When you use electricity is as important as how much you use.
Did you know that the power you use between 4 PM & 9 PM costs SMPA four times as much, and has a higher carbon impact than power used during the rest of the day?
Power bills are beginning to show information about the monthly usage “Peak,” as well as the “On-Peak” and “Off-Peak” periods. For now, nothing has changed in the rates you pay, nor the methods by which you are being billed. However, we want you, our members, to be informed about the timing of your energy usage well ahead of potential changes to our rates.
Frequently Asked Questions (FAQs)
Q: Does this mean that rates are going to go up?
A: A rate structure change is not the same as a rate increase. A time-based element will give consumers a choice as to how their overall bill is affected. There is the potential that a members’ average power bill could go down if they make intentional changes in usage habits or if they utilize “smart” technology, programmed to optimize benefit while reducing on-peak load.
Many new appliances are equipped with features to limit their electricity consumption during peak periods. Dishwashers, washing machines, dryers and even refrigerators can help you use less energy during peak.
If you own or are considering an Electric Vehicle (EV), think about how you will charge your vehicle during off-peak hours.
A: There are two main options under consideration:
Time of use (TOU) billing is a method of setting different prices for electricity depending on the time of day. Utilities use TOU rates to encourage members to shift their electricity usage to Off-Peak hours when electricity is cheaper and more sustainable.
For SMPA, Energy used during 4PM-9PM is considered On-Peak. All other times of the day are Off-Peak
SMPA is considering applying a TOU rate structure; however, we want to help you understand Time of Use billing and how it might affect you before any rate changes occur. Your bill now shows you information about your monthly kWh that you used On-Peak (4PM-9PM) and Off-Peak.
For now, nothing has changed in the rates you pay, nor the methods by which you are being billed, but these new line items will give you information about the timing of your energy usage. After SMPA has completed an analysis of our rates, members may see a change that reflects the timing of electricity usage.
SMPA has identified the peak period as 4 PM to 9 PM. Historically, SMPA’s highest monthly demand occurs between these hours. This is important because we are charged a monthly fee based on how high this demand goes. If the monthly high (or “peak”) can be reduced, that saves the cooperative money, which lowers upward pressure on your electric rates.
Detail: Demand rates are designed to associate the costs of providing power to consumers during peak times with what a member pays on their bill, based on that member’s contribution to the peak. This makes for a more equitable method of billing between all members.
Your Peak Power is now shown on your bill here:
Note that we show you your Peak Power for both the On-Peak and Off-Peak periods. Both values are measured in kiloWatts (kW), reflecting the average of your instantaneous power demand over 1 hour during the defined period for each billing cycle. If your On-Peak Power value is higher than the Off-Peak value you may be able to find ways to shift more of your usage to the Off-Peak time period.
You can find your Peak Power readings in SmartHub with the Usage Explorer tool.
With a Peak Power rate, members who use more electricity during peak demand periods will generally pay more than those who use less during those times. That is because a charge is applied to the On-Peak kW reading each month. Remember the On-Peak period is 4PM-9PM. As members shift their usage away from the On-peak period, they help reduce overall demand and help lower costs for everyone.
SMPA is considering imposing a Peak Power rate in 2024 to encourage our members to lower costs, lessen strain on the grid, and foster a more sustainable and reliable energy system for you.
Detail: Is Peak Power the same thing as Demand?
Peak Power is how SMPA defines the highest hourly kW reading of the billing cycle, either during the On-Peak period (4PM-9PM) or the Off-Peak period (all times except 4PM-9PM). This could be called Demand; in fact, many utilities do. The term “demand” refers to a measurement of the collective strain on the grid for any given period of time. Each user of the grid has a contribution to that “demand” based on what electricity they use during that period. Some utilities measure demand in 15-minute intervals, and many of SMPA’s larger accounts currently pay a demand charge for their 15-minute demand reading. Some utilities also look at monthly or even seasonal demand.
While Peak Power and Demand are similar if not interchangeable terms, for purposes of SMPA’s rates, you can consider the following definitions:
Peak Power is the highest hourly kW reading of the billing cycle, either during the On-Peak period (4PM-9PM) or the Off-Peak period (all times except 4PM-9PM).
Demand is the highest 15-minute average kW reading measured by the electric meter during the billing cycle, regardless of the time-of-day that the demand reading is taken.
SMPA is considering both of these options and will make further progress when the results of our periodic rate study come in.
You can stay informed on these topics by reading EnergyWise, you monthly co-op newsletter and/or by attending our monthly Board Meetings virtually, or in-person at the announced time and locations (usually the SMPA office at 170 W. 10th Ave. in Nucla or at 720 N. Railroad St. in Ridgway)
Q: Why show this information on the bill if it doesn’t affect the total right now?
A: We’re glad you asked. The strategy of providing this information on bill statements before any rate change is implemented, provides two benefits:
1) It raises awareness of the high cost of power during the peak period and
2) It shows consumers their role in this overall expense. We want members to know that, if they shift their power use away from the peak period, they can help lower SMPA’s cost for everyone and lessen the strain on our electric grid. We encourage our members to imagine what changes they could make to reduce their power use during the peak while maintaining their quality-of-life.
Q: How much more expensive will peak power be?
A: We do not currently have this answer. While it’s true that SMPA’s bundled on-peak wholesale power cost, per kiloWatt-hour (kWh) is four times that of off-peak power, we are not able to predict if the added cost will hit retail consumers in the same way. Please see the above answer for ways to keep informed on this developing topic.
Q: If this move is meant to make me change my habits, then what help can SMPA offer?
A: One of the primary ways that SMPA influences member behavior is through rebate offerings. We currently pay rebates for consumer equipment that can help with peak reduction, including home batteries, smart thermostats, electric thermal storage units, and electric vehicle charging equipment.
SMPA also provides education on these technologies as well as rebates and promotion of tools that improve energy-efficiency and beneficial electrification as well.
Q: What impact will this move have on the environment and local efforts to reduce carbon emissions?
A: Shifting electricity use to off-peak periods and reducing consumption during peak periods can contribute to reducing carbon emissions associated with electricity generation. When electricity demand peaks in the evening, solar generation tends to taper off as the sun sets. At that time, conventional power plants, often fueled by fossil fuels, are relied upon to meet the increased demand.
By actively managing our electricity consumption, we can help alleviate the strain on the power grid during peak periods and reduce the need to rely heavily on fossil fuel power plants. This, in turn, can lower carbon emissions and mitigate the environmental impact of electricity generation.
Q: What effect will this have on my investment in my net-metered solar array?
A: Photovoltaic (PV) arrays generate savings by selling excess generation to the utility. However, this generation largely occurs outside of the peak period (4 PM to 9 PM.) If this excess could be stored and re-deployed during the peak, there is potential that the system could provide substantially greater savings. This is one of the reasons that SMPA offers rebates for home battery solutions.
Q: How will this impact me if I have purchased or will purchase an electric vehicle (EV)?
A: EVs have the potential to help reduce the system peak. They could also push it upward depending on when owners decide to charge their vehicles. EV owners should be keenly aware of the hours between 4 & 9 PM, and should make every effort to charge at other times during the day.
Q: Is this part of the move to a partial requirements contract with Tri-State G & T?
A: SMPA’s Strategic Objective to Determine the optimal long-term power supply strategy that best achieves our mission involves several investigations and initiatives. The challenge of peak reduction for cost savings and environmental benefit is likely to persist, regardless of which wholesale power supply solution we end up employing. Given this, it makes sense for us, as a cooperative, to know when our system peak is and to start thinking of ways for us to reduce it.