Simple Solutions - That Work BREAKING DOWN ELECTRICITY BILLS IN THE USA: WHY IT MATTERS

By Wessel J. Watt

CEO – WATT INDUSTRIES LLC

Electricity bills for industrial consumers in the U.S. typically consist of several core components:

1. Energy Charge (kWh)

This is the charge for the actual electricity consumed during the billing period, measured in kilowatt-hours (kWh) and is the largest component of the bill, especially for those using electric induction furnaces or other electrically powered melting systems. The energy charge typically reflects the cost of generating electricity and can vary based on time-of-use, market pricing, and rate plans. Foundries use large amounts of electricity for melting, molding, heat treatment and ancillary operations. Monitoring and optimizing usage during off-peak hours can significantly reduce this charge. Typical consumption is 400 - 650 kWh/ton and is dependent on the quality of scrap used, efficiency of the furnace amongst others.

2. Demand Charge (kW)

Demand charges are based on the highest level of power drawn from the grid during a measuring period (normally 15-minutes), typically measured in kilowatts (kW) but can also be measured in kVA. Utilities use this charge to cover the cost of infrastructure required to meet peak load demands. Foundries often experience high power spikes during equipment startup (e.g., furnace ignition) or when more than one furnace is in full operation. Even short-duration spikes can set a high demand baseline, drastically increasing monthly bills.

3. Transmission and Distribution Charges

These charges cover the cost of delivering electricity from the generation source to the facility through high-voltage transmission lines and lower-voltage distribution networks and can be fixed or variable. This charge is often derived from the highest demand recorded during a rolling 12 months.

4. Additional Charges and Tariffs

   1. Power Factor Penalties: Power factor is a measure of how effectively electrical power is being used and a low power factor (normally less than 0.95) results in penalties because it indicates inefficient use of power.

   2. Time-of-Use (TOU) Rates: Utilities may charge different rates based on the time of day, with higher rates during peak demand periods and lower rates during off-peak hours and automated systems can help shift workloads accordingly, making TOU rates a strategic tool for cost control.

   3. Environmental and Regulatory Charges: These include charges for renewable energy programs, carbon offsets, emissions compliance, and other regulatory requirements.

   4. Taxes and Fees: Sales tax, public purpose surcharges, and other local fees are usually added to the final bill.

The components, along with detailed analysis of where, when, and how energy is used, can be recorded and displayed using an automated energy system.

Strategies for Managing Electricity Costs in Foundries

Managing equipment sequencing and using soft starters or load management systems like the WATT Demand System (WDS) can mitigate demand charges. To effectively control electricity-related expenses, foundries can take proactive steps, including:

1. Energy Audits

Conducting regular energy audits identifies inefficient equipment, poor operational practices, and hidden energy drains. A foundry would require data for various consumers, mediums and processes to conduct an audit, which would be easily handled by and energy demand system. Through analyses of the data, comparisons can be done between similar consumers as well as benchmarking against other/new technologies, and a monetary value could easily be coupled to it to justify possible Capex.

2. Load Management

Staggering equipment startups and reducing non-essential loads during peak times can significantly cut demand charges. Energy demand systems automate this process—enabling peak clipping and load shifting in real time, unlike older on/off systems—without disrupting production. They also prevent start-up loads from tripping the main feeder, protecting uptime and equipment. Some foundries have reduced demand by over 30% with no loss in output; one achieved an additional 500kW savings by actively analyzing and adjusting processes.

3. Participating in Demand Response Programs

Foundries often receive financial incentives for reducing electricity usage during peak grid demand periods by participating in utility demand response programs. These incentives and other curtailment programs are easily incorporated in automated energy demand systems. Integrating your energy demand system with utilities’ schedules and load reduction requests enables foundries to participate with confidence and without the stress of non-compliance.

4. On-Site Power Generation

Installing solar panels, BESS, cogeneration systems, or using waste heat for power generation (as seen in some cupola systems) can reduce grid reliance and lower bills over time.

5. Power Factor Correction

Using capacitor banks or harmonic filters can improve power factor and eliminate related penalties.

Electricity is both a cost and constraint in the foundry industry. By analyzing utility bills, foundries can apply targeted strategies to cut costs and boost competitiveness. Load demand management has advanced from simple curtailment to data-driven optimization. With U.S. electricity demand expected to rise 15.8% by 2029—driven by energy-intensive sectors like metal casting—effective demand management is critical for grid stability and operational success. In today’s landscape, understanding energy use isn’t just accounting—it’s smart business.

Contact  Wessel Watt wessel@watt-group.com

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The components, along with detailed analysis of where, when, and how energy is used, can be recorded and displayed using an automated energy system.

Sample graphics for various monitoring.