As a member owned cooperative, we have a responsibility to provide you with safe, reliable power in the most cost effective way possible.
Most members are familiar with the energy per kilowatt hour charge on their electricity bill. This charge reflects the energy you use over time. For example, if you run your 1,000 watt dishwasher for 1 hour, you will use 1 kWh and be charged the current rate for that use. This charge is straightforward — you pay for the energy you use.
The Service Availability Charge recovers the critical costs of maintaining our electric system, linemen restoring outages, the fixed costs of our buildings, vehicle maintenance, property taxes, finance costs, supplies and equipment, software, and staffing to operate the company. These costs are fixed, in that they are necessary to make service available on our system as a whole — whether a consumer uses their electricity one month a year or 12 months a year.
The demand charge from our wholesale power provider reflects the cost for the electrical grid to deliver power to all of our members 24 hours a day, 7 days a week, 365 days a year. The foundation of the demand charge is the highest 30 minute need for power during the month from 1 p.m. to 9 p.m., Monday through Saturday. These costs are currently included in our energy charge. In 2026, the demand charge could rise to 60% of our wholesale bill.
At the March Board of Directors meeting, SDCEA staff proposed a shift in electricity pricing to better manage demand cost during peak hours. The recommendation is to transition from the current two part rate structure (Energy Charge and Service Availability Charge) to a three part rate structure, which includes an Energy Charge, Service Availability Charge, and a Peak Demand Charge.
We understand that changes in rate structure can feel overwhelming. We are approaching rising demand costs with a solution that will allow our members to have more control over their future electric bills by shifting how and when they use energy during these hours. Under the proposed plan, the residential rate Energy Charge, which is assessed on the total electricity used during the month, will decrease from $0.14370 per kWh to $0.13026 per kWh, and, a new $2.50 per kW Demand Charge will be added. This charge is based on each member’s highest one hour energy need (kW) during peak hours — 5 p.m. to 9 p.m., Monday through Saturday — within the monthly billing cycle. Sundays are excluded from this calculation. These details may change, pending board consideration.
This adjustment aims to reflect the cost of energy more accurately during peak demand times. This change will impact members differently depending on how they use energy.
Aside from promoting fairer cost recovery among members, a three part rate structure also gives members more control over their monthly bills. Currently, the only option to save on your bill is to use less energy. With the new proposed rate structure, members will be able to shift, stagger, and save to give you more influence over your bills. That means when you choose to use energy outside of SDCEA’s peak hours or stagger the use of appliances within peak hours, it will decrease your demand and demand costs. SDCEA also provides options for members to use less energy during peak times through programs and rebates, including pilot programs (water heater, EV charging, battery), efficiency rebates, and assistance options.
Starting with your April 1 bill (received in May), you will see your specific peak demand reading. While the proposed rate structure would not take effect until July 1, this information is provided to help you understand how your bill may change. You may use this information to plug into our online calculator to see what effect it may have on your bill. If you prefer, you are welcome to contact our office for help with this information.
Jon Beyer is the CEO of Sangre de Cristo Electric Association, a electric distribution cooperative based in Buena Vista, Colorado.
