Time of Day

Paying for power demand

Undoubtedly, North Central Electric members have noticed the cost for electricity has risen.

You can see in the adjacent table the average wholesale kilowatt-hour rate for a residential consumer has increased from 2003 to 2009 by 45 percent. And those costs will continue to increase.

Buckeye Power - the wholesale power supplier to North Central and the 23 other Ohio electric cooperatives - has taken the lead in the electric industry and made the investment to meet Clean Air Act standards sooner rather than later. The Ohio cooperatives are spending approximately $900 million to install scrubbers at our coal-fired Cardinal Generating Station in Brilliant, OH, along the Ohio River. This work will be completed in 2013. Other electric utilities are just beginning to make the same clean air investments in their power plants.

Historically, North Central Electric's farm and residential rates have been structured using the average wholesale power cost per kilowatt-hour (kWh) from Buckeye Power, shown in the right column in the adjacent table.

While we have been applying the average wholesale rate per kWh in our farm and residential rates, we have been billed by Buckeye Power for our demand during peak hours. Peak demand is measured in kilowatts (kW). For example, a 1,000-watt heater has one kW power demand. If that 1 kW heater runs continuously for one hour, then the meter will register one kWh. Peak demand charges from Buckeye recover the fixed costs associated with owning generating plants, whereas the cost to generate electricity is priced on a kWh basis.

The adjacent table shows that Buckeye kW demand charges have steadily increased and are projected to rise at a faster pace through 2013 than other generating charges.

The graphs below show the peak demand periods for North Central are different in the winter than the summer. This reflects seasonal differences in our members' energy use patterns which are very much influenced by time of day and temperature.

There are two winter peak demand periods - 6 to 9 a.m. and 5 to 10 p.m. Monday through Friday. The summer peak demand period lasts from 2 to 10 p.m. Monday through Friday. Weekends and holidays are not usually peak demand days.

For years, the cooperative has asked members to try and shift their heavy power use to off-peak hours. However, there has been no incentive to do so, except to save the cooperative money.

The new meters will allow North Central to begin implementing Time of Day rates. Effective with the bills received in February 2011, there will be no separate $2 charge for having a "Turtle Meter." The only exception will be for "Turtle sub meters" such as for add-on heat pumps, geothermal systems and wind or solar generators, etc.

Time of Day rates are not new, but are an increasing trend in the electric industry. They give consumers a choice. They will be able to react to rates which better reflect their cooperative's costs and determine what time of day they want to use their power consumption or if they want to make a change at all.

The North Central Electric Board of Trustees and management reviewed and discussed farm and residential rate-making concepts over the last two years. It was determined since rising demand costs are a growing component of the cooperative's power bill, then there should be a demand related price signal in the member's electric bills based on the time of day that peak demand occurs.

During the three to four year meter installation period, there will be a one-cent per kWh difference between the rates for off-peak versus on-peak hours. After the meter installation period, the difference between the rates for off-peak and on-peak kWhs will gradually increase.

All hours on weekends, Christmas, New Year's Day, Memorial Day, Independence Day and Labor Day will be considered off-peak since most businesses are closed on those days, which reduces the cooperative's peak demand.

The Board of Trustees realizes this is a major change and wants to make sure it clearly communicates these planned changes to the members.

Because it will take three to four years to change approximately 8,300 meters, we plan to phase in the new rate as the meters are changed. We plan to implement the new Time of Day rate this fall beginning in October for all those consumers who have the meter installed by then.

Members will receive another notice before the new rate actually goes into effect. Members who have their new meter installed after the new rate goes into effect this fall will be billed the following month under the new rate.