Understanding Time-Of-Use Charges

Video for Understanding Time of Use Charges

Components of your energy bill

How much energy you use (consumption) is not the only determination of how much you pay for electricity. In addition to Energy Charges, based on a cost per kilowatt-hour (kWh), a portion of your TOU bill may also be determined by Demand Charges, based on cost per kilowatts (kW).
 

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The differences between demand and consumption are easy to understand.

The difference between demand (kW) and energy consumption (kWh) is vital to your choices in reducing your costs. A simple way to see the difference between demand and consumption is by considering these simple analogies:

One 100-watt bulb burning for ten hours uses 1,000 watt-hours, 1kWh. But demand on the grid is higher when ten bulbs burn simultaneously for an hour
A car's speedometer is like a demand meter; an odometer is like an energy meter. Demands on a car driving 100 miles in an hour are higher than driving 100 miles over a ten-hour period
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In comparing both light bulb examples, if both of these customers were billed for their consumption only, both would receive the same bill for 1 kWh of energy. That is the way most residential customers are billed. In the second case, the utility has to have 10 times more generating “capacity” to provide that customer's brief high demand for power compared to the first case.

A customer who sets a high demand requires more services from us: additional generating plant capacity and more expense for lines, transformers, and substation equipment.

Demand Charges generally reflect our fixed costs (generation, transmission, and distribution) of providing a given level of power available to you, and Energy Charges (consumption) reflect the variable portion of those costs as you actually use that available power.

Depending on your rate option, you could see Facilities-Related Demand Charges and Time-Related Demand Charges on your bill.

  • Facilities-Related Demand Charges apply at all times throughout the year, and are calculated per kilowatt (kW) according to your highest recorded demand during each billing cycle—no matter what season, day of week, or time of day.
  • Time-Related Demand Charges only apply during the summer season (June 1 through September 30), when demand reaches its peak and costs are highest. Time-Related Demand Charges are assessed each month during On-Peak hours and also during Mid-Peak hours. These charges are in addition to and separate from a Facilities-Related Demand Charge.