Residential Rate Restructure FAQ’s
Residential Rate Restructure FAQ’s
What’s a Peak and Why Does it Matter?
A peak is simply a period of time when electricity usage it at its greatest. Members will have a daily peak, generally in the morning or evening. When a majority of members peak during the same time period, it creates a peak on MEC’s electric distribution system. Because electricity must be generated the moment it is needed, serving peaks can require resources that are more expensive since they are harder to plan for.
Why is MEC Adding the New Charge?
The peak charge is not actually a new charge and has always been embedded in the energy rate. MEC is simply separating the peak charge from the energy charge. Separating the peak charge allows us to assign costs directly related to a member’s peak usage and not base it solely on total energy consumption. Even though members will see an additional line on their bills under the detail of charges, they will also notice the energy rate has been reduced.
What Has Changed?
In March 2022, MEC’s Board of Trustees approved the addition of a Peak Charge to all residential and small-commercial rate categories. Until now, these members have been billed using a two-part rate consisting of an energy charge and a base charge. While this two-part rate structure has served the Cooperative well since day one, it no longer reflects the way in which we are billed by our power supplier (Bonneville Power Administration or BPA).
Nowadays, when power is consumed has a much greater impact on our wholesale power bills than it did when the Co-op was formed. On any given weekday, MEC’s electric distribution system sees two peaks: one in the morning, from approximately 7 to 10 a.m., as members are getting ready for work and school, and a second peak in the evening, from approximately 6 – 9 p.m., as members return home and begin making dinner or doing household chores. Across the region, these two time periods see the highest demand for electricity, and as a result, purchasing power during these times is more expensive.
With wholesale power rates placing a greater emphasis on members’ time of use, a two-part rate cannot adequately account for the higher cost of electricity during peak periods. This creates a risk of inequity within these rate classes as the cost of this more expensive power is spread among all of the members regardless of whether they are causing higher costs through on-peak energy usage or not.
How Will it Work?
MEC’s peak hours are Monday through Friday from 7-10 a.m. and 6-9 p.m. (weekends and major federal holidays are excluded). Each weekday, when a member uses electricity during peak hours, our metering system will identify the largest hour of on-peak usage and report it as that day’s peak. At the end of the billing period, our software will look at all of the daily peaks and pinpoint the one highest value from the period, which is your monthly peak. The monthly peak, measured in KW, is then multiplied by the Peak Rate ($0.27/KW) to generate that month’s Peak Charge.
Are We Increasing Rates?
No, MEC is not increasing rates. The last rate increase for Co-op members was in May 2017. Our recent cost of service study indicated that we are generating sufficient revenues through existing rates. This change is designed to be revenue neutral. That is to say, we are not increasing rates and the goal is not to generate any additional revenue. The goal of this change is to collect costs in a way that better reflects the way we are billed by our power provider. While this change adds a new peak charge, we are balancing this with a reduction in our Montana and Idaho residential energy rates. Some members may see their bills stay the same or be reduced slightly, while others may see a slight increase.
Putting the Power in Your Hands
Some on-peak electricity usage is impossible to avoid. For instance, appliances like refrigerators and freezers will need to run periodically, regardless of the time of day. Other loads, especially those that use large amount of power may be able to run off peak. Below are a few examples of ways you can reduce your peak:
- During peak hours, we encourage you to “level your load,” and spread out the use of major appliances rather than running them at the same time.
- Do laundry and other chores that require significant amounts of electricity outside of peak hours, such as mid-day, later in the evening, or on weekends. Consider setting a timer to run your dishwasher, washer and dryer and other appliances outside of peak hours.
- Purchase a programmable thermostat to reduce heating and air conditioning use during peak hours.
- Purchase a qualifying smart thermostat for your electric heat pump or furnace which can help you reduce peaks by controlling when you heat and cool your home, and take advantage of our thermostat rebate program.
Who Benefits from This Change?
Members who avoid the simultaneous use of large electrical appliances during peak hours will save money.
As a member-owned electric Cooperative, our goals are quite simple: to provide reliable low-cost power and to treat all members fairly. We hope that this rate structure will help our members use energy more wisely. The reality is, when we all use less energy during peak hours, we all save money.
When Will This Change Take Effect?
Members will see this change on the June 2022 billing statement, which will hit mailboxes in early-July.