adopted a new policy that was touted as a major rate reduction “for all customers,” no one would have thought that some customers – namely, certain low-income multifamily housing properties – would actually pay more. But UCM spotted this quirk in the new rate structure, and petitioned regulators on behalf of one of its clients to correct the situation.

The key issue was that eligibility for electric rate subsidies available to low-income housing customers had not been expanded in conjunction with the new rate structure, forcing some customers to choose between giving up their low-income discount or adopting a less favorable rate structure. UCM was confident that regulators never intended to put low-income housing customers in this position, and filed briefs that explained the intricacies of the rates and the surprising outcome for some customers.

Despite strong opposition to UCM’s position from the utility company, regulators granted UCM’s petition, and the rate increase experienced by low-income housing projects under the new rates was eliminated.

Milk Processing Plant

UCM revises electric company tariff language to achieve the largest savings opportunity.

UCM was retained by the nation’s largest processor of milk and dairy products to evaluate utility costs at more than 80 facilities across the United States. UCM made dozens of billing changes that reduced costs by several hundred thousand dollars, but the largest opportunity required UCM to revise electric company tariff language.

UCM compared the way one state's major electric utilities classified milk processing facilities, and found inconsistencies that resulted in UCM’s client paying significantly more for electricity than competitors in other parts of the state. UCM also identified language from prior Public Service Commission decisions that strongly suggested regulators approved of the milk production facilities receiving the lower rate designation.

Through the utility company’s “General Rate Case” process, UCM explained the rationale for its position and provided ample evidence of how changing the utility’s regulations to make them consistent throughout the state was sound public policy. UCM’s position was adopted, the tariff language was changed, and UCM’s client reduced electricity costs by more than $300,000 per year.

University

UCM searches public records & utility company's financial statements to reconstruct the rate structure.

UCM was hired by a major public university to analyze its utility costs. UCM secured substantial reductions in gas and electricity charges, but it was the millions of dollars spent on water and sewer service upon which UCM focused its attention.

UCM researched how the local water and sewer utility developed its rates, and the specific components that went into the total rate that was charged. The university’s water and sewer bills provided no itemization of charges or other details, so UCM relied on public records searches and the utility’s financial statements to reconstruct the utility’s rate structure. Through this process, UCM discovered that the water and sewer rates included costs for upgrades to the utility’s infrastructure, and these capital facilities fees could not be charged to public entities like the university.

Using UCM’s findings, the university’s counsel was able to revise the utility’s rate structure to eliminate the capital facilities fees, and water and sewer costs were reduced by more than $2 million.

Fruit Processing Plant

UCM proposes that certain clients be allowed to change their meter read dates 2x per year to avoid exorbitant “demand” charges.

UCM worked on behalf of several large fruit processing plants to revise utility company rules on how electricity “demand charges” were calculated. The problem was that these plants used a tremendous amount of electricity – some had demands exceeding 6 MW – but operated at full capacity for only 60 to 90 days each year during harvest. Because of this production cycle, the plants frequently incurred exorbitant demand charges at the beginning and end of each season. For example, at the beginning of the season, if the plants had to ramp up production just a few days before their meter was read, they would incur a full month’s demand charge even though they were operating for just a few days, which drastically increased total electricity costs.

UCM identified this problem and crafted a novel solution. UCM proposed to regulators that seasonal operations that meet certain criteria be allowed to change meter read dates twice each year – at the beginning and end of their operating seasons – to align demand charges with actual usage. In this way, these customers would avoid the punitive demand charges they incurred when the harvest happened to occur near their arbitrary meter read date.

UCM secured support from the utility and regulators for its proposal, and its solution was adopted, reducing clients’ electricity charges by hundreds of thousands of dollars per year.

National Retailer

UCM incorporates 15-minute interval data showing actual electricity consumption at “large,” “mid-sized,” & “small” stores.

UCM was retained by one of the nation’s largest retailers to analyze rates and tariffs for 116 electricity providers in the eastern United States, quantify the impact of potential changes to “primary voltage” service, and summarize the results. The project was performed on a very tight schedule and required UCM to identify rate schedules and riders that applied to client facilities, interpret and clarify complex tariff provisions, and quickly determine the impact on client stores.

For each of the 116 electric utilities that were reviewed, UCM created Excel models that calculated the annual savings that would result if stores were converted to primary voltage service. UCM incorporated 15-minute interval data showing actual electricity consumption at “large,” “mid-sized,” and “small” stores into the model so that we could assess the impact of the proposed changes for any type of store served by each utility.

UCM completed the project on time and the client was extremely pleased with the results.

City Streetlight Purchase

UCM evaluates a city’s proposed $10 million streetlight purchase.

For many decades, more than 96% of the streetlights in a large city were owned by the local electric utility. In 2016, the utility offered to sell more than 17,000 of these streetlights to the city. UCM was hired to evaluate the pros and cons of the streetlight purchase and report its findings to the City Council.

UCM analyzed the purchase from every angle, starting with a breakdown of the utility’s valuation that resulted in a proposed sales price of more than $10 million. UCM reviewed the utility’s testimony and workpapers from prior regulatory filings to assess the correct streetlight valuation and depreciation methodology, identified a discrepancy in the utility calculations, and negotiated a $687,000 reduction in the price. UCM’s report also addressed how to deal with ongoing streetlight maintenance, the expected reduction in electricity charges once the lights were purchased, potential “smart city” applications, and possible risks.

In large part based on UCM’s findings, the city elected to proceed with the purchase and is reaping the benefits of that decision to this day.

Casino Off-Grid

UCM client now generates all of the electricity it needs – more than 40 million kWh per year.

A Native American tribe owns and operates a large casino, hotel, and other facilities with more than 8 MW of aggregated electric demand. UCM has advised the tribe over several years as it has acquired major generation assets, including cogeneration, solar, and fuel cells. UCM’s work has been varied, and has included the following:

Pro-forma calculations on expected costs and savings associated with major energy capital investments
Evaluation of vendor calculations and proposals
Regulatory analysis and negotiation with the tribe’s electric utility on charges assessed for “stranded costs” (i.e., “departing load charges”) and “standby” service
Implementation of various beneficial rate changes made available because of the incorporation of generation assets

Today, the tribe generates all of the electricity it needs to operate the casino and hotel – more than 40 million kWh per year – and pays the utility relatively modest standby fees. UCM continues to serve as a trusted advisor whenever energy or utility issues arise.

City’s Power Purchase Agreement

UCM examines initial PPA terms & determines that savings are virtually guaranteed not to occur.

A city installed solar panels at one of its largest facilities and agreed to pay for the installation through a 15-year “Power Purchase Agreement” (PPA) with one of the nation’s largest solar companies. However, five years into the project, the city was skeptical that the anticipated savings were being realized and asked UCM to investigate.

UCM found that the solar system was generating about 11% less electricity than forecasted. More importantly, UCM found that the terms of the PPA virtually guaranteed that the system would not produce savings. The initial PPA price was too high because it failed to take into account that the city would continue to incur significant “demand charges” and “customer charges” with the local utility, regardless of how much electricity was generated by the solar panels. Additionally, the annual escalation in the PPA price per kWh was excessive, and meant that the project would yield increasingly worse results the longer the solar panels were left in place.

With UCM’s findings documenting the impropriety of the PPA, the city was able to approach the solar company and renegotiate the terms to make the project worthwhile.

City’s Water Conservation

UCM answers City Council’s request to see how its water conservation efforts are paying off.

A City Council wanted to monitor its efforts to reduce water usage during a drought. There was just one problem: the city received over 800 monthly bills from three different providers, and staff were barely able to get the bills paid on time, much less capture and organize water consumption data. The city turned to UCM for help.

Working with city staff, UCM created a database that simplified and streamlined the data entry required to process each water bill, while simultaneously capturing detailed consumption and cost data that had not been obtained before. As the system was created, UCM responded to feedback from the city and made adjustments to the software to include the specific features the city wanted. Once the database was complete, UCM trained those who would be using it to ensure the transition to the new system went smoothly. In the end, the system not only allowed the city to perform meaningful analyses of water consumption and costs, but also reduced the time and expense to process and pay the bills.

Water Agency Battery Storage

UCM's analysis reveals that battery storage system should be smaller than vendor proposals.

A wastewater district recognized that it needed backup power in the event of an emergency or prolonged outage, but there were too many options and too many vendors selling their solutions. So the district hired UCM to provide objective advice on the best way to achieve its goals at the lowest possible cost.

UCM analyzed the district’s critical operations, modeled 15-minute electricity consumption data for these essential uses, and reviewed applicable utility company tariffs to determine the optimal size of the proposed system. This approach resulted in UCM recommending a battery storage system much smaller than vendors had suggested, in large part because UCM discovered that preferential utility treatment of the system required that it meet just 15% of the district’s total load. UCM’s analysis also identified the optimal way for the district to charge and discharge the battery to ensure power was available during emergencies, while also reducing demand charges during everyday use. With UCM’s help, the district eventually adopted a cost-effective hybrid approach, relying on battery storage for instantaneous power during the first few hours of an outage, while having a backup generator available for longer periods.