What peak demand and beating the peak mean for co-ops and their members

By Kim Graber

When we turn on a light switch in Colorado, we expect that the lights will come on.

We don’t worry about whether we’re also running the dishwasher, or if we already have lights on elsewhere in the house. We also don’t think about how much power other people in our neighborhood are using.

The U.S. and Colorado’s electric co-ops have excellent reliability standards and metrics. On average, people in the U.S. lose power less than twice each year for less than five hours — a reliability rate of 99.95%. And disruptions are nearly always caused by a local distribution-related event — trees falling on power lines, for example.

To maintain that reliability, power suppliers and distribution cooperatives must pay attention to what’s known as peak demand. This is why electric co-ops sometimes ask members to help “beat the peak.”

WHAT IS PEAK DEMAND, AND WHY DOES IT MATTER?

The U.S. power grid is an interconnected system of transmission and distribution lines that carry power from generation sources to end users. Regional grid operators known as balancing authorities manage the power supply to be sure it matches the current demand.

Andy Carter, member engagement manager at Empire Electric Association, compares this effort to driving a car through hilly country.

“As you start to go up the hill, you notice your speedometer goes down, and you start putting your foot on the gas pedal so you can maintain the speed that you want,” he said. “But then when you start going down the hill, you see your speedometer is going up, so you let off the pedal.”

Like our cars’ demand for fuel, our demand for electricity fluctuates throughout the day. It typically goes down overnight. It rises in the morning and again in the early evening as many people turn on lights and run appliances.

Demand also fluctuates with the seasons. During the spring and fall, we use less power because we have less need to either heat or cool our homes. In the U.S., demand tends to peak during the summer when many people are using air conditioning.

Overall, demand for electricity in the U.S. is growing. The U.S. Energy Information Administration estimates that residential electricity usage will increase 14% to 22% between 2022 and 2050.

EIA also predicts that summers will experience the most growth in demand. The country’s population growth is shifting toward warmer climates. And changes in our climate mean we’re experiencing warmer temperatures during both the winter and the summer. Both factors reduce the country’s need for heating in the winter and increase the need for cooling during the summer.

To ensure that they’re always able to provide enough power whenever it’s needed, suppliers need to have enough capacity to meet peak demand. This is the moment during a given period when the most electricity is being used.

HOW DOES PEAK DEMAND AFFECT OUR POWER SYSTEM AND OUR CO-OPS?

Matching generation capacity with peak demand affects the grid’s reliability. If suppliers don’t have enough power supply to meet the current demand, we can experience blackouts.

Peak demand also has economic implications. Wholesale prices for energy are at their highest when demand is greatest. This means that co-ops pay more for the energy that is being used during peak demand.

“As a co-op, if we want to manage peak demands, really what we’re wanting to do is keep our costs down,” Carter said.

While co-ops have to recoup their costs and the investments they’ve made in infrastructure for delivering electricity, they work to do so in fair ways that take their members’ needs into consideration, Carter added.

“We’re not in it to make money; we’re in it to serve our members,” Carter said.

Some co-ops set rates and develop programs to encourage members to beat the peak — to shift their energy usage to times with lower demand when possible.

“If the rates are set right, then the members get the idea of when they should or should not use energy to make it less expensive,” Carter said.

For example, some co-ops might set higher rates for using electricity during what they define as “on-peak” periods. They might also offer plans — such as smart thermostats and electric vehicle charging programs — that can help interested members automatically manage their demand.

WHAT CAN CONSUMERS DO TO BEAT THE PEAK?

Whether you want to help reduce energy consumption overall or simply want to potentially save money on your electric bill, there are actions you can take to beat the peak:

• Think about ways to conserve energy through your everyday activities. For example, raise your thermostat a few degrees in the summer or lower it in the winter. Or consider new, more energy-efficient appliances if yours are older. Your co-op might offer rebates on energy-saving purchases such as new appliances, heating and cooling options, and lighting.
• Understand peak demand charges and structure your usage accordingly whenever possible. If you have an EV, for example, consider charging it overnight. Or think about running your dishwasher overnight instead of right after dinner.

To learn more about peak demand in your area as well as any rate options and programs that are available to you, contact your local co-op.

Kim Graber is a freelance writer from Longmont.