New Demand Rate Structure
Ever since Howard Electric Cooperative was formed in 1936 your cooperative has looked for ways to better serve you…our members. In that same spirit, we have been working with our rate consultant over the last several months studying our rates. I am excited to report that we have developed a new rate structure that in future years will give you more control over your power bill, if you choose to do so. Although rates are going up the restructuring of our rates will more accurately reflect the cost to operate HEC.
As a not-for-profit electric cooperative, our goal is to provide reliable, safe electric service to our members at the lowest possible cost. We do not generate electricity. We purchase it through long term contracts from Associated Electric Cooperative, and a large portion of the bill HEC pays is a demand charge (see previous Manager’s columns at www.howardelectric.com that explain demand charges). HEC’s demand charges are based on peak usage during those times of day when electricity use is at its peak.
- Morning Peak – (6 a.m. to 8 a.m.) the need or demand for electricity is greatest in the morning hours when we start our day by taking showers, additional use of appliances, and turning up the heat.
- Evening Peak – (4 p.m. to 8 p.m.) the need or demand for electricity is greatest during the afternoon hours when a majority of our members arrive home to end the day by cooking dinner, washing and drying clothes and in the summer months turning the thermostat down to cool off.
Any use of electricity that can be avoided or shifted outside of these Peak usage hours saves money on HEC’s wholesale power bill and ultimately your bill as well. With the current rate structure that HEC and other utilities have been using for many decades, there has not been an effective way to directly share those savings with members until now. The metering technology we have in place allows us to measure the amount of electricity used during peak usage hours. We have restructured our rates to better reflect the actual cost of operating HEC and now you can make choices in the way you use electricity that will directly affect your bill.
The new rate structure will go into effect beginning with bills invoiced on April 1, 2016 (your March usage). Our initial demand rate will be very small and for most of you, shifting usage hours will not be worth doing, but in future years as the demand rate goes up and the kwh rate goes down, shifting your usage hours will be a good tool for you in controlling energy costs.
We will provide more information in publications and on our website in the near future.