As a consumer-owned not-for-profit utility, Benton PUD exists solely to operate in the best interest of our customers. And we know affordable, reliable, and environmentally responsible electricity is critical to your health, safety, and well-being.

In addition to ‘keeping the lights on’, it is our job to be forward thinking and to anticipate and plan for increases to our costs, which are your costs. With some of the most aggressive clean energy laws  in the nation, Washington state’s unprecedented regulation of all electric utilities is beginning to put a premium on the cost of supplying electricity when customer demand is the highest.  

We know energy policies can be confusing and politically polarizing, but the simple fact is that electricity is a just-in-time service where the unforgiving laws of power grid physics requires the supply of electricity to precisely match demand on a minute-by-minute basis. While we are just beginning to experience increasing cost pressure during high customer demand periods, we anticipate this pressure will grow over time as utilities are forced to rapidly replace controllable, dependable, and affordable technologies with intermittent and variable wind and solar to satisfy Washington state’s 100% non-greenhouse-gas emitting electricity requirements.  

While it is true, with the help of generous tax subsidies, the costs for individual wind and solar farms have gone down in recent years, their inability to produce electricity in a controllable pattern matching customer demand comes at a high net cost due to the need to overbuild these technologies. Overbuilding means you must pay for multiple wind and solar farms to increase the probability the total actual generated electricity derived from the sun and wind will add up to enough to meet customer demand across a wide range of weather and temperature conditions. But wind and solar are far from a perfect replacement of dependable technologies which means backup technologies must be in place and paid for, even if they only run part of the time. While energy storage technologies like batteries are beginning to be installed, they have serious operational limits. And no matter what form it comes in, energy storage will add significant costs to electricity due to the very large scale and redundancy needed to make a difference in power grid reliability.

While Washington state’s 100% non-emitting electricity generation requirement by 2045 may seem like a far-off date, the effects of the requirement’s post 2025 prohibition on coal-fired baseload generation and punitive financial penalties for using natural gas generation beginning in 2030 are impacting electric utilities like Benton PUD today. Additionally, these laws have already added significant costs to the wholesale electricity market during high demand periods by adding a carbon tax to the cost of controllable natural-gas-fired generation needed currently for balancing electricity supply and demand on the hottest and coldest days of the year.

The bottom line is the costs of backup technologies, plus the costs of wind and solar overbuilds and the batteries they need to overcome their inherent operational deficiencies will increase the cost for utilities to maintain power grid reliability. And these increased utility costs are well established, particularly in states like California where some residential retail electricity prices are more than four times higher than what Benton PUD’s customers currently pay.

Fortunately, Benton PUD’s over 90% non-emitting, affordable and reliable hydro and nuclear wholesale power supply portfolio is helping keep our prices in check for now. But hydroelectric dams can only do so much. And while they too are a controllable source of electricity, they also represent variable generating technology with electricity output dependent on available water in the rivers which can vary significantly from year-to-year and month-to-month. Additionally, in attempts to improve salmon runs, the generating capability of hydroelectric dams has been reduced significantly over the years by routing unprecedented amounts of water through spillways rather than through turbine-generators. And calls for even more spill continue to be a part of ongoing litigation related to dam operations which could further diminish the amount and flexibility of hydropower in the future.   

So how is Benton PUD responding to the increasing cost of grid reliability? First, we started by requesting a change to our wholesale electricity supply contract which was approved and implemented by the Bonneville Power Administration (BPA) October 1, 2023. This contract change gets Benton PUD out of the business of transacting directly in wholesale electricity markets which are becoming more volatile and uncertain in terms of price and availability of dependable generating supplies. Second, we are implementing changes to our rate design to begin to align rates with how our costs are incurred. Last year, a demand charge was implemented for Residential customers that set the framework for a more fair and appropriate collection of revenues that better aligns with Benton PUD’s costs. Later this year, we are implementing a demand charge for Small General Service customers and making some small changes to how demand is billed for Medium and Large General Service customers. Demand charges have been in place with Benton PUD’s larger commercial, industrial, and irrigation customers for most of our 77-year history so it is not a new concept. And while some costs of regional power grid generation and transmission has been included in longstanding demand charges, historically the biggest cost drivers were utility investments in equipment and wires required to avoid overloading local community electric delivery systems during high customer usage periods.   

Our goal is to keep rates as low as possible and we want to work with our customers to achieve that. In the past, due mostly to metering equipment limitations, rate making contained inherent inequities among customers by including the majority of utility fixed costs and grid reliability costs in the volumetric energy charge, especially for residential and smaller commercial customers. Through investments we have made in Advanced Metering Infrastructure, we are now in a position to improve our General Service retail rate design to better align with how our costs are incurred while also providing a small price signal that rewards customers who are able to reduce the maximum rate at which they are using electricity throughout each month. Starting in November, Small General Service customer bills (that will include usage from October) will incorporate a demand charge of $1/kilowatt. Like long established demand charges for larger commercial, industrial, and irrigation customers, the new demand charge will be calculated one time each monthly billing cycle and will be based on a customer’s highest average usage during all thirty-minute periods of the cycle. To make this change in a manner that does not result in overall increased revenues for Benton PUD, our Small General Service energy rate which represents the majority of a customer’s bill will be decreased from 6.30¢/kWh to 5.92¢/kWh. The change will charge customers that place a higher demand on Benton PUD’s electricity delivery systems a premium and provide an opportunity for customers to lower their bill by decreasing their maximum demand.

Medium and Large General Service customer rates currently have demand charges, however there is no charge for the first 50 kilowatts of demand. Starting with bills issued in November (that will include usage from October), these customer bills will include a demand charge of $1/kilowatt for the first 50 kilowatts of demand. Demand in excess of the first 50 kilowatts will be billed using the existing demand rates. These changes are also being implemented in a revenue neutral manner by decreasing the energy charge from 5.48¢/kWh to 5.33¢/kWh for Medium General Service, and from 4.71¢/kWh to 4.69¢/kWh for Large General Service.  

While this may sound complicated, it really is as simple as managing how much electrical equipment is being used at the same time. Every customer is different and has a pattern of usage which may or may not result in significant changes to their monthly bill with the updated rates. For customers with flexibility in how they use electrically powered equipment, it may be worth it for them to consider shifting the time of day during which they are using equipment with the highest rates of electricity consumption. Benton PUD provides an online portal, SmartHub, where you can view and monitor your usage; identify trends of when your maximum demand is occurring; and determine how you may modify future electricity usage patterns if desired.   

For the majority of General-Service customers, the new rate structure will result in a change to their monthly bill of 2.5% or less on average, either as a reduction or an increase. And it establishes the framework for a more fair and appropriate collection of revenues that better aligns with Benton PUD’s costs. The bill Benton PUD receives each month from BPA includes a demand charge which means that if customers reduce their demand, our wholesale costs will go down, which takes pressure off increasing retail rates. Benton PUD has a longstanding tradition of forward thinking. Looking ahead, the implementation of these demand charges is an incremental and small impact change to put in place, so our customers have as much control over their power bill as possible on our way to meeting the State’s requirement to be 100% carbon free by 2045.  

Yes, General Service rates are changing. A demand charge will be implemented later this year for Small General Service customers and small changes will be made to how demand is billed for Medium and Large General customers. Starting in November, Small General Service customer bills (that will include usage from October) will incorporate a demand charge of $1/kilowatt. To make this change in a manner that does not result in overall increased revenues for Benton PUD, the Small General Service energy rate will be decreased from 6.30¢/kWh to 5.92¢/kWh.
 
Medium and Large General Service customer rates currently have demand charges, however there is no charge for the first 50 kilowatts of demand. Starting with bills issued in November (that will include usage from October), these customer bills will include a demand charge of $1/kilowatt for the first 50 kilowatts of demand. Demand in excess of the first 50 kilowatts will be billed using the existing demand rates. These changes are also being implemented in a revenue neutral manner by decreasing the energy charge from 5.48¢/kWh to 5.33¢/kWh for Medium General Service, and from 4.71¢/kWh to 4.69¢/kWh for Large General Service.

Like long established demand charges for larger commercial, industrial, and irrigation customers, the new demand charge will be calculated one time each monthly billing cycle and will be based on a customer’s highest average usage during all thirty-minute periods of the cycle. The demand read is a rolling thirty-minute interval, based on five-minute subintervals, in which the consumption of energy is the greatest during the billing period (see graphic below). Since the demand read is based on a thirty-minute measurement period, this represents average kilowatts (kW) of demand required for that thirty-minutes (rounded to the nearest whole number). Only one demand read during a billing period will be used to calculate the monthly demand charge. For example, a customer has a billing period from November 8 through December 8 and their highest demand read was 9 kW. The next bill they receive will include a demand charge of $9.

Demand (measured in kilowatts or kW) measures the rate at which electricity is consumed at a specific point in time while Energy (measured in kilowatt-hours or kWh) is the total amount of power you consume over a period of time.
 
For example, the energy needed to power one 100-watt light bulb for 10 hours is the same as the energy needed to power 10 100-watt light bulbs for one hour. However, more resources are needed to supply electricity to all 10 light bulbs at the same time.

As more equipment runs simultaneously, your demand for power increases.

No, this was not a rate increase. This was a change in the rate structure and is designed to be revenue neutral which does not result in additional revenue for Benton PUD. However, individual customers may see an increase or decrease in their bills based on their demand and energy consumption. See below for information on how you can lower your demand, which may lead to lower bills.

The demand charge billing component went into effect for usage in billing periods starting October 1, 2024 and was reflected on bills issued in November 2024. 

Yes, small general service customers with net metering will have a demand charge when the new rate structure goes into effect. It will be calculated one time each monthly billing cycle and will be based on the highest average usage during all thirty-minute periods of the cycle. (the portion of customer usage in excess of what is being generated during that thirty-minutes). 

The demand charge is not a new concept and has been in place with Benton PUD’s commercial (medium and large general service), industrial, and large irrigation customers for most of our 77-year history. In October 2023, the demand charge was added to residential customers as well. While some costs of regional power grid generation and transmission has been included in longstanding demand charges, historically the biggest cost drivers were utility investments in equipment and wires required to avoid overloading local community electric delivery systems during high customer usage periods. Now aggressive clean energy laws are beginning to put a premium on the cost of supplying electricity during the hours of the day when customer demand is highest. 
 
Benton PUD performs a Cost of Service Analysis study (COSA) annually that provides what level each rate component should be set at. A COSA is a standard tool that employs industry accepted methodologies to ensure fair allocation of costs and provides a basis for rate design. The COSA calculates what the daily system charge, demand charge, and energy rate for all rate classes should be, including small general service.  Historically, small general service meters did not measure a demand read. As a result, the demand charge has been embedded in the energy charge, which is common in the utility industry. Through the installation of Advanced Metering Infrastructure (AMI), all meters now provide a demand reading which makes a demand charge for all metered services possible. 
 
The results of the COSA study show 54% of the costs to serve small general service customers are fixed for Benton PUD, and 46% are variable. However, historical small general service rate design has 14% of revenue collected through a fixed charge (daily system charge) and 86% collected through a variable charge (energy rate).
 
The COSA calculates what the rates should be to align how customers are billed with the nature of costs for the utility. For example, the energy rate should align with the cost of electricity received from BPA that is generated largely with hydro power as well as nuclear power. The daily system charge and demand charge are rates that align more closely with utility fixed costs such as peak capacity backup capabilities, transmission lines, substations, distribution lines and transformers, and customer support services. For small general service customers, the COSA study shows the energy rate should be decreased, while a demand charge should be added and the daily system charge (base charge) should be increased.
 
Most utilities have similar results with COSA studies, and many have opted to raise the base charge to a level of $40-$60 per month, which means every customer pays a higher monthly fixed charge regardless of how they use electricity. Instead of raising the base charge to the full COSA amount of $39, the implementation of $1.00 per KW demand charge begins to provide for the recovery of fixed costs, but in a manner that is proportional to a customer’s highest usage during the billing period. The initial demand rate will be set at $1.00/kW with a corresponding reduction to the energy rate and may be gradually further unbundled in future years. 
 
We are implementing a change to our small general service rate design to better align rates with how our costs are incurred while also providing a small price signal that rewards customers who are able to reduce the maximum rate at which they are using electricity throughout the month. In addition to ‘keeping the lights on,’ it is our job to be forward-thinking and to anticipate and plan for increases to our costs, which are your costs. With some of the most aggressive clean energy laws and regulations in the nation, Washington state’s unprecedented regulation of electric utilities is beginning to put a premium on the cost of supplying electricity. 
 
We know energy policies can be confusing and politically polarizing, but the simple matter is that electricity is a just-in-time service where the unforgiving laws of power grid physics requires supply of electricity to precisely match demand on a minute-by-minute basis. While we are just beginning to experience increasing cost pressure during high customer demand periods, we anticipate this pressure will grow over time as utilities are forced to rapidly replace controllable, dependable, and affordable technologies with intermittent and variable wind and solar to satisfy Washington state’s 100% non-greenhouse-gas emitting electricity requirements. 

Benton PUD is not the first electric utility to implement a rate structure with a demand charge for small general service customers. Many utilities in the nation have this type of rate structure including several in the Northwest.

Bill examples are for visual representation purposes only. Your demand readings and usage may differ.

The impact of separating out the demand charge from the energy charge will vary from customer to customer. Some customers will see almost no changes, some will see an increase in their bill, while others will see a decrease. This will all depend on their demand and energy consumption, or in other words, how much energy they use each month, and their usage pattern will affect their bill amount. The impact can also fluctuate from month to month based on these factors.

The demand charge is calculated one time each monthly billing cycle and will be based on a customer’s highest average usage during all thirty-minute periods of the cycle. While this may sound complicated, it really is as simple as managing how much electrical equipment is being used at the same time. Every customer is different and has a pattern of usage which may or may not result in significant changes to their monthly bill with the updated rates. For customers with flexibility in how they use electrically powered equipment, it may be worth it for them to consider shifting the time of day during which they are using equipment with the highest rates of electricity consumption. Spreading out activities that require a lot of energy throughout the day instead of doing them all at once will help reduce your peak demand, which will lower your demand charge on your electric bill.

SmartHub is an online portal that allows you to manage your account, make payments, track usage, sign up for alerts and notifications, and so much more! If you don’t have SmartHub yet, make sure to sign-up now. Login to SmartHub to view and monitor your usage throughout the billing period; identify trends of when your maximum demand is occurring; and determine how may modify future electricity usage patterns if desired. However, SmartHub’s usage graphs have limitations on how much detail can be displayed (either hourly interval data or fifteen-minute interval data depending on type of meter installed).

Since the demand read is a rolling thirty-minute read based on five-minute subintervals, and SmartHub’s usage graphs are either hourly interval data or fifteen-minute interval data, you will not be able to match the demand read on the bill to the usage graph. SmartHub gives you the option to view your usage either Monthly, Daily, or Interval (which would be hourly or fifteen-minute intervals depending on the type of meter installed). The Usage Type field allows you to select what to view (either usage (kWh) only, Demand (kW) only, or both (kWh and kW). By looking at Interval data with both kWh and kW, you will be able to identify time periods of heavy usage, which should coordinate with the demand read.

There may be steps customers can take to lower their monthly energy costs. With the helpful tools and resources that Benton PUD offers, using energy wisely is easier than you think. You can find Energy Saving Tips for Your Business on our website or contact us at 509-582-1234 or conservation@bentonpud.org to request an energy audit to see if there are ways to operate equipment more efficiently.

For Pay As You Go participants, the demand charge is calculated by using the highest eligible demand reading from the past 30 days and prorating that amount to charge daily instead of monthly.
 
For example, if the highest demand reading from the past 30 days is 9 kW, then we divide the $9.00 charge ($1 per kW) by 30 (days in the month) to get a daily demand billing of $0.30 added to the daily usage charges.

Each charge on the electric bill covers different costs associated with providing electrical service to the customer.
 
Energy Charge – A variable charge to cover the cost of energy used in the billing period, measured in kilowatt hours (kWh). It is intended to cover the costs of purchasing power from our wholesale power and transmission provider.
 
Daily System Charge – A flat fee to cover the fixed costs of operating the utility. Examples include the office building, billing, metering systems and equipment, office personnel, taxes, and debt service.
 
Demand Charge – A variable charge based on the highest rate of electric use during a rolling thirty-minute usage period during the billing period, measured in kilowatts (kW). The demand charge covers the costs of having adequate power supply capacity as well as utility investments in equipment and wires required to avoid overloading local community electric delivery systems during high customer usage periods.