With the arrival of a new pricing method for residential consumers, some questions are beginning to arise… What does this new pricing method mean? Will I save money if I sign up? How much? Is it worth it for me?
Por: Vinícius Vidoto Viero
Jun 25, 2021
Energy Efficiency
In this series of texts, I will try to explain and illustrate some issues that may arise with this new pricing method.
The first thing we must understand very clearly is that pricing method and tariff flags are NOT the same thing (although both nomenclatures use cores and the names are very similar).
The pricing method is the “basic” cost of energy, which we can call the Energy Tariff (ET), which at the moment, for residential consumers, will be divided into “conventional tariff” and “white tariff”. For large/medium-sized consumers, there are other types of ET (Energy Tariff), but we will not go into that to avoid confusion. Since the ET is specific to each distributor (therefore, it is something very regional), a distributor in the city of São Paulo may have a different ET than the one distributed to Rio de Janeiro.
Tariff flags are additional costs for energy production. Tariff flags are determined by ANEEL – National Electric Energy Agency (therefore, it is something at the national level) and they are related to the activation of thermoelectric plants. Basically, when we enter the dry season, or when the reservoirs are very low, the flags change from green (no surplus and almost no thermoelectric plants operating), to yellow, red level 1 and then red level 2 (more expensive, with many thermoelectric plants operating).
The tariff flags are applied to the calculated TE value, therefore, regardless of whether you switch to the white tariff or continue with the conventional tariff, when ANEEL stipulates that we are in the red tariff flag level 1, you will continue to pay the additional amount for this.
In the next texts, we will delve a little deeper into the subject, and understand the difference between the current tariff and the new white tariff, how to calculate whether or not it is worth making the switch and some tips and possibilities for saving on energy costs.
Now that, with part 1 of this text, we understand that tariff flags and pricing method are specific things, what does this “white tariff” mean?
First, let's understand a little better what the pricing method is. Well, as previously mentioned, the pricing method, or Energy Tariff (TE), is the “basic” cost of energy. In other words, it is the amount that, if multiplied by your consumption, will give you the amount to be paid for the generation of the energy you consume.
To understand this in a very simple way, let's make a comparison with a car. If your car does 13 km/l, you know that with 10 liters you will travel 130 km. If the energy tariff is R$0.51/kWh, you know that for each kWh consumed you will spend R$0.51 in TE. After calculating the tariffs, the amounts of taxes, flags, fines and other amounts are added, thus giving the total amount of your bill.
But what is the difference between the conventional tariff (which we are subject to today) and the white tariff? The conventional tariff is the same, regardless of the time of day. The white tariff, on the other hand, will vary depending on the time of day.
To understand this, we must understand what “peak time”, “intermediate time” and “off-peak time” are, and to do this we will look at a graph provided by ANEEL – National Electric Energy Agency, in Technical Note No. 0056 of May 24, 2017.
The graph is a comparison between the average photovoltaic generation per hour of the day and the average consumption per hour of the day in the residential sector. At the moment, we are specifically looking at the orange graphs, which are the consumption graphs.
The hours with the highest consumption (circled in red) are what we call “peak hours” (since they are at the highest “end” of the consumption graph). The hours that precede and follow the hours with the highest consumption (circled in yellow) are called intermediate hours. The remaining hours (and weekends) are called “off-peak hours”.
Now that we know what the time divisions are, we can better understand what we mentioned a few paragraphs ago, regarding the conventional tariff being the same regardless of the time and the white tariff varying. The conventional tariff will be the same, regardless of whether energy consumption occurs at eight in the morning (off-peak hours), at six-thirty in the afternoon (intermediate hours) or at nine at night (peak hours). The white tariff will charge an amount of X at eight in the morning (off-peak hours), an amount of Y at six-thirty in the afternoon (intermediate hours) and another amount of Z at nine at night (peak hours), with Z being the most expensive, followed by Y and X being the lowest amount.
In the next texts, we will delve a little deeper into the subject, and understand how to calculate whether or not it is worth making the switch and some tips and possibilities for saving on energy costs.
Now, with parts 1 and 2, we already have enough knowledge to start really evaluating whether or not the transition to the white tariff is worth it for you. To do this, I will initially use a simulator provided by Enel (Energy Distribution Company for the city of São Paulo), thereby adding a few more important concepts, and then I will explain the calculations and how you can do this without the simulator, with paper, pen and a calculator, or with an Excel spreadsheet.
First, then, let's go to the simulator in the link below:
The simulator's home page is this, with some information about the filling procedure, about who can join or not, about the calculation methodology, and even what we discussed previously about the flags, taxes and other fees that are an additional value, separate from what refers to the white or conventional tariff.
Then, you choose the type of property you want to simulate, be it residential, commercial, industrial or rural. As soon as you choose the property profile, the page asks you to add the appliances that consume electrical energy, their operating hours and suggests a more common power (but, this can be modified). As we can see in the image below, we can filter the equipment by room and add them gradually or we can have all the equipment and add them all at once, it makes no difference.
Next, we have the screen for adding a generic device (which is equivalent to the screen for adding any other device, as we will see) where we can add its power by clicking on “change power”, modifying the quantity of this device in your property and the usage profile (when it starts to be used, how many hours it is on and how many days per week). The generic device profile can be used if you have a device that is not on the list. I will simulate my home for illustrative purposes.
Below is an example of a screen where I am adding lamps to my simulation (I am adding them by environment and in this case, thinking of a room), defining the type (LED lamp – 9W), the quantity and the usage profile.
Next, keeping in mind the idea of setting up the living room, I add a TV, but with a slightly different usage profile, using the “One more time” button to say that the TV is only on during the morning and at the end of the day.
Next, I add a microwave (now thinking about the kitchen), but my equipment has a different power than the 1200W that the website provides as a base, my equipment is 1400W, so I go to “Change Power” and modify the value.
I continue adding some equipment until I have the complete list of equipment in my home added and with that, we will have the following screen:
Giving a total of approximately 166 kWh of consumption (my previous bill was approximately 140 kWh, a difference of almost 20%, but for this type of simulation it is fine).
With this we can isolate the simulation and have the result:
In other words, it is more advantageous for me to continue with the conventional tariff. The difference in value is very small (only R$1.04) and considering the difference of almost 20% between simulated and real consumption that I mentioned, a change, in my case, would probably either not be a good choice or would be ineffective. The “villain” in this simulation was the intermediate period when I consumed approximately 36kWh. If I could either reduce this consumption or shift as much consumption as possible to the off-peak period, I would see savings in adopting the white flag. But we will talk about savings strategy later, for now I want to explain how the calculations are made.
The calculation is actually very simple, being the multiplication of the hours of use by the days of use, by the number of equipment and by the power of the equipment. In other words:
After calculating the consumption, we multiply the consumption by the tariff to find the value, in other words:
If we want to do this at home, we can do the following:
– Check and write down how many pieces of equipment of a certain type I have (for example, if you ask “how many bulbs of the same wattage do I have?”). Importantly, if I have 5 9W LED bulbs and 5 15W fluorescent bulbs, we must consider different pieces of equipment for the calculations, since the wattages are different (one is 9 Watts and the other is 15 Watts)
– Check and write down the wattage of the equipment we counted previously. We cannot confuse power (measured in Watts (W) or kilowatts (kW)) with voltage (measured in Volts, for homes, normally 110V or 220V). The wattage of the equipment is written on them, on some sticker, or without a manual. Below are some images of equipment in my house, for example:
– Check with the energy commission that serves your region what the peak, specific and off-peak rates will be and what the times for each of these segments are.
– Check and note the usage profile, how many hours each piece of equipment is used and how many days a week it is used. Remember that weekends are considered off-peak at any time. Segment the usage profile into off-peak hour details, intermediate hour details and peak hour details.
Now we have all the necessary data and it is just a matter of the multipliers (we use FP for off-peak, I for intermediate and P for peak) and we do this for all types of equipment:
All these calculations can be done with a pen, paper and calculator or with the help of an Excel spreadsheet. And that is basically what the Enel simulator does too, including showing us the consumption and the monetary values for each period of the day (peak, off-peak and intermediate). For locations with more equipment and more complex equipment, hiring specialized consultants to do this type of assessment is not an option, but this is the design methodology.
Now that we know the calculations, let's see how to make the comparison. To do this, we must calculate the cost with the white tariff and the cost with the conventional tariff and then evaluate which is lower. And this is very simple, because the calculations are exactly the same, the difference is that for the white tariff, the off-peak, financial and peak tariffs are different and for the conventional tariff it is the same tariff, regardless of the time. The lowest cost (and the difference between them) are the factors that will make you want to change your tariff or not.
Also remember that to make the change you need to contact the energy transmission company in your region so that they can visit your property and change your meter. And if you realize that the change was not a good idea, you can ask to return the conventional tariff after 30 days.
In the next text, we will discuss the subject a little more, and see some tips and possibilities for saving on energy costs.
Now that we have gained enough knowledge from the three previous texts to assess the forecast for changing tariffs, let's talk a little about saving strategies, because it is possible that even if it is not a good idea to make the change at first, with some changes in habits and other ways of saving, it becomes something viable.
Now speaking of cost reduction strategies, we can either adopt measures to reduce consumption (for conventional or white tariffs) or measures that take advantage of the difference in values in the tariffs (only for white tariffs, which present such a difference). These measures, in general, can be called energy efficiency measures.
Saving energy consumption is always a good idea, both for our pockets, as well as for the planet and society. For our pockets it is quite obvious, but for the planet and society it may be a little less clear. For nature, in the Brazilian reality, the less energy we consume, as a country, the less we will need to activate thermoelectric plants and we will emit less greenhouse gases and contracted gases (which would also impact our pockets, as it would reduce the incidence of tariff flags). For society, with the reduction in consumption as a country, the cost of energy production and distribution can be reduced, allowing a lower income bracket to have a smaller impact on this cost.
Speaking in more depth about some consumption reduction strategies that are applicable to both types of pricing, we can mention as the most common and simple to apply the replacement of equipment for new, more economical ones, and the identification and elimination of waste.
The replacement of equipment is quite clear and simply involves exchanging an old piece of equipment for a new one that consumes less energy and delivers the same quality in use. In other words, we can exchange a 22W fluorescent lamp for a 10W LED, where both will deliver the same lighting capacity, but an LED consumes less than half the energy of the fluorescent lamp. What we must be careful about is not exchanging one piece of equipment for another that consumes less, but also delivers a lower capacity (unless we intensify waste, which we will discuss later)
Waste can occur both in the usage pattern and in the “size” of a piece of equipment. In the usage pattern, the simplest and clearest example of this is leaving lights on during the day in rooms that are lit by the sun. Or even excessive lighting, but this is a more complex measure and should be done by someone with the technical knowledge to do so. Waste in the “size” of equipment is when a piece of equipment is too powerful for its intended use, for example (a very exaggerated example) a 30,000 BTU air conditioner in a 20 square meter room. The elimination in terms of usage patterns occurs when habits change (turning off the lights, in the example given) and in terms of size, it occurs when replacing a piece of equipment with a properly sized one, something that should be done by someone with the technical knowledge to do so. In other words, we will leave things that are energy-intensive for the weekends, during the morning/afternoon, or late at night (after 10 pm). As an example, using the Enel simulator, we can calculate the difference in the change in the use of a shower, for 20 minutes during peak and intermediate hours (but the logic would follow the same if we compare it to off-peak hours).
A saving of approximately 8 reais by postponing our shower for one hour (adopting the white tariff, since in the conventional tariff the cost is the same regardless of the time).
With this, we conclude this series of 4 texts that help us understand whether the change in the form of pricing is beneficial or not for us and where we also address some measures to save energy. I thank everyone who reads.