Living Green and Saving Money with an Electric Load Controller and Time-of-use Electricity Rates

What if I told you that for just $2000 you could get a device installed in your home that would reduce your electric bills? You would probably scoff at the idea and think it would take forever to pay for such a pricey device. That was my first reaction when a gentleman selling these first approached me. But I listened further and read up on the idea. When I learned that the savings were typically 20 to 40% of one's electric bill every year, I did the math and realized that would be significant and probably pay back the device's cost in just a couple of years. I personally saved from $500 to $700 each year with this plan, and know that it is possible to save even more depending on your situation. I have had the device in my home for more than 10 years and it has been trouble-free and paid for itself many times over (and it's like tax-free income!).

The device in question is known as an electricity "load controller" or sometimes "demand controller." It is used to help homeowners take advantage of special electricity rate plans known as time-of-use (TOU) rates. There are often two different variations on such rate plans. In one, they simply charge more for electricity consumed during peak periods and less for off-peak use. The other type adds an additional wrinkle: a "peak demand charge" which penalizes you for using lots of electricity at one time during the peak period, and in return they charge even less than usual for the electricity. But this peak demand charge will normally overwhelm the savings due to the lower rates, resulting in a higher bill. That is, unless you have a load controller! Note that these are sometimes called "Energy Management Systems."

So what do these things do actually? They selectively shut off your individual major appliances in order to manage your peak load. Your peak load is the maximum amount of electricity your home uses at one time during the portion of the day defined as on-peak hours (usually about 10 hours out of each weekday, and never on the weekend.) Now, here's the catch: If all of your major appliances are running at the same time you will have a very high peak demand and your electric bill with be much higher under this plan! So the question becomes how to make sure this never happens during the peak hours, and further to minimize the total number of such appliances (or "loads") that are on at the same time. Well if you had to run around and manually turn things on and off to accomplish this you'd never be able to keep up. The load controller does it for you with a fairly sophisticated computer algorithm. It relies on the fact that utility companies define and measure the peak demand by adding up the electricity used in every 15-minute interval. The highest 15-minute electric usage in any one month becomes the peak demand for that month, on which the demand charge penalty is based. So you can see if in just one 15-minute period in a given month all of your major appliances were running together you'd have blown your bill for that month. But the computer can make sure that doesn't happen.

The load controller continuously monitors your total electricity flow, and when it exceeds a pre-programmed limit it starts to shut down your major electric using appliance in a predetermined priority order until the load drops back to a level that will not result in a higher peak than desired. Since it has 15 minutes to work with in each interval, it doesn't have to immediately shut everything down, but rather continues to monitor the usage and waiting as long as possible before shutting down another load. It's really a very sophisticated algorithm. This minimizes the inconvenience or discomfort to the residents.

So what are these "major appliances" that are controlled by the device? Well they are the major users of electricity in a typical home: air conditioning, heating, water heating, clothes drying. If you use electric appliances for all these function you can probably save big with this plan. If you use natural gas for many of these functions then you are not a candidate for this approach.

Without the load controller, there will certainly be many times each month when all of these appliances are on at the same time, perhaps even for a full 15-minute interval. But they don't have to be running at the same time to provide their functionality to the home. That is the key-making these appliances "take turns" rather than all run at once.

So you can save money, but what was that about reducing pollution? That happens because electric utilities have to use their priciest and dirtiest methods of electricity generation in order to meet the peak demands, so that is why they are interested in reducing those peaks. So it is a green money-saver!

An excellent explanation of these devices and additional details can be found on this web site.