4 Ways Demand Pricing Will Change How You Use Electricity

In June 2016, APS submitted a new rate proposal to the Arizona Corporate Commission that, if approved, will move all but 200,000 customers to a demand-based rate plan as early as July 2017*. Under this new plan, customers would continue to pay fees for their total electricity usage (though at lower kWh rates). Still, they would also be assessed demand fees based on their highest single hour of energy consumption during on-peak hours.

Understanding how demand fees work and assessing their potential impact on your monthly bill can take time and effort. To help, here are four ways demand pricing differs and what it could mean for how you and your family use electricity.

1. Demand fees are assessed during on-peak hours only: If the ACC approves APS’s request, new on-peak hours will be from 3 - 8 PM weekdays (currently Noon – 7 PM weekdays). These new on-peak hours just so happen to extend later into the evening when solar panels are less effective and when you’re most likely to require the most electricity (early evenings after work). As such, paying close attention to your energy use and engaging in real conservation activities will be essential.

2. Demand fees are based on your highest energy usage within a narrow window: APS proposes a 60-minute window, while SRP solar customers currently have a 30-minute window. This means that the best method for avoiding high demand fees on your bill is to become familiar with the “energy footprint” of all your big appliances. For example, electric clothes dryers require the most electricity, followed by AC units and water heaters. When you get home from work, spooling up all three will create a peak in your demand that will surely cost you money.  

3. During each on-peak hour, every appliance you turn on will increase your demand: The best way to prevent high demand fees is to avoid powering up too many high energy appliances during on-peak hours. If you must run large appliances, such as multiple AC units, avoid turning them on simultaneously and instead stagger their use to help keep costly demand peaks to a minimum. Smart home automation devices can also. For example, our solar with demand management technology automatically staggers large energy loads while utilizing solar to pad against demand.

Learn how Jenn in Chandler used our solar with demand management technology to drop her temperature by 5 degrees and her bill by 60%!

4. Your entire month of on-peak usage is reviewed, and a demand fee is assessed to the highest-use window. For SRP, this window is 30 minutes, while APS requests a 60-minute window. This means you must pay close attention to your hourly usage to keep the demand fee to a minimum. For example, if you accidentally turn on two or three large appliances simultaneously between 4 and 5 PM yet are careful the rest of the month, you’ve already created a demand peak that can result in a sizable fee.

Saving money with a demand-based rate plan requires understanding your electrical loads and constant attention to your hourly on-peak usage. The good news is that APS has promised that any customer who signs a residential solar contract on or before July 17, 2017, will remain on the current non-demand rate plans for 20 years.

Here are samples of actual grandfathering letters:

• Current Customer Solar Letter
• Future Customer Solar Letter

So, while there are ways to make solar compelling even with a demand-based rate plan (read how Dr. Troy did it), if you’re an APS customer considering solar, you’d be well served to act now and avoid the extra headache altogether.