Demand Rate Addresses How We Use it Differently

United Power switched to a demand rate in January 2019 as a way to more fairly charge its members for their electric usage and impact on the cooperative’s system. Since its roll out, some members have asked why the switch was made and requested more information about demand and how to understand it.

Electric utilities like United Power often use terms like “distribution system,” “electric infrastructure” and “grid.” These terms refer to the interconnected network of poles, wires, transformers and substations that work to deliver — or distribute — power to members. The system is carefully engineered to meet the needs of more than 100,000 meters and the homes and businesses served off those meters.

Like any other household appliance or electronic device, pieces of our system wear out over time and need to be repaired, replaced or even upgraded to improve reliability. These maintenance costs aren’t based solely on how much power you use, however, but how and when you use it.

When you use more power at once, you’re creating a higher demand on the system. These demand surges have a greater impact on the grid.

For example, a member in a small apartment with a window air conditioning unit doesn’t have the same impact on the grid as a household with two air conditioning units and a hot tub.

Some devices on the system have capacity limitations, for example, meaning they can only maintain a certain amount of power at a given time. The cooperative places these devices strategically to ensure power reliability. When one household served off that device uses a larger share of energy, it causes more wear on it. In some cases, the cooperative may need to replace existing devices with higher capacity ones to accommodate increases in energy usage.

With the traditional blended rate, which bundles demand and energy usage, each United Power member shares an equal cost in the maintenance of the system despite using it in vastly different ways. This means some members have been paying more than they should, while others aren’t paying enough. Whether you use a lot of energy or a little, or even generate your own, a reliable grid is something we all depend on and need available to us.

By separating the demand and energy components on your bill, we are more fairly distributing these costs to members based on how they use power. Each member now pays their fair share of the cooperative distribution system they rely on.

United Power offers a free online resource for members who want to know more about how they use power. Power Portal breaks down your energy usage in 15-minute intervals so you can easily tell what habits are contributing to your demand. Visit Power Portal to learn more about this member resource.

If you have additional questions about the demand rate, you can go to Understanding Demand or reach one of our dedicated energy management specialists at 303-637-1300.

Demand for Electricity is like Demand for Water

You can fill the same 5-gallon bucket with either a garden hose, or a fire hose. A garden hose will not fill as quickly – but the hose costs less to operate, and the impact on the water system is minimal. Fill that same bucket with a fire hose, and it will fill up very quickly, but the surge of water from a fire hose requires larger pipes and a more expensive hose. In the end, both buckets would be full with the same amount of water, but filling a bucket more slowly – smoothing the water use over time – creates less demand on the system and costs less to do. 
 

Modernization of the electric grid should not be the singular focus of spending in the United States, rather we should also be targeting our efforts and dollars at specific projects that will make the most immediate impacts. Billions are spent every year on upgrading the system and adding intelligence to the grid and are always balanced against the impacts on rates and customers. Even with unlimited checkbooks on transmission – California and Texas are great examples – system issues can occur.

As a country, we should dream big but equally critical are to make improvements that can have an immediate impact on improving the nation’s infrastructure. The vision of seven hundred and sixty-five megawatt lines crisscrossing the U.S. is a “BHAG” – big, hairy audacious goal – that should be pursued.

However, with even the simplest transmission project taking a decade or more, we should take some specific, short- and medium-term actions.

It is also important to realize while permitting is slow, money is currently available to invest in transmission. The hang up is in assuring the line will be used and commitments made to guarantee the offtake of power. In other words, if no demand backed by financial arrangements, no construction. So, what projects do I believe can and should be done today?

Rebuild the seven AC/DC ties between the Eastern and Western grid. At a cost of roughly thirty million, this project could be complete in less than eighteen months.

Expand the Mead Substation at Hoover Dam into a renewable energy hub. This project will take between twenty-four to thirty-six months to complete. It is at the base of the El Dorado Valley, connects to California, and is the ideal spot for a robust hub.

Complete the Intertie Project started in 1964. In forty-eight months or less, the two hundred and seventy-five miles of transmission could be built that would loop the Pacific Northwest across the west and into the Southwest Power Pool.

Widen our focus and fund technology that benefits the nation and not just a single region. Concentrate those efforts on grid cybersecurity, as well as advanced system sensing to anticipate and avoid issues.

Another key area is to create a cohesive national effort to enhance wildfire tools and technology, including the expansion of right-of-way tree clearing. Encourage or standardize the use of coated cables, especially in areas when undergrounding is limited by terrain or cost.

Create an incentive structure that supports our end goals for improvements in the grid. Pay higher incentives for the power solutions that are really needed: pay a higher rate of return for lines that serve grids wider than a single state, quit paying for redundant infrastructure, and guarantee offtake as a fundamental component of the incentive structure.

Create real markets that span time zones and weather conditions and empower those entities to support. This should also include an RTO to coordinate offshore wind and provide the trading and management platform.

Finally, recognize that transmission is best suited to fix the growing energy divide. The digital divide is often spoken of in our country when the energy divide is an even greater one to navigate for underserved or unserved communities. The “haves” can afford solar panels and storage, while the “have nots” are paying the price. The haves can create microgrids – which serve a purpose – but also serve to create a balkanized electrical system.

Our current business models hang on an engineering measurement – the kilowatt/megawatt hour paradigm. This paradigm is no longer valid when the haves can move their energy supply off the grid for a portion of the day while the have nots pay the carrying costs. We need to move beyond a simple engineering focus on our grid and the delivery of power and understand the far-reaching effects being created with our inherently uneven system.

The question to be asking is how can we effectively grow our grid to realize all the intrinsic potential, and bring all our citizens along to enjoy those benefits? Let us dream for the future and act for today.

This article recently appeared in August 2021 Public Utilities Fortnightly. Read the original article here.