I finished up some very rewarding work this week helping an organization really understand their automatic delivery system. What came to light is there are a lot of companies that just moved from days between delivery systems and are now on a k-factor/heating degree day (HDD) system.
So with that being said, my blog today is to show how to calculate a K Factor and what the definition of HDD is.
Lets start with HDD. HDD is calculated by simply averaging the high and the low temperature for the day in your market area and subtracting that number from 65. Why 65? Because it has been determined that a user of heat has the tendency to turn their heat off or would use no heat when the average temperature for the day is 65 and above.
Low for today is 20 degrees
High for today is 30 degrees
Average = 25 degrees
HDD = 40 Heating Degree Days (65-25)
The K-Factor is simply how many degree days it takes for your customer to burn ONE gallon of fuel. So if I have a 500 gallon propane tank at my customers house and they have a 6.5 K-Factor, they are going to burn one gallon of propane for every 6.5 degree days. That being said, in the above example we have 40 degree day, that means a customer that has a K-Factor of 6.5 theoretically burned 6.15 gallons of fuel that day. To take it one step further, if your goal is to deliver 300 gallons into this customers account each time you go and they are a pretty consistent user, you will deliver them every 1,950 degree days that elapse (6.5 x 300 gallons).
Lastly, here is how you calculate the K-Factor on every delivery you make
Degree Days Elapsed Since Last Delivery / Gallons Delivered = K-Factor
So if 1,853 degree days elapsed since my last delivery and i delivered 287 gallons. I would divide 1,853 into 287 and my K-Factor for that delivery would be 6.46.
I wont get into all the details of making changes to this K-Factor and understanding how your organization can become more efficient as that can be a very long topic. But this is just a small example of the services Propane Strategies, LLC is offering their clients.