Addressing the survey’s most frequently asked questions about demand charges
Every September, the Member Satisfaction Survey asks for your feedback. This year, you shared your appreciation for the work your Co-op is doing to protect your access to reliable, affordable power. You rated your overall satisfaction with your not-for-profit Co-op at 9.29 / 10!
You also asked questions about demand. To answer one: the demand charge on your residential bill was implemented in 2019. It isn’t new, but let’s revisit your most frequently asked questions about demand.
What is demand?
The grid is like the highway. The highway is typically busiest in the morning, when people go to work and school, and in the evening, when people go home. The highway must handle times of high demand, even though the rest of the day isn’t as busy. Handling that demand (designing, building and maintaining the highway) costs a lot. Most people use the highway for a short time, but they’re still part of the reason that the highway must exist. In the highway system, the highest users are typically the highest payers. Each time they gas up, they’re paying taxes that help fund the highway.
In terms of electricity use, demand means the maximum amount of electricity used at one time, measured in kilowatts (kW). The demand charge on your electric bill reflects your highest demand on the grid during “peak hours.” Peak hours are from 7 a.m. to 10 a.m. and 5 p.m. to 8 p.m., Monday-Friday.
Your bill shows you what your peak demand was (measured in kW) and when it occurred. Currently, the demand charge is $4.04/kW. If your highest demand during peak hours was 5kW, your bill will reflect a demand charge of $20.02 ($4.04 x 5kW). You are charged once each month for your peak demand – not daily.
Why do we have a demand charge?
In short, for two reasons: power costs and infrastructure costs.
Your Co-op buys most of your power from the Bonneville Power Administration (BPA), and pays a monthly power bill to BPA, just like you pay a monthly bill to your Co-op. The BPA bill includes a demand charge, reflecting how much electricity members used at once.
However, paying for demand is about more than power costs. The physical grid, or infrastructure, required to meet peak demand – transformers, poles, wires, and more – is expensive. On an average day, Co-op members collectively use about 200 megawatts (MW) of power. However, the grid must be robust enough to accommodate those members’ collective peak demand. In January 2024, that peak demand reached 440 MW!
The demand charge ensures that all members are sharing in power and infrastructure costs. It also keeps those costs as fair as possible – if bills only charged by kWh, members who create high demand spikes (requiring additional infrastructure and power costs) would be subsidized by others who use electricity differently. Instead, in regards to demand, the members who are cost causers are the cost payers.
Is demand just a way for Flathead Electric Co-op to charge more?
No. As a not-for-profit electric utility that returns excess revenue to members via capital credits, we have no incentive to charge more.
How can I lower my demand charge?
During peak hours, avoid using multiple appliances (like your oven, dishwasher, and dryer) at once. Spreading your usage throughout the day can lower your peak demand and your bill.
Demand Charge Comparison
Carl and Sheila use the same total amount (kWh) of electricity, but Shelia saves money by spreading out her electric usage during the evening peak hours.
NOTE: you ONLY get charged ONCE during a monthly billing cycle for your highest demand during peak hours! The scenario below assumes that Carl and Sheila both hit their highest monthly demand on the same day.
