Some of Sawnee EMC's commercial rates use "Demand" as a part of calculating your bill. Demand is the highest period of kilowatts measured that you use during the month. Your monthly kilowatt usage may be 8000 kWh, while your demand may be 25 kilowatts. This means that at some time during the month your building used 25 kilowatts for at least one short period on the way to using 8000 kWh per month.
How is Demand Recorded?
Most of Sawnee EMC's commercial meters record demand on a continuous basis each month. Every month the demand is reset to 0 kW when the billing reading is taken. The meter begins recording the usage for each 15 minute segment. If you use more kW in the next 15 minutes than you did in the previous 15 then it takes that reading as your demand and continues this process throughout the month until the next billing reading is taken.
Why is Demand used in billing?
The peak demand for our system is a determining factor in the cost of power purchased by Sawnee EMC. As our peak demand grows, so does the cost of the electricity for all members. By keeping your demand down, it saves money for you and all other members of the cooperative.
How Can Demand Affect My Bill?
Demand can have a positive or negative effect on your bill. If your rate is demand based, and you have a low demand with a higher monthly kWh usage, you may get a reduction in the price per kilowatt for part of your bill. However if you have a high demand then you may not get the reduction on your price per kilowatt. It is to your advantage to try to keep your demand as low as possible.
When Does a Lower Demand Benefit Me on My Rate?
Let’s look at the part of the G-22 rate to demonstrate how a lower demand benefits you.
MONTHLY-RATE
Base Charge @ $52.38 /mo.
Energy Charge Including Demand Charge:
First: 1,500 kWh @ $0.1246/kWh
Next: 8,500 kWh @ $0.1100/kWh
Next: 90,000 kWh @ $0.0874/kWh
Over: 100,000 kWh @ $0.0803/kWh
All consumption in excess of 200 kWh per kW of billing demand but not greater than 400 kWh per kW of billing demand @ $0.0331/kWh
All consumption in excess of 400 kWh per kW of billing demand @ $0.0227/kWh
The areas that are highlighted show you the part of your rate that depends upon your demand.
Example 1:
To explain the breakdown let's assume, you use 8000 kWh per month with a demand of 18 kW.
First: To find the point at which kWh consumption becomes in excess of 200 kWh per kW of billing demand, take your demand and multiply it by 200 kWh.
18 kW x 200 kWh = 3600 kWh
Second: To find the point at which kWh consumption is in excess of 400 kWh per kW of billing demand, take your demand and multiply it by 400 kWh
18 kW x 400 kWh = 7200 kWh
The first number (3600 kWh) is the “break point” for you, as shown in the rate break-down above; all kWh usage up to 3600 uses the tiered rate listed. Then all kWh usage between 3600 and 7200 kWh costs $0.0331/kWh and everything between 7200 kWh and 8000 kWh costs $0.0227/kWh.
1500 kWh x $0.1246 = $186.90
(3600 kWh-1500 kWh) x $0.1100 = $231.00
(7200 kWh-3600 kWh) x $0.0331 = $119.16
(8000 kWh-7200 kWh) x $0.0227 = $18.16
Total = $555.22
(Total does not include other charges listed on the G-22 Rate (PDF))
Example 2:
Now try that same scenario with the same 8000 kWh consumption and a higher demand of 35 kW.
First: To find the point at which kWh consumption becomes in excess of 200 kWh per kW of billing demand, take your demand and multiply it by 200 kWh.
35 kW x 200 kWh = 7000 kWh
Second: To find the point at which kWh consumption is in excess of 400 kWh per kW of billing demand, take your demand and multiply it by 400 kWh
35 kW x 400 kWh = 14000 kWh
14000 kWh is higher than your consumption of 8000 kWh, so you do not get the benefit of the price of $.0227/kWh and your initial breakpoint does not occur until 7000 kWh so you only get 1000 kWh at the price of $.0331.
1500 kWh x $0.1246 = $186.90
(7000 kWh-1500 kWh) x $0.1100 = $605.00
(8000 kWh-7000 kWh) x $0.0331 = $33.10
Total = $825.00
(Total does not include other charges listed on the G-22 Rate (PDF))
As you can see from this demonstration using the same monthly consumption, a lower demand will save you money.