Conservation Corner – February 2024

What is This Demand Charge On My Bill?

Columbia Rural Electric Association (REA) electric bill demand charges are based on the highest amount of electricity, or demand, that your household draws from the electrical grid at any given time. This short period of time is often referred to as the “peak demand” period, which is the highest 15-minute interval of power usage within the monthly billing cycle. The demand charge is based on the highest rate of electricity consumption during this peak period.

We charge more for high usage because we pay more for the electricity that is used during peak demand periods. Columbia REA, and other utilities, pay higher rates from our suppliers for the electricity that you use during these high usage, or peak demand, time periods. We have to cover these additional costs in the form of a demand charge. The good news is that there are many ways to reduce your electricity usage, especially during peak demand times. In most cases, it is very possible to eliminate the demand charge from your bill altogether.

Our technology allows us to track when our system is transmitting the highest amount of electricity. We use this maximum peak information to ensure we have enough infrastructure to meet the highest electricity demand. As you might expect, our high-demand periods align with our member’s most busy times at home, causing spike periods of high demand.

Columbia REA’s residential demand rate schedule provides the first 7 kW at no charge. With a few adjustments, an average residential user should be able to keep at or below this level.

• 1 kW is 1,000 watts. For example, a typical hot water heater will consume about 4.5 kW, or 4,500 watts, while it is running.
• The demand charge is applied only when you use more than 7 kW (Again, kW usage is the amount of electricity you are using at any given time.)
• The first 7 kW are free, so if you never go over 7 kW at any time during the month, you will not pay a demand charge.
• For example, kW usage of 10 kW will add $5.25 to the member’s bill (10 kW minus 7 kW that is free equals 3 kW that is billable at $1.75 per kW, or $5.25).

If you want to reduce demand fees, you can take steps to manage and reduce peaks. This may involve adjusting your schedule and your habits a bit, such as using your high-power appliances at different times throughout the day.

Take the example of the hot water heater using 4.5 kW. If it’s on and your 2-ton heat pump is turned on at the same time, and some lights were on, you would still likely be under the 7 kW amount. Now if you use your clothes dryer also, you will go over the 7 kW limit and the demand billing would be about $8.00 for that month. This is only billed once per month, at the highest recorded amount over 15 minutes. If you can control when the heavy demand appliances are on, and spread the time that you use those appliances over time, rather than running several at once, you may avoid any demand charge.

On the opposite page, we’ve included a listing of average kWs per common household appliances and other tools. Please keep in mind that different makes and models may differ slightly. The chart is intended to give you a good idea of how much electricity you are using when your appliances are in use. The best way to reduce your peak period usage is to know when that period is for you, and how you are using your electricity. You can review your current and past demand usage on our online SmartHub application. Log in at the Columbia REA website select “Usage Explorer” and change the “Usage type” to include Demand.

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Charlie DeSalvo, Energy Efficiency Specialist

If you have any questions about energy efficiency, email Charlie DeSalvo or call (509) 526-4041.