Learner Login FAQ +1-650-690-2515

How to Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Lean Six Sigma can help you improve anything from business processes to reducing your energy consumption at home. Want to save money on your energy bill or simply view a Lean Six Sigma project example? Check out this easy to follow example. View more examples of projects and ways Lean Six Sigma can help you improve at work and at home.

Operational Definition(s): What to Know Before Getting Started

  • Kilowatt Hour, kWh: Is a unit of energy equal to 1000 watt hours or 3.6 mega joules. All wattage measures in this study are in kWh(s).
  • Usage Meter: This device is used to measure the actual power usage of a appliance in kWhs
  • Major Appliances: For this study are the following:
    • Refrigerator, Oven, Stove, Dishwasher, TV, DVR
    • Washer, Dryer, House Heater Fan, Air Conditioner
    • Pool pumps
  • Smart Meter: Edison SmartConnect® smart meters are designed to transmit usage information within a secure wireless network every hour. This data used in tandem with its supporting S/W gives the customer access to a much greater set of information, programs and tools that can be sued for greater control over his/her energy use and budget.
  • Billing is from the 19th thru 19th of the next month

Schedule Baseline - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Project Results Summary (Executive Summary): Using Lean Six Sigma to Reduce Your Electricity Bill

Project Wins:

  • Reduced monthly electricity cost by 35%, 10% greater than the target goal
  • Improved alignment of max power usage with least cost time frames thus reducing the cost of electricity used
  • Improved awareness by all house mates on their own power usage habits.

DMAIC Approach

  • Identified a baseline of electricity usage (over 1 year)
  • Identified appliances and how much electricity is
    used and when during the day
  • Audit the number of times room lights and computers are left unattended and powered on

Context

  • The customer is currently unemployed and needs to reduce monthly costs in order to meet budget constraints

Project Timing

  • Start Date: October 07, 2012
  • End Date: December 20. 2012

Results

  • December 2010: $350
  • December 2011: $320 (-$30 from previous year)
  • December 2012: $215 (-$105 from previous year)

Project Results - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Project Charter

Problem Statement

  • Monthly cost of electricity used has gone up every year for the last 6 years. Now it is more than $260/month.

Goal Statement

  • Understand the required use of electricity and identify those devices or activities that contribute the most to the overall bill. Reduce the overall electricity usage & cost by 20%

Scope

In Scope:

  • Upgrading of major appliances with more efficient devices
  • Redefine the usage models for major appliances to reduce use frequency and when used

Out of Scope:

  • Changes to house environment standards (Air and Water Temp, etc.)

Business Case & Benefits

  • Currently the customer is in job transition. Household budget has been greatly reduced. Also being at home more has increased the monthly utility bills.
  • Reducing this monthly expense will reduce the monthly drain on savings.

Voice Of the Customer

  • Customers are those living in our house
  • Requirements based on interviews:
    • Home temperatures need to be comfortable
    • Adequate hot water available
    • Laundry kept clean
    • Yard lights in place for safety
    • Pool kept clean
    • Changes approved by all

Team Members

  • Self (Michael)
  • Wife (Carol)
  • Daughter (Sara)
  • Son (Brian)

Project Timeline

Timeline (Estimated vs. Actual) - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Voice of the Customer

  • The Voice of the Customer was used to understand the goals, expectations and limits of the customer. The customer’s goal is to reduce electricity usage and/or cost by 25%. Customer expectations include:
    • Meeting the goal of reducing electricity used and/or cost by 24%
    • Maintaining an comfortable home environment
    • Minimize the inconvenience resulting from the use of automated control devices
    • Keep the expense payback period to under 10 months
    • Establishing a method for maintaining the goal once it has been achieved
  • Customer meetings were held throughout this project to discuss results of the audits, and agree to improvement plans.
  • Customers also agreed to monitor the continuation plan and implement a incentive plan for positive results.

Project Deliverables

  • This project will be driven by both data collection and processes
    • Usage data on all major consumers of power will be recorded, both how much and when
    • Customer’s habits and requirements will be evaluated and recorded
  • This project will document both power consumption rates during the day and document when this occurs by the hour
  • This project will document a Customer Usage Map for the home
  • A Room light audit will be conduced and documented
  • Root Cause Analysis will be performed and the results documented.
  • Improvement plan will documented
  • Continuation plan will be documented

Home Usage Process Map

Process Map - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.comProcess Map 2 - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Fishbone Diagram

Fishbone Diagram - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Hypothesis Statements

Hypothesis Statements - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Hypothesis Statement (Lights Left On)

  • Potential X: People leave the lights on when they are not in the room
  • Hypotheses Statement: Automatic light switches will pay for themselves with 1 year.
  • NULL: Automatic light switches will not pay for themselves with 1 year
  • ALTERNATE (Non Directional): Automatic light switches will reduce our electricity bill

Lights Left On Audit (Baseline Data)

Baseline Data - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Room Light Audit:

  • Potential Issue: People leave the lights on to often
  • Hypothesis Statement: Lights left on in unattended rooms greatly contribute to the over monthly electricity expense

Audit Description:

  • For 1 month I recorded how often lights were left on, I did not talk to house mates prior to the audit in order to minimize any impact on the baseline. If during I audit sweep of the house I found a light on I did not turn the light off. If a light was on during my normal activities I turned the light off. I would perform audits of the house every 2 hrs. while I was home.

Lights Left On Audit Results Data Post Upgrade

Results Data - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

 

Lights Left On Reduced by 80.6 %

Room Light Audit:

  • Potential Issue: People leave the lights on to often expense
  • Hypothesis Statement: Lights left on in unattended rooms greatly contribute to the over monthly electricity
  • Audit Results: It was determined from the baseline data that there was a real issue with how we manage our habits with regard to turning the light off when we leave a room

Solutions:

  1. Held a family meeting to review the baseline results and to agree upon possible improvements. See below:
    • Install automatic light switches in rooms that we all can agree on. Of the 12 rooms in our house 6 were selected. Automatic light switches operate on detecting motion. Each was set to turn off after not detecting motion for 8 minutes.
    • A incentive plan for people was adopted. Every time anyone saw a light on in a empty room the last person to use the room would put $1.00 in a Edison fund. If we went 1 month without any contributions then we would have a family movie night.

Results:

  • Each automatic light switch cost $11.99 (6 for $77.69 including Taxes)
  • Each room has at least 200 watts of lighting and I decided to allocate 2 hrs for each event.
  • Kilowatts / month = 103 events/month x 400 watts/event = 41,200 watts / month = 40.2 kWs / month Savings: (40.2 kWs/month x $.30/kW = $12.06 per month x .806 = $9.72/month

Return on Investment = $77.69 / $9.72/month = 7.9 months

Hypothesis Statement for Pool Pump

  • Potential X: The master, 20 year old single speed pool pump contributes to 30% of all electricity used during a single month
  • Hypotheses Statement: A new variable speed master pool pump will reduce electricity required to clean the pool by more than 30%
  • NULL: The new master pool pump will not reduce electricity consumption
  • ALTERNATE (Non Directional): The new variable speed master pool pump will reduce the electricity consumption

The variable speed pool pump resulted in a 44% reduction in the electricity used to complete the daily pool cleaning cycle therefore the hypothesis is TRUE.

Pool Pump Upgrade Results - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Baseline Electricity Usage Chart

Electricity Cost Per Month - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Results: Electricity Usage Chart

Electricity Cost Per Month Results - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Baseline Measure Chart

Baseline Measure Chart - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Results Measure Chart (Hourly Usage)

Baseline Measure Chart Reduced - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Baseline Measure Chart (Daily Usage)

Baseline Measure Chart Daily - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Results Measure Chart (Monthly Usage)

Results Measure Chart - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Improvement Results

  • Improvements were selected based on the ease of implementation and the return on investment
  • Improvements were also agreed to by the customers
  • The improvements were as follows:
    1. Update the 20 year old single speed master pool pump with a variable speed pool pump
    2. Reduce the frequency of lights being left on in unoccupied rooms
    3. Alignment of our peak electricity usage with Edison least expensive time frames
    4. Turn off the dryer mode in the Dishwasher
    5. Keep the Freezer 90% full at all times

Baseline vs. Improvement Data Comparison

Baseline vs. Improvement Data Comparison - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Control

  • Monitor Lights Left On agreed to process
  • Audit electricity usage each week for 1 year, checking on daily use metrics provided by Edison
  • Perform a energy usage audit every year and maintain records for all major appliances
  • Slowly convert all household lights to LED lighting, target goal 100% in 2 years

Monitoring Plan

Key Process measures:

  • Bi-monthly communication to customers with data provided by Edison
    • Provided by Michael in a monthly family meeting
  • Average daily/weekly usage should not exceed that of the usage from 1 year ago minus process improvement estimates from Dec. 2012
    • Provided by Michael in a monthly family meeting
  • Monthly “Lights Left On” process fees should not exceed $21.00 / month
    • Provided by Michael in a monthly family meeting

All indicator measures are lagging and will be evaluated monthly.

Response Plan

Response Plan - How To Reduce Your Electricity Bill Using Lean Six Sigma - GoLeanSixSigma.com

Have questions about reducing your energy usage or about this project example? Please share your questions or comments below!

Ready to reduce your own energy usage with Lean Six Sigma? Register for the Green Belt Training & Certification today!

Tracy O'Rourke

Tracy is a Managing Partner & Executive Advisor at GoLeanSixSigma.com. She is also a Lean Six Sigma Green Belt Instructor at University of California San Diego and teaches in San Diego State University’s Lean Enterprise Program. For almost 20 years, she has helped leading organizations like Washington State, Charles Schwab and GE build problem-solving muscles.
  • apple

    wow. thank you for sharing

    • GoLeanSixSigma

      You’re welcome, Apple! Do you have any plans to use Lean Six Sigma at home to save on your electricity bill?

  • Jas

    I am looking forward to do Lean Six Sigma project in my office. Could you suggest one?