As your electric cooperative, EnergyUnited is committed to providing you with safe, reliable and affordable energy on a daily basis. This means ensuring that we have an adequate power supply that can meet your demand. It also means that we need to keep our wholesale power supply costs, which are the biggest factor in the price we charge for energy, as low as possible.
What determines wholesale power supply costs?
Wholesale power supply costs are comprised of the costs of capacity, energy, and the transmission of energy to our distribution system. This total amount comes to roughly 65% of our total company-wide expenses each year.
While our power supply portfolio is already competitive in terms of cost, reliability and fuel diversity, we devote significant attention to finding ways to manage and reduce the various cost components.
How is demand for power supply met?
Capacity refers to the generation resources that we have available to serve our members, whenever they may need to use energy. These include baseload resources (typically nuclear, natural gas and coal plants), which run around the clock because they are efficient, low-cost and they provide the base amount of energy production that we know will always be demanded by our collective members.
We also have various levels of peaking resources (typically natural gas-fired power plants), which can ramp up and down on short notice to provide additional energy during periods of higher energy usage. In the summer, this is generally in the late afternoon and early evening and in the winter, it’s generally in the early morning.
How does peak demand affect cost?
The total amount of capacity we must contractually have available each year is based on the amount of our total system-wide load during the top 10 peak demand hours of the previous year. The more we can curtail overall power usage during the top 10 peak demand hours each year, the less peaking capacity we will need to purchase going forward, which translates to lower costs for you, our members.
How are peak periods managed by EnergyUnited?
We manage the peak periods a few different ways. First, a number of our residential members allow us to manage their home’s water heating systems and their air conditioning units during peak periods.
We judiciously choose when to manage this load, and while we cannot predict with absolute certainty when a top 10 peak hour will occur, we can generally limit these load management efforts to roughly 30 or 40 hours during each year.
This program dates back several years to when we installed equipment at individual homes, and it has recently also been the subject of a small pilot program using smart thermostats. The participation of these individual members in these programs leads directly to cost savings for all of our members.
We also have some larger commercial and industrial members with generation systems on-site who, with advance notice, will self-generate most or all of their power needs during peak periods, which helps reduce our peak wholesale demand.
Finally, subject to safety and reliability considerations, we also manage peak energy demand by adjusting the voltage on our distribution system to reduce the amount of energy that is otherwise lost during transmission.
What are the current results of these efforts?
As a whole, these efforts have been successful in reducing our power supply costs. The most recent evidence of this is the reduction of our Wholesale Power Cost Adjustment (WPCA) last December. The WPCA is a charge on every member’s monthly bill which allows us to recover the costs of our wholesale power supply.
In December, we reduced this charge by 2 mils or, in other words, 0.2 cents per kilowatt hour (kWh). For an average residential customer who uses 1,000 kWh of electricity per month, this reflects a savings of roughly $2 each month. We intend to maintain this reduction for the rest of the year, and we will continue to reevaluate the level of the WPCA during 2018 and beyond.
This reduction, combined with the fact that we have not implemented a general rate increase since 2014, shows our effective commitment to keeping costs down while keeping the lights on for you, our valued members.