Residential Demand Charge FAQs

What is Demand?

Demand is a measurement of the maximum amount of power required during any one-hour interval within a billing period, measured in kilowatts (kW). Simply put, energy is the amount of power you consume, while demand measures your impact on our electric distribution system to deliver that power. The more appliances you run at the same time, the more your demand for power increases.

Why did the PUD decide to add a new Demand charge?

The Demand charge is not a new charge. It has always been embedded in the energy rates. The PUD is separating out the Demand charge from the Energy charge. This will allow the PUD to assign costs that are directly related to demand, and not based on total energy consumption. These are the costs related to maintaining the distribution system.

The customer will still see an Energy charge that is based on the total amount of energy they consume during a billing period. However, the Energy charge will be reduced once the Demand charge is separated out.

The new unbundled rate structure with separate Demand and Energy charges will allow customers to see exactly how much they pay for the energy they actually use (the energy costs from BPA, our power provider), and how much they pay toward the costs that the PUD incurs to deliver and distribute that energy to them.

What is the Demand charge?

The Demand charge is a variable charge that covers the costs of maintaining the distribution system, including poles, wires, substations, trucks, and line crews. It is based on the energy demand during a billing period, and is calculated by taking the highest demand recorded in a billing period (in kW) and multiplying it by a demand rate (currently set at $1.00/kW). 

The more high-energy appliances the customer uses at the same time within a one-hour period, the higher the demand.

For example, if a customer turns on their oven (5kW) and clothes dryer (5kW) and runs both at the same time within an hour for 30 minutes, then their average demand for that time interval would be measured as: ((5kW x 30m) + (5kW x 30m)) / 60m = 5kW. If this is the highest average demand interval recorded in the billing period, then that would be the demand usage for that billing period. The Demand charge would then be calculated as: 5kW x $1.00/kW = $5.00.

However, if the customer turns on the oven and runs it for 30 minutes, then turns on the clothes dryer for the next hour and runs it for 30 minutes, the average demand usage would be: (5kW x 30m) / 60m = 2.5kW. If this is the highest average demand interval recorded in the billing period, then that would be the demand usage for that billing period. The Demand charge would then be calculated as: 2.5kW x $1.00/kW = $2.50.

Why does the PUD charge for Demand?

The Demand charge enables the PUD to recover the costs of maintaining the distribution system.

A customer who sets a high demand requires more services from the PUD, including additional capacity, which means a higher expense for lines, transformers, substation equipment, etc. The PUD uses the demand reading to determine the maximum energy (or maximum capacity) required by our customers.

This information is used to develop a system that will be able to meet the customer’s highest peak demand. Customers may not be using the PUD system at maximum capacity all the time. However, the PUD is still required to maintain the system so that it is ready to provide service to customers at maximum capacity, at any time of the day. 

How does the PUD determine the Demand rate?

Generally, every two years, the PUD performs a Cost of Service Analysis (COSA) which calculates the total revenues required by the PUD to meet its planned expenses. The COSA also calculates the cost to serve each rate class to determine how much revenue each class should contribute to the total. The COSA recommends to the PUD Board of Directors what the demand rate should be. Through the rate review process, the Board then sets the rates for our customers.

Is this another rate increase?

This is not a rate increase. This change is designed to be revenue neutral. The PUD will not receive additional revenues from this change.

Is the Demand charge an added charge on top of the existing Energy charge?

The Demand charge will be unbundled from the Energy charge. When we do this, the Energy charge will also be reduced to compensate for the change.

When will the Demand charge begin?

In the future, the PUD may begin billing all customers for their Demand charge. 

Customers currently see a line item on their bill showing their demand for the month. However, there is no cost associated with the demand. The PUD is adding this line item early to help customers monitor their demand. They will then have the ability to modify their usage, if they so choose, before the charge is implemented. This will allow them to see how modifying their usage might impact their demand and the Demand charge.

Why does the PUD need to change the rate structure?

With the current rate structure, customers who use more energy generally pay disproportionately more for the Demand charge than customers who consume less energy. This is because the Demand charge is embedded into the energy rates. Therefore, when their energy consumption increases, the Demand charge automatically increases, whether or not the customer has a high demand usage.

On the other hand, customers who have lower energy consumption generally pay less for the Demand charge because it is built into the energy rates, even if their demand use is high. In effect, they are paying less than their fair share for using the PUD system.

The new rate structure is designed to be more transparent and equitable. The goal is to ensure that all customers are paying their fair share of using the PUD system, and that the PUD has a way to assign costs that are directly related to demand use, and not based on total energy consumption.

Will my bill increase?

The impact of separating out the Demand charge from the Energy charge will vary from customer to customer. Some customers will see no changes, some will see an increase in their bill, while others will see a decrease. This will all depend on their demand and energy consumption, or in other words, how much energy they use each month and their usage habits will affect their bill amount. The impact can also fluctuate from month to month based on these factors.

Our Residential Demand Calculator can help you see how it will affect your bill.

Will my billing due date change in October?

No. All billing schedules will remain the same.

What is the difference between demand and energy consumption?

A simple way to understand the difference between demand and energy consumption is to consider the following space heater scenarios from two different customers:

Illustration B requires 6 times more demand. One 1500-watt space heater running for 6 hours uses 9,000 watt hours, which is equivalent to 9 kWh. So does six 1500-watt space heaters running for one hour. But demand on the grid is six times higher when six heaters run simultaneously for an hour.

If both of these customers are only billed for their energy consumption, both would receive the same bill for 9,000 kWh of energy. However, in the second scenario, the customer uses all the energy to power the space heaters within a one-hour period. 

A customer who sets a high demand requires more services from the PUD, including additional capacity and more expense for lines, transformers, substation equipment, etc. Because of this, they will see a higher Demand charge reflected on their bill. Customers who consume more energy but have a lower demand will still pay for the energy usage through the Energy charge, but will see less Demand charge.

What can I do to help lower my Demand charge?

The Demand charge is calculated based on the average peak demand usage during any one-hour interval within a billing period. Spreading out activities that require a lot of energy throughout the day instead of doing them all at once will help reduce your average peak demand, which will lower your Demand charge on your electric bill. The goal is to level out your load. For example: 

• Operate your electric stove, oven, washing machine, clothes dryer, dishwasher, car charger and other large appliances at different time intervals throughout the day, and not all at once. You could start your washer or dryer after cooking, and try not to run your washer and dryer at the same time. You could also set your dishwasher, pool and spa pump, charging electric vehicle to run after you go to bed.

• Turn off non-essential lights and appliances when not in-use.
• When possible, adjust your thermostat to reduce heating and cooling.
• Use electricity during the off-peak periods. Off-peak periods are: Sundays and major holidays (New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.)

The Demand charge is calculated based on the average peak demand usage during any one-hour interval within a billing period.

Will my bill display the date and time of my Demand reading?

Yes.

Will I be able to continue to participate in Budget Pay after these changes are in effect?

Yes. We will continue to offer the budget pay program. Please visit our Budget Pay page for more information.

What can I do to lower my monthly energy costs?

There are many steps customers can take to lower their monthly energy costs. With the helpful tools and resources that the PUD offers, using energy wisely is easier than you think. You can find Energy Saving Tips and High Bill Concerns information on our website. 

For electrically heated homes, the PUD offers customers a free walk-through home energy assessment, as well as other energy saving programs. For more information about these programs, please contact our Efficiency Services Group at (888) 883-9879.

I am having trouble reading my new billing statement. Can I speak to someone about my current bill?

We’ve created a special page on our website on how to read your bill. You can also call us at 503-397-1844 if you have questions.

Am I able to request a change in my current rate class?

The type of service you require determines your rate class. If you believe that your rate class does not accurately represent the type of service you are receiving, please contact our Billing Department at 503-397-1844. You can also view the 2023 rates.

Why am I being charged an Energy charge, Base charge, and a Demand charge on my electric bill?

Each charge on the electric bill covers different costs associated with providing electrical service to the customer.

Energy charge – A variable charge to cover the cost of energy used in the billing period, measured in kilowatt hours (kWh). It is intended to cover the costs of purchasing power from our wholesale power and transmission provider.

Base charge – A flat fee to cover the fixed costs of operating the utility. Examples include the office building, billing and metering systems and equipment, office personnel, taxes, and debt service.

Demand charge – A variable charge based on the highest rate of electric use during the billing period, measured in kilowatts (kW). It covers the costs of maintaining the distribution system, including poles, wires, substations, trucks, and line crews.

Does the PUD offer any programs to make paying bills easier?

The PUD offers various bill payment programs, including Budget Pay. A Budget Pay billing plan allows you to pay the same amount each month, based on your previous 12 months of service. This can help lessen the shock from high energy bills incurred during extremely cold or hot weather. New Budget Pay plans are set up in March only, so if you would like more information or would like to enroll in this program, please contact our office at 503-397-0590.