Residential, General Service Small, and All Electric Commercial Demand FAQs
What is Demand?
Demand is a measurement of the maximum amount of power required during any 15-minute interval within a billing cycle, measured in kilowatts (kW). Simply put, energy is the amount of power you consume, while demand measures your impact on our electric distribution system to deliver that power. The more appliances you run at the same time, the more your demand for power increases.
Why did the BPU decide to add a new Demand charge?
The Demand charge is not a new charge. It has always been embedded in the energy rates. The BPU is separating out the Demand charge from the Energy charge. This will allow the BPU to assign costs that are directly related to demand, and not based on total energy consumption. These are the costs related to maintaining the distribution system.
The customer will still see an Energy charge that is based on the total amount of energy they consume during a billing cycle. However, the Energy charge will be reduced once the Demand charge is separated out.
The new unbundled rate structure with separate Demand and Energy charges will allow customers to see exactly how much they pay for the energy they actually use, and how much they pay toward the costs that the BPU incurs to deliver and distribute that energy to them.
What is the Demand charge?
The Demand charge is a variable charge that covers the costs of maintaining the distribution system, including poles, wires, and substations. It is based on the power demand during a billing cycle and is calculated by taking the highest demand recorded in a billing cycle (in kW) and multiplying it by a demand rate (estimated to be set at $1.80/kW for Residential Customers).
The more high-energy appliances the customer uses at the same time within a 15-minute interval, the higher the demand.
For example, if a customer turns on their oven (5kW) and clothes dryer (5kW) and runs both at the same time within a 15 minute interval, then their average demand for that time interval would be measured as: (5kW + 5kW) = 10kW. If this is the highest average demand interval recorded in the billing cycle, then that would be the demand usage for that billing cycle. The Demand charge would then be calculated as: 10kW x $1.80/kW = $18.00.
However, if the customer turns on the oven and runs it for 15 minutes (turning it off), then turns on the clothes dryer for the next 15 interval and runs it for 15 minutes, the demand usage would be: 5kW. If this is the highest average demand interval recorded in the billing cycle, then that would be the demand usage for that billing cycle. The Demand charge would then be calculated as: 5kW x $1.80/kW = $9.00.
Why does the BPU charge for Demand?
The Demand charge enables the BPU to recover the costs of maintaining the distribution system.
A customer who sets a high demand requires more services from the BPU, including additional “space” on the distribution system, which means a higher expense for lines, transformers, substation equipment, etc. The BPU uses the demand reading to determine the appropriate electrical infrastructure needed to reliably serve our customers.
This information is used to develop a system that will be able to meet the customer’s highest peak demand. Customers may not be using the BPU system at maximum demand all the time. However, the BPU is still required to maintain the system so that it is ready to provide service to customers at maximum demand, at any time of the day.
How does the BPU determine the Demand rate?
Generally, every 4-5 years, the BPU performs a Cost of Service Analysis (COSA) which calculates the total revenues required by the BPU to meet its planned expenses. The COSA also calculates the cost to serve each rate class to determine how much revenue each class should contribute to the total. The COSA recommends to the BPU Board of Directors what the demand rate should be. Through the rate review process, the Board then sets the rates for our customers.
Is this another rate increase?
This is not a rate increase. This change is designed to be revenue neutral. The BPU will not receive additional revenues from this change.
Is the Demand charge an added charge on top of the existing Energy charge?
The Demand charge will be unbundled from the Energy charge. When we do this, the Energy charge will also be reduced to compensate for the change.
When will the Demand charge begin?
Starting Spring 2025, the BPU may begin billing residential (including all electric), general service small, and all electric commercial customers for their Demand charge.
Customers currently see a line item on their bill showing their demand for the month. However, there is no cost associated with the demand. The BPU is adding this line item early to help customers monitor their demand. They will then have the ability to modify their usage, if they so choose, before the charge is implemented. This will allow them to see how modifying their usage might impact their demand and the Demand charge.
Why does the BPU need to change the rate structure?
With the current rate structure, customers who use more energy generally pay more for the Demand charge than customers who consume less energy. This is because the Demand charge is embedded into the energy rates. Therefore, when their energy consumption increases, the Demand charge automatically increases, whether or not the customer has a high demand usage.
On the other hand, customers who have lower energy consumption generally pay less for the Demand charge because it is built into the energy rates, even if their demand use is high.
The new rate structure is designed to be more transparent and equitable. The goal is to ensure that the BPU has a way to assign costs that are directly related to demand use, and not based on total energy consumption.
Will my bill increase?
The impact of separating out the Demand charge from the Energy charge will vary from customer to customer. Some customers will see no changes, some will see an increase in their bill, while others will see a decrease. This will all depend on their demand and energy consumption, or in other words, how much energy they use each month, and their usage habits will affect their bill amount. The impact can also fluctuate from month to month based on these factors.
Our Demand Calculator can help you see how it will affect your bill.
What can I do to help lower my Demand charge?
The Demand charge is calculated based on the average peak demand usage during any 15-mimute interval within a billing cycle. Spreading out activities that require a lot of power throughout the day instead of doing them all at once will help reduce your average peak demand, which will lower your Demand charge on your electric bill. The goal is to level out your load. For example:
- Operate your electric stove, oven, washing machine, clothes dryer, dishwasher, car charger and other large appliances at different time intervals throughout the day, and not all at once. You could start your washer or dryer after cooking and try not to run your washer and dryer at the same time. You could also set your dishwasher, and/or charging electric vehicle to run after you go to bed.
- Turn off non-essential lights and appliances when not in use.
- When possible, adjust your thermostat to reduce heating and cooling.
The Demand charge is calculated based on the average peak demand usage during any 15-minute interval within a billing cycle.
Will my bill display the date and time of my Demand reading?
Yes.
Will I be able to continue to participate in Budget Billing after these changes are in effect?
Yes. We will continue to offer the Budget Billing program. Please visit mcphersonpower.com/budget-billing-options for more information.
I am having trouble reading my new billing statement. Can I speak to someone about my current bill?
Yes, please call us at 620-245-2515 if you have questions.
Why am I being charged a Base charge, Energy charge, and a Demand charge on my electric bill?
Each charge on the electric bill covers different costs associated with providing electrical service to the customer.
Base charge – A flat fee to cover the fixed costs of operating the utility. Examples include the office building, billing and metering systems and equipment, office personnel, vehicles, and other services.
Energy charge – A variable charge to cover the cost of energy used in the billing cycle, measured in kilowatt hours (kWh). It is intended to cover the costs of purchasing energy from Evergy.
Demand charge – A variable charge based on the highest rate of power used during the billing cycle, measured in kilowatts (kW). It covers the costs of maintaining the distribution system, including poles, wires, and substations.
Does the BPU offer any programs to make paying bills easier?
The BPU offers several convenient billing options including Automatic Payments, Paperless Billing and Budget Billing which is a free program designed to ease the fluctuation of your monthly bills. Instead of paying your actual energy costs each month, you pay an average amount. It is not a discount program and offers no savings or lower rates, however, you get the convenience of a more predictable bill.
Contact Customer Service at 620-245-2515 for help enrolling in any of these options!