What is Demand (kW)?

Demand is the rate at which a member uses electric energy. A kW is 1000watts, and a kWh represents a 1kW used over 1 hour. Two members can use the same amount of energy, but one might use it slowly (for example, 1kW over the course of an hour) and the other much faster (for example, 1kW in 15 minutes). The first member put 1 kW of demand on our system; the second put 4 kW of demand, since they used the energy 4 times faster. 

Here are a couple of good everyday analogies that might help in understanding electric demand vs. energy:

 

To fill a bucket with water, one can use an inexpensive hose connection that provides 1 gallon of water per minute, or one can use a more expensive large faucet that provides 5 gallons per minute. The flow rate is equivalent to demand, and the amount of water in the bucket is equivalent to consumption. Each bucket has the same amount of water, but one was filled 5 times faster. This is like two members using the same number of kWh, but putting different demands on the system.

 

A car's speedometer is analogous to the demand and the odometer to the total amount of energy consumed. Two cars could travel the same distance, one at 30 mph for 10 hours and the other at 60mph for 5 hours. To power the car to sustain the faster speed takes a much more capable and expensive engine than it does to power the one going slower.

 

What is the Demand Charge?

Demand charges are applicable only to rate classes that are billed for demand. Although each meter provides a demand measurement in kW, only applicable services receive a charge based on that measurement. 

Demand charges are set to recover the costs associated with fixed capacity-related distribution equipment and/or wholesale purchased power. These costs are not associated with the number of customers using energy over time. Rather, they are a function of sizing the equipment to meet a member's peak demand, or maximum usage at a specific point in time. Costs to build and maintain a distribution substation would be an example of capacity-related fixed costs, as well as the remaining fixed costs to purchase, operate and maintain lines and transformers not already recovered in the monthly flat Service Access Charge.*

 *The flat monthly Service Access Charge recoups consumer-related fixed costs. The total costs to purchase, operate, and maintain lines and transformers are in part consumer-related because they exist due to a cooperative having to connect/serve a member. They are also in part capacity-related, because they exist due to a member needing equipment of a certain size to meet their maximum load requirements.

Tip: Members with demand charges should stagger their usage. For instance, turn units on in 15 minute increments.