Knowledgebase: EC Professional
EC Pro: Cost Avoidance is Too Low
Posted by Barry Kroeker, Last modified by Joel Brickell on 28 May 2015 03:04 PM

Issue: The unit price of natural gas is much higher this year. We reduced our gas usage. I think that our cost avoidance should be high but it's not. What's the reason?

Solution: You may need to adjust the Global setting that controls the unit cost "safety net". 

Explaining the Safety Net:

The unit cost safety net is designed to prevent cost avoidance values from being overstated due to abnormal unit costs.

The unit cost used in cost avoidance calculations is based on the CURRENT bill. However, when current year usage is very low, the unit cost can be unrealistically high, causing cost avoidance to be unrealistically high as well. (Example: Current bill is a minimum bill due to summer shutdown. Usage= 25 kwh, cost = $12, calculated unit cost is $0.48/kwh. A normal value is $0.10 or less.)

How do we know if the unit cost value of $0.48/kwh is reasonable or not? Energy CAP compares the current unit cost with the average unit cost for the entire baseline year for each meter. In this example, let's say the average cost per kwh for this meter for the baseline year was $0.08. The $0.48 value is six times higher.

The safety net establishes a broad range of allowable values based upon mulitples of the baseline average unit cost. The min/max range defaults to 0.5 to 4.5 times the baseline AUC. In this example, that would allow current values of 0.04 to 0.32. Since 0.48 is OUTSIDE of the allowable range, the safety net kicks in.

The safety net tells EnergyCAP's processor to ignore the CURRENT unit cost of 0.48 and use the baseline average of 0.08 instead.

In the case of natural gas, let's say that today's gas prices ARE 4 times the baseline year's. In that case, we DON'T want the safety net to kick in and fall back to the much lower baseline unit cost. That will cause our savings to be grossly UNDERVALUED.

Updating the Safety Net:

To set the safety net to a broader range (say .2 to 8), you must update the global property associated with the safety net range:

  1. Run EnergyCAP.
  2. Click Setup/Global. The Global Properties window will open.
  3. Click the CAP tab.
  4. Click the Accept and Show Settings button. the Processor Safety Range Settings will be displayed.
  5. Edit the Minimum AUC, Maximum AUC and Minimum Degree Days per Day fields as necessary.
  6. Click OK to save the changes and exit the Global Properties window.

The default settings are:

  • Minimum AUC variance from Baseline: 0.5
  • Maximum AUC variance from Baseline: 4.5
  • Minimum Degree Days per Day: 0.01

by Administrator  06/25/2007  last modified by B. Kroeker 06/30/2009

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