Q. We are using an average utility rate in our energy cost savings calculations but I am hearing that we might get a lot larger savings if we use the exact utility rates in our calculations. What should we use?

A. There two answers to this question. The first is that if your objective is to calculate utility incentives and the incentives are based on average rates, I would use the average rate since this is to your benefit. Second, if your objective is to accurately calculate the project energy cost savings for project feasibility and the utility rate changes with time of use or changes by the amount you use, I recommend then recommend for you to use the exact rate. By not using the exact rate, calculations may be off by as much as 30% that impacts the project payback significantly.