Understanding Demand & the Monthly Coincident Billing Peak
The 2018 rates approved by the Northern Electric Cooperative Board of Directors will take effect on March 1, 2018. The rates include components which reflect the way Northern Electric is billed every month by the co-op’s wholesale power supplier East River Electric Power Cooperative. Several members will be placed into a rate structure which includes:
Energy (kWh) vs. Demand (kW)
As a distribution cooperative, Northern Electric Cooperative does not actually generate the electricity used by the members at the end of the line. Every month, Northern Electric pays a power bill to East River Electric Power Cooperative in Madison, South Dakota. East River is Northern Electric's wholesale power provider. Northern Electric's power bill to East River is based on two major components: energy and demand.
The basic measure of electric energy use is measured in kilowatt-hours or kWh. For example, a 100-watt light bulb consumes 100 watts per hour. If that bulb is left on for ten hours it will consume 1 kWh. Northern Electric pays East River based on the number of kilowatt-hours that are consumed over the entire month and across the entire Northern Electric service territory.
Demand is measured in kilowatts or kW. KW is the basic unit of electric demand and is equal to 1,000 watts. If ten 100 watt bulbs are left on for an hour that residence is still consuming one kWh but it is placing a 1 kW demand on the wholesale power provider by having all of the bulbs on at once. Every month, nearly half of Northern Electric's power bill to East River is based on the kW demand the co-op is placing on East River during a single 30-minute monthly coincident billing peak.
The list below is aimed at providing members with answers to some of the most frequent questions about demand rates:
What is the monthly coincident billing peak?
The monthly coincident billing peak is a single 30-minute period when Northern Electric’s wholesale power provider East River Electric Power Cooperative is experiencing peak use for the month. This is different than monthly kilowatt (kW) demand which would represent the member’s highest 30-minute interval for the month.
The new rate structure will put an emphasis on reducing electric demand during the East River monthly billing peak instead of the individual member’s monthly peak demand. In other words, after March 1, members will be billed based on the kilowatt (kW) demand on their meter during the single 30-minute monthly peak for the entire East River system (see chart below). Northern Electric is moving to this coincident demand billing structure because nearly half of Northern Electric’s monthly power bill from East River is based on the amount of kW Northern Electric contributes to the 30-minute coincident billing peak every month. Electric heat that is calculated with the use of a submeter will not contribute to the coincident peak. If your electric heat is not being calculated on a submeter please call Northern Electric to have one installed.
The member's highest monthly kW demand will be used to calculate the capacity charge.
How do I know when East River hits the monthly coincident billing peak?
Northern Electric, East River, and co-op members do not know when the system will hit the 30-minute coincident peak until the month is over. There are several time periods every month when East River approaches its peak threshold and load-control devices installed on water heaters, air conditioners, grain bin fans, and irrigation systems are activated. But, neither East River nor Northern Electric know which event will produce the highest peak of the month until the month is over.
East River can send out notifications via text message or email to Northern Electric members notifying them when the system is approaching the potential monthly coincident billing peak. If you would like to receive those notifications download and complete the form below.
Download TCPA Notification Consent form to sign up for East River notifications. (form must be printed and signed by all persons receiving notifications)
Northern Electric's power supplier has designated certain time periods during certain months when coincident demand charges will not be billed. These time periods are called demand-waiver periods. Members can operate large loads during these demand-waiver periods without the possibility of incurring a demand charge.
How do I control electric demand during the 30-minute monthly coincident billing peak?
Members do not have to do anything to control their demand during this single 30-minute period, however, they will be billed for their kW contribution to the coincident billing peak.
Members who would like to control their demand during the coincident billing peak have a few options to reduce their coincident demand charge:
- Members can manually control their electric loads by receiving direct notifications via text message and email from East River and then manually turning off or reducing demand on electric loads.
- Members can also use third-party grain bin or irrigation management systems on their smart devices to control their large loads when the system is approaching the peak.
- Another option available to members is to enroll in load management and have a load control device installed on large loads like grain bin fans, irrigation pivots, water heaters, and air conditioners. East River will automatically cycle the loads on and off to reduce electric demand when the system is approaching the monthly coincident billing peak.
- Gas grain dryers and load and unload augers will not be controlled with a load control device but will contribute to the coincident billing peak if they are operated during this single 30-minute peak.
Electric heat which is calculated on a separate submeter does not contribute toward the monthly coincident billing peak and should not be controlled.
How does the new rate structure impact my current load control devices and rate?
If you currently have a load control device - and as long as it is not bypassed - it will control the equipment connected to it during load control periods. The new rate structure will allow members with irrigation or grain bin fans to bypass load control periods, however, those members will be billed for the demand they contribute to the coincident peak. Irrigators will no longer be limited to bypassing load control for the entire month and will be allowed to bypass or accept load control events based on their current needs. If irrigators or growers bypass a load control event they will only be billed demand if they happen to bypass load control during the single 30-minute coincident billing peak that month. Members with load control devices on grain bin fans should call Northern Electric at 605-225-0310 for bypass options.
How often can I expect alerts about the coincident billing peak?
The amount of times East River approaches the potential monthly coincident billing peak and dispatches load control varies from month to month and is based on multiple factors including weather, irrigation, grain drying, holidays, or even if schools are in or out of session. East River does not typically dispatch load control or hit the monthly coincident billing peak between 10:00 p.m. and 6:00 a.m. Here is historical data of load control times from the last few years:
|Month||Control Periods||Total Hours of Control|
|Jan. 2016||7||30 Hours|
|Feb. 2016||9||34 Hours|
|March 2016||1||5 Hours|
|April 2016||1||6 Hours|
|May 2016||4||13 Hours|
|June 2016||4||27 Hours|
|July 2016||16||108 Hours|
|Aug. 2016||8||55 Hours|
|Sept. 2016||2||13 Hours|
|Oct. 2016||9||34 Hours|
|Nov. 2016||19||49 Hours|
|Dec. 2016||11||49 Hours|
|Month||Control Periods||Total Hours of Control|
|Jan. 2017||5||23 Hours|
|Feb. 2017||6||22 Hours|
|March 2017||4||16 Hours|
|April 2017||8||24 Hours|
|May 2017||1||4 Hours|
|June 2017||11||74 Hours|
|July 2017||14||87 Hours|
|Aug. 2017||2||11 Hours|
|Sept. 2017||7||50 Hours|
|Oct. 2017||9||49 Hours|
|Nov. 2017||12||38 Hours|
|Dec. 2017||12||47 Hours|
Members who are billed on a demand rate will also be billed a capacity charge. The capacity charge will be billed based on the member's maximum kW for the current month - or previous eleven-month period - and multiplied by the capacity charge. For example, a member peaked at 100 kW in October because they were drying grain. If that member's maximum kW does not surpass 100 kW for the next year they will be billed 100 kW multiplied by the capacity charge every month.
Why is a capacity charge needed?
Members who are on a demand rate require more infrastructure to accommodate their power needs. Larger transformers, conductors, and breakers are typically needed at these service locations.
A capacity charge can be explained by thinking about a water pipe. An industrial plant requires a larger pipe to meet its monthly water needs compared to an average residence. The utility needs to use bigger pipes and pumps to serve the industrial plant so that it can meet the needs of that location. The same is true with electricity. Large services require larger infrastructure and require more capacity on the system. The capacity charge ensures the cooperative can provide the equipment, infrastructure, and capacity needed at a large service.
The facility charge is the portion of a member's bill which reimburses the cooperative for the poles, wires, equipment, and other non-power costs incurred to generate, transmit, and distribute electricity. The facility charge is in place to pay for the basic infrastructure to deliver electricity to a service location.
To learn more about electric demand please view the video below.