Bob Pierce answers questions about energy efficiency, consumer products, and cooperative governance. He is Clearwater Power’s Chief Operating Officer and welcomes your questions on our Ask Bob page.
Why are there different charges on my bill? What’s the difference between an energy charge and a demand charge?
Clearwater Power has a 3-part rate structure. Members are billed on their total electricity use and demand. On your monthly bill, you’ll see 3 charges: a service availability fee, a charge for energy, and a peak demand charge.
The service availability fee covers a portion of the fixed costs associated with having electric service, such as power line maintenance, rights-of-way work, accounting, and member services. This cost is the same for all residential members.
The energy charge represents the costs for the energy used—measured in kilowatt-hours. The cost per kWh is the same for all residential members, but how much electricity each member uses determines the amount charged.
Demand, sometimes called peak demand, is a measurement in kilowatts of the peak impact on the electric system to deliver power. The demand charge is based on a measurement of the maximum amount of power used.
In our case, the demand is the most power used during a 15-minute period. The more appliances operating at one time, the higher the demand. It doesn’t matter how long they’re on. It only measures the “high water mark.” It differs from energy charges, which measure the total used over time.
People tend to have a time of day when they’re using the most electricity, such as when getting ready in the morning for work or school. At these times, there is a greater demand for energy. Our system must be built to meet these peak demand times, even though, for most of the day, the demand for power is far less.
Separating a small portion of the demand charges from energy charges allows us to better balance some of the costs directly related to demand, rather than total energy consumption.
As you can see, some of our costs are based on total energy consumed, some are fixed and some are based on peak demand. This type of rate structure is fundamentally about fairness. It offers greater transparency and control over your total charges. Separating the charges allows us to make power bills more equitable among all members and their various energy needs and consumption.