Breaking Down The Numbers:
What Demand Can Look Like On Your Bill
Over the past several months, we’ve been exploring a concept that is becoming increasingly important in the electric industry: demand.
We’ve learned that electricity costs are influenced by more than just how much energy we use. They’re also affected by how much electricity is needed at one time.
Think of it this way: energy is the total amount of electricity you use throughout the day or month, while demand measures how much electricity your home is using at a specific moment. When several large appliances run at the same time, your home’s demand increases, even if your total energy use doesn’t change.
That’s where our examples of Ross and Rachel came in.
Both used the same amount of electricity during the evening. They cooled their homes, cooked dinner, washed clothes, and dried them. Yet Ross ran most of those appliances at the same time, while Rachel spread them throughout the evening. Because Ross’s electricity use peaked higher than Rachel’s, his demand was greater, even though they consumed the same total amount of energy.
Why does this matter?
Because electric cooperatives must build and maintain a system capable of serving members during periods of peak demand. Whether that peak occurs on a hot July afternoon or a cold January morning, the equipment, power supply, and infrastructure must be sized to handle it.
To help illustrate how a future demand charge might work, let’s use a simple hypothetical example.
Suppose there was a $1 demand charge for each kilowatt (kW) of monthly demand. A member whose highest demand for the month was 10 kW would pay a $10 demand charge. A member whose highest demand was 6 kW would pay a $6 demand charge.
The difference isn’t how much electricity they used during the month. The difference is how much electricity they needed at one time.
The good news is that demand is often manageable. Small changes in timing can make a difference. Running the dishwasher after the dryer finishes, waiting to start a load of laundry until after dinner, or spreading out the use of major appliances can help reduce a home’s peak demand without reducing comfort or convenience.
As the electric industry continues to evolve, understanding demand helps explain how power costs are created and how future rate designs may better reflect the costs of serving members. While energy use will always matter, the timing of that use is becoming an increasingly important part of the equation.