When Demand Peaks: How Energy Use Patterns Impact Your Bill

Power costs are still trending upward, both here at Wiregrass Electric Cooperative (WEC) and around the country. In fact, our wholesale power costs climbed from $29.9 million in 2021 to a record $37.5 million in 2024. This trend is driven by variables including inflation, supply chain delays, evolving national policies, and increased electricity demand.

1 of the critical drivers of these rising costs is peak electricity demand, which occurs during specific times of the day when simultaneous usage spikes. This system is akin to a highway during rush hour. Just as more lanes are needed when traffic is heaviest to prevent congestion, more energy resources are necessary during peak demand times to ensure a steady flow of power.

Peak demand is the specific time when the collective electrical use of our members reaches its highest point. For WEC, peak demand typically occurs from 6-9 a.m. during the winter months. The highest coincidental peak during this period determines the cost WEC and other utilities pay for power.

Winter Peak Demand Statistics:

• 2023 through 2024: 138 MW
• 2023 through 2023: 144 MW
• 2021 through 2022: 111 MW
• 2020 through 2021: 108 MW
• 2019 through 2020: 104 MW

2024 Cost Breakdown:

• Demand: $21 million
• Energy: $16 million
• Distribution: $21 million

Winter Peak Hours:

• November 1 through February 28, from 6 a.m. to 9 a.m.

Continued price increases for essential grid components — like transformers, which have surged 400% since 2020 — are largely due to extended supply chain delays and the demand for renewable energy integration and grid modernization.

Peak Efficiency & Managing Costs

To address these challenges, WEC is adjusting our rates to encourage behaviors that reduce peak demand. Peak times are our costliest periods, and by promoting efficient energy use during these hours, we can directly cut our most significant expense.

As part of this effort, we are implementing an increased demand charge, while simultaneously reducing the regular kilowatt-hour energy rate. This means that members who effectively manage their energy use during peak hours could potentially see lower overall bills. The reduction in residential energy rates will take effect concurrently with the revised demand charge.

Residential Demand Charge

Each residential account incurs a $2.50 charge per kilowatt that the household contributes to the peak demand. This charge helps cover the costs of maintaining enough capacity to supply electricity reliably during high-demand periods. It also ensures fees are fairly assessed based on individual contributions to peak demand. Essentially, those who use more power during peak times pay more, reflecting their greater impact on our collective energy costs.