Knowing the difference between energy demand and purchasing
You may not think you need to have an understanding of energy demand and purchasing, but do you ever look at your energy bill and wonder what it all means? If your answer to that question is “yes,” then you might be interested to learn how demand impacts your utility bill.
To start, it is important to understand how electricity is made and how it is delivered to your home.
Before REC can send electricity to homes, the electricity needs to be generated by a Generation and Transmission cooperative (G&T). REC purchases power from our G&T, Western Farmers Electric Cooperative. Once the electricity has been generated, it travels over high-voltage transmission lines to substations, where the voltage is reduced to a safer level. The electricity then travels over REC's distribution power lines and finds its way into the homes. So, while our members' pay their electric bill to us – your electric distribution cooperative – we don’t actually generate the electricity used. That is the job of the G&T.
We do help to determine how much electricity our members need to power their homes and businesses, and our members' play a big part in determining how much electricity the G&T needs to create in order to keep the lights on in our community. This is where the terms “consumption” and “demand” come in.
Consumption is measured in kilowatt hours (kWh). Demand is measured in kilowatts (kW). A lightbulb “consumes” a certain number of watts, let’s say 100 watts per hour. If that lightbulb stays on for 10 hours, it “demands” a certain number of kilowatts (in this case, 1 kW) from the generation station producing electricity. Now, if you turn on 10, 100-watt lightbulbs in your home for one hour, you are still consuming the same number of kW. However, you are placing a demand on the utility to have those kW available to you over the course of one hour, instead of ten. This requires the generation and transmission plant to produce more power in less time in order to meet your demand.
REC purchases kilowatt hours from the G&T based on the average demand of our members. Peak demand refers to the time of day when the demand for electricity is highest. This is typically during the evening when families return home from work or school, cook dinner and use appliances the most. Using electricity during this peak demand period often costs more to both REC and to our members.
Demand is the reason electricity bills fluctuate season to season and even year to year. Generating and distributing power can be a tricky and complicated business, but rest assured REC will always meet the necessary demand to provide safe, reliable and affordable electricity to our members.