Wholesale Power Costs & Rising Demand
In examining data from the last 5 years, Wiregrass Electric Cooperative’s (WEC) wholesale power costs and peak demand both show a clear upward trend — factors crucial to understanding energy rates. The data reveals a hike in our wholesale power costs from $30,277,372 in 2019 to a record $36,951,549 in 2023. This is driven by variables like inflation, supply chain disruptions, and increased electricity demand.
Demand refers to the amount of power needed at a specific time, and it varies. Notably, December 24, 2022, saw an all-time system peak, reaching a staggering 144 MW. Cold winters and heightened home activity contribute to these peaks, underlining the need for innovative solutions.
2023 Cost Breakdown
- Demand - $19 million
- Energy - $14 million
- Distribution - $18 million
The price of essential grid components — such as transformers, poles, circuit boards and power lines — has spiked since 2019. As of 2023, these costs have surged by 43%- 80%.
Growth & Financial Stability
Amid the challenges of inflation and rising power costs, WEC has worked diligently to maintain financial stability. Our rate structure has been refined to incorporate a portion of demand costs to meet immediate needs and forge long-lasting sustainability. These changes were made thoughtfully, positioning us well for the future.
What Is Demand?
Demand is the maximum power needed at any given time. For example, if you turn on several high-energy-consuming appliances simultaneously, such as the heater, oven, and washing machine, your demand at that moment spikes
Peak demand, our highest need, impacts the cost of wholesale power. We must have enough capacity to meet the power demand of all homes and businesses, even when that demand spikes.
Winter Peak Hours:
November 1st through February 29th from 6 a.m. to 9 a.m.
Residential Fixed Demand Charge
Every residential account will have a $6 fixed demand charge on its bill. This charge represents a demand of 3 kW, a minimum value for residential meters on our system during our peak demand period
Advanced radio frequency meters allow us to accurately measure and bill for residential demand.
Managing Costs & Ensuring Quality
WEC and PowerSouth Energy Cooperative are implementing strategies to mitigate increases, such as:
- Strategic fuel hedging, whereby we lock in favorable rates to protect against future price hikes
- Incorporating nuclear energy from Plant Vogtle to prepare for the current federal administration’s goal of net-zero carbon emissions
- Adopting efficient natural gas burning technology at Lowman Energy Center
- Stocking essential items strategically
- Running a lean team
- Prioritizing prudent spending
For more details about residential demand, how it affects our costs, and how you can lower demand, visit our FAQ page.
Solutions
- Install a water heater timer. By controlling when your water heater operates, you can avoid using it during peak hours.
- Use a programmable thermostat. Set it to lower temperatures during peak demand times. With smart thermostats, you can control your thermostat from your phone even when you’re away.
- Shift completing high-energy tasks like washing and drying clothes or running the dishwasher to nonpeak hours.