Understanding Energy Demand
and Purchasing

August 2018

You may not think you need to understand how energy demand impacts 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 the amount of electricity being used at times of peak demand can impact your utility bill.

First, let’s review how electricity is made and delivered to your home. Before your co-op can send electricity to your home, that electricity needs to be generated, by a generation-and-transmission cooperative or other electricity-generating entity.

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 distribution power lines and finds its way into your home. So, while you pay your bill to us — your electric distribution cooperative — we don’t actually generate the electricity you use. That is the job of the generation-and-transmission cooperative or other electricity generating entity.

We do help to determine how much electricity our members need to power their homes and businesses, and you play a big part in determining how much electricity needs to be generated in order to keep the lights on in our community. That 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 10. This requires the generation-and-transmission plant to produce more power in less time in order to meet your demand.

Each distribution co-op purchases kilowatt-hours from the generator 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 your co-op and its members.

Demand is the reason your electricity bill fluctuates from season to season and even year to year. Generating and distributing power can be a tricky and complicated business, but rest assured Virginia’s electric cooperatives will always meet the necessary demand to provide safe, reliable and affordable electricity to your family.

Meghaan Evans writes on consumer and cooperative affairs for the National Rural Electric Cooperative Association, the Arlington, Virginia-based service arm of the nation’s 900-plus consumer-owned, not-for-profit electric cooperatives