Lane-Scott to Implement Demand Rates
During our recent cost-of-service study, Lane-Scott and Guernsey, our rate consultant, analyzed the impact of implementing a three-part rate structure for all electric rate classes, featuring a customer charge, energy charge and a demand charge.
Currently, the Lane-Scott residential, domestic, and general service small connects have a two-part rate of the fixed monthly customer charge and an energy charge, which is based on the volume of kilowatt hours of electricity used during a month. Our general service large and industrial rates already utilize a three-part demand rate due to the large amount of demand required for these loads.
What is the Demand Charge?
Demand refers to the amount of electrical power being used at a given time. Demand is based on the intensity at which energy is used (or the “demand” one puts on the grid) in kilowatts (kW). While the energy charge is based on the volume of electricity used in kilowatt hours (kWh).
One way to understand demand is to use an automotive analogy (see the illustration below); the odometer on your car measures the total miles driven (similar to your total kilowatt hour usage). Likewise, demand is like your speedometer, measuring the speed at which that energy is used. The more electricity you use at one time, the higher your “speed,” or the higher your demand.
Why is the Rate Structure Changing?
Lane-Scott’s costs are driven by the need to satisfy members’ highest demand, even if it only occurs once each month. That’s like building and maintaining a six-lane highway to accommodate traffic for one major event a year when, for most of the year, a two-lane highway would suffice.
- It’s More Objective and Economical: With our three-part rate structure, less emphasis will be put on a flat customer charge, and more on the demand YOU put on the system. This ensures that those who put larger demand on the grid pay for a more proportionate share of fixed costs.
- A Three-Part Rate Structure Aligns with the Electric Utility’s Cost Drivers: Lane-Scott is billed monthly from our power supplier based on a three-part rate. Ultimately, members are paying for the demand we are charged by our power supplier. Implementing a member demand rate as a three-part rate means we are billing our members in the same way our co-op is billed.
- You Have Greater Control Over Your Energy Savings: By adding a demand component to bills, members will have two ways in which to control their energy savings: through managing their demand as well as using energy efficiently.
How to Lower Your Demand and Save Money on Your Bill:
As more appliances in your home run simultaneously, your demand for power increases. This is why it’s important to limit the simultaneous use of appliances. Demand is measured in 15-minute increments. Spreading appliance use out just 15 minutes, will reduce your recorded demand.
Your monthly demand will be billed off of the highest 15-minute kW reading during that month. If your highest demand usage was 8 kW, you will be billed 8 x the demand rate.
When Will The Rate Change Take Effect?
Members will see the demand charge applied to their June usage, billed in July.
The full revised rate scheduled as approved by the Lane-Scott Electric Board of Trustees will be printed in the June Kansas Country Living magazine.
