In the past few months, several REC members have asked more questions about how the new rates work and why they were designed with a customer charge, a demand charge and an energy charge. In the continuing effort to provide understanding to these questions, the following rate design explanations should offer more insight.
For the rates that have a purchase power demand charge (Time of Day), that demand is measured during the peak period, which is Monday through Saturday, 12 noon through 10 p.m.
There is also a distribution demand charge which is the highest 15-minute usage during the billing month (which is a calendar month). This charge covers the cost of the electric infrastructure in place to keep homes and businesses connected to REC.
Previously, REC’s fixed costs were included in the kilowatt-hour charge and since up until just a few years ago, that methodology worked to fairly recover the cost of providing electricity. As more and more net meter installations occurred, those REC members who did not have a net meter installation were increasingly subsidizing members with those net meter installations. Essentially, members without net meters were helping to pay net meter owners’ investments. With the new demand rate in place, this is no longer the case.
The original Cost of Service Study indicated the need for a six percent rate increase for the Time of Day customers. With the April 1 rate change those members could have seen an approximate six percent increase if their ETS units were appropriately sized for the space and used diligently and other electric appliances were controlled. The interim rate, which went into effect on Dec. 1, 2019 as a result of the Colorado Public Utilities Commission complaint settlement, substantially reversed the benefit of using the ETS unit diligently on off-peak hours.
The REC has been piloting demand controllers, which in many instances have great potential to help members manage demand. As REC continues to gain experience on how these devices can benefit members, the information will be shared.
As more appliances in your home run simultaneously, the rate at which you are consuming electricity increases. For example: Mary and Joe both use 3.3 kwh when cooking dinner and running their dishwashers— 1.5 kwh for the range and 1.8 kwh for the dishwasher. However, Mary cooks her food for one hour, then she runs her dishwasher the next hour. Joe cooks his food and runs the dishwasher while he’s cooking. Mary’s total demand is 1.8 kw, whereas Joe’s is 3.3 kw. Both members are using the same amount of energy but putting a different demand on the electric grid.