You could say the sun was shining for three months on the solar-energy system Scott Rhodes installed on his Egg Harbor Township business, but not shining too much.
The electric bill for his business, Rhodes and Rhodes Millwork, normally $480 to $500 a month, was down to $40 to $50 a month since activating the solar panels in December, he said.
Besides saving 90 percent on electricity, he was earning solar renewable energy credits that power companies needed to purchase, paying back his system costs even faster.
But then for the period from April 5 to May 7, Rhodes got a bill from Atlantic City Electric for $568.22 — slightly higher even than he was paying before he went solar!
What’s more, for that period, his solar panels actually produced more electricity than his business used, about 280 kilowatt-hours of power.
Rhodes wondered how this could be. He called a help line at Atlantic City Electric and was told the amount was a demand charge, based on his system’s peak use of electricity during the period.
The utility representative added one more confounding fact to his situation: If his business had used even 1 kilowatt more than it had generated, his bill would have been less than $20.
“This goes against every reason why I put solar energy on the roof of the business,” Rhodes said. “If I want to keep my electric bill under $50, I will have to keep my lights and fan on 24-7.”
Or, as it turns out, just wait a bit for the seasons to change.
Rhodes and Rhodes Millwork, it turns out, fell into a quirky little place in the utility rate structure that doesn’t affect residential users and rarely affects businesses much — and only for a brief period.
The high bill results — oddly enough — from the almost accidental convergence of the utility’s worthy goals of supporting alternative energy while reliably providing all of the electricity its customers want at any moment.
Bill Yingling, communications director for Atlantic City Electric parent Pepco Holdings Inc., couldn’t discuss a particular customer’s situation, but his explanation of the utility’s rate policies made clear what had caused Rhodes’ bill to spike.
First, there’s the matter of always giving customers all of the power they need. To do that, all electric utilities must build and operate their systems to accommodate the peak in electricity demand — which in our area comes each summer on the hottest days when so many people turn their air conditioners up at the same time.
Since providing extraordinary amounts of electricity for limited periods is extraordinarily expensive, Atlantic City Electric has a component of its bills for commercial customers based on their peak demand for power.
This encourages, for example, a large ice making company in Cape May County to spread out its freezing of water to keep its demand for electricity from jumping too high at any time.
So businesses are billed in part on the highest demand for electricity during any 15-minute period during the month, Yingling said.
Sometimes that demand charge would be quite high, even though the business uses a relatively low number of kilowatt hours of electricity. In such cases, the utility imposes a distribution ceiling limit based on kilowatt hours consumed and the business isn’t charged fully for its level of demand, he said.
But in order to get relief from the distribution ceiling limit, the business has to have electricity usage during the month on which to base the limit.
At certain times of year — when heating systems are no longer running and air conditioning is yet to be needed — a properly designed solar energy system might produce more power than the business needs and so it doesn’t use any kilowatts from Atlantic City Electric.
“When the customer is no longer drawing kilowatt hours, and it’s net zero on the meter, then we have nothing on which to base the distribution ceiling limit,” Yingling said. “So we charge for the demand and include the demand charge on the bill.”
So Rhodes and Rhodes Millwork was billed not for any amount of power it used, but for the rate of its usage during the peak 15 minutes of the month. And it could get no relief from the distribution ceiling limit because there was no overall electricity usage on which to base that.
There is no demand charge for residential customers, so even those with solar arrays need not worry about this. But businesses should take note.
“If a customer is going to make a considerable investment in a renewable energy system, it’s important they understand how the rates work so they can maximize the benefits of that system,” Yingling said.
Big increases in Small Business Administration lending in Cape May, Cumberland and Ocean counties helped drive a big increase in the number and value of such loans in New Jersey so far this year, while Atlantic County bucked the trend.
Statewide, the number of SBA loans is up 41 percent to 499, while their total value is 32 percent higher at $245 million for January through May, compared to the same period in 2011, the N.J. district office of the SBA said.
This year’s four loans in Cape May County were worth $2.9 million, compared to two last year valued at $660,000.
Cumberland County had no SBA loans in the first five months of 2011. This year, it had four loans worth $2.2 million.
The 15 loans this year in Ocean County were eight fewer than last year, but they were bigger loans — worth $13.3 million compared to last year’s $7.2 million.
In the region, only Atlantic County saw a decline, to five loans worth $2.3 million, compared to six loans worth $3.1 million in the first five months of last year.
Alfred Titone, director of the SBA New Jersey district, said the increases reflect growing confidence in the economy and improvement in the credit markets.
Among lenders, JPMorgan Chase Bank was the leader with 68 loans totaling $7.8 million, an amount matched by TD Bank for its 56 loans.
New Jersey Business Finance Corp. handled 31 larger loans totaling $27.3 million.
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