If you were one of the three hundred Ravalli Electric Co-op members who attended our 81st Annual Meeting on March 19th, you will likely recall a video and brief mention about a “demand” line item that will soon be appearing on your bill. In fact, you may have already seen this calculation on the last bill you received.
But what is it?
Basically, demand equates to the load that is put on the system at a given time. For example, peak demand for Ravalli Electric Co-op generally occurs in the cold winter morning hours when members are getting ready for work. The system has to work harder at that time to accommodate so many members using a large amount of electricity (electric heaters, water heaters, and appliances) at the same time. Although this level of demand is not sustained around the clock throughout the day or the year, the system has to be able to accommodate this when it does occur.
There is a cost associated with the system’s ability to handle this demand in the form of reserves that can be called upon whenever the demand on the system reaches above anticipated capacity. These reserves ensure that even when there is a tremendous load placed upon the system, it has the means to continue delivering electricity to our members’ homes.
There are several ways we can compare demand on the electrical grid to other more familiar scenarios. For instance, I drive a pickup with a turbo diesel engine. Most of the time, I don’t need the additional power that my truck affords me because I am simply driving it back and forth to work.
So why have it? For the security of knowing that when I hook up to my horse trailer containing nearly 5,000 pounds of horse flesh, my truck can pull it. That is the peak demand for my pickup.
Although you are currently seeing a 0.00 charge line item on your bill, there will likely be a charge associated with demand at some point in the future. The tiered billing approach REC currently employs does have a demand component to it. Simply put, the more electricity you use, the higher kWh rate you pay for it.
The drawback of the current tiered approach to billing is that it allows some users to pay a lower kWh rate even though their demand, at certain times, is high. This might apply to residents who frequently travel, distributive generators, members who use a variety of heating sources, those who run a business out of their home (commercial accounts are already charged for demand), and any number of scenarios where overall usage is relatively low, but at certain times demand is very high. The current rate structure allows for a cost shift to occur, meaning certain users pay more than their fair share for those reserves mentioned earlier, even though some of those members at a lower rate tier are still utilizing those same reserves.
The separate demand charge would eliminate this cost shift and allow all members to pay their fair share for additional power generating resources.
Seeing demand on the bill now will allow users to get acquainted with the concept of demand and how they use energy long before a charge is ever associated with it.
If you have questions about demand and what you can do to decrease it, contact Member Services at 961-3001.