Residential Demand Rates IT S TIME

Why Demand rates? Ensures each member pays their fair share.

Why Demand rates? Ensures each member pays their fair share. Howard Electric is not anti-solar.we are anti-subsidies. Helps to ease our poorer members subsidizing the wealthier members. Other examples of heavy peak setters: Instantaneous Water Heaters Electric Strip Heat Welders

Why time of day demand rates?

2000 Member 1 Solar Production vs. AECI's Peak 10 1800 9 1600 8 1400 7 1200 6 1000 5 800 4 600 3 400 2 200 1 0 1 a.m. 2 a.m. 3 a.m. 4 a.m. 5 a.m. 6 a.m. 7 a.m. 8 a.m. 9 a.m. 10 a.m. 11 a.m. AECI MW/AC 12 p.m. 1 p.m. 2 p.m. 3 p.m. 4 p.m. 5 p.m. 6 p.m. 7 p.m. 8 p.m. 9 p.m. 10 p.m. Member 1 KW/DC 11 p.m. 12 a.m. 0

2000 Member 2 Solar Peak vs. AECI's Peak 10 1800 9 1600 8 1400 7 1200 6 1000 5 800 4 600 3 400 2 200 1 0 1 a.m. 2 a.m. 3 a.m. 4 a.m. 5 a.m. 6 a.m. 7 a.m. 8 a.m. 9 a.m. 10 a.m. 11 a.m. 12 p.m. 1 p.m. 2 p.m. 3 p.m. 4 p.m. 5 p.m. 6 p.m. 7 p.m. 8 p.m. 9 p.m. 10 p.m. 11 p.m. 12 a.m. 0 AECI MW/AC Member 2 KW/DC

Why not charge a higher KWH charge during peak rather than a KW demand charge? Demand Charge Higher KWH Charge

Time of Day Rates Why Not a Higher KWH Charge During Peak Instead of KW Demand Rates? A home with an instantaneous water heater, electric strip heat, and an outdoor wood stove. KW (Demand) 4-5 p.m. 5-6 p.m. 6-7 p.m. 7-8 p.m. 20 KW 2 KW 2 KW 2 KW KWH 10 2 2 2 A home with a tank water heater and ground source heat pump. Totals 20 KW 16 KWHs KW (Demand) 4-5 p.m. 5-6 p.m. 6-7 p.m. 7-8 p.m. 5 KW 5 KW 5 KW 5 KW KWH 4 4 4 4 Totals 5 KW 16 KWHs

Time of Day Rates Why Not a Higher KWH Charge During Peak Instead of KW Demand Rates? A home with an instantaneous water heater, electric strip heat, and an outdoor wood stove. 4-5 p.m. 5-6 p.m. 6-7 p.m. 7-8 p.m. Totals Costs KW (Demand) 20 KW 2 KW 2 KW 2 KW KWH 10 2 2 2 A home with a tank water heater and ground source heat pump. KW (Demand) 4-5 p.m. 5-6 p.m. 6-7 p.m. 7-8 p.m. 5 KW 5 KW 5 KW 5 KW KWH 4 4 4 4 20 KW 16 KWHs Totals 5 KW 16 KWHs $1,168 @ 20 Costs $1,168 @ 20

Time of Day Rates Why Not a Higher KWH Charge During Peak Instead of KW Demand Rates? A home with an instantaneous water heater, electric strip heat, and an outdoor wood stove. KW (Demand) 4-5 p.m. 5-6 p.m. 6-7 p.m. 7-8 p.m. 20 KW 2 KW 2 KW 2 KW KWH 10 2 2 2 A home with a tank water heater and ground source heat pump. KW (Demand) 4-5 p.m. 5-6 p.m. 6-7 p.m. 7-8 p.m. 5 KW 5 KW 5 KW 5 KW KWH 4 4 4 4 Totals 20 KW 16 KWHs Totals 5 KW 16 KWHs Costs $2,318 co-op cost $1,168 @ 20 20KW x $9.66 x 12 months = $2,318 Costs $ 580 co-op cost $1,168 @ 20 5KW x $9.66 x 12 months = $580

Time of Day Rates Why Not a Higher KWH Charge During Peak Instead of KW Demand Rates? A home with an instantaneous water heater, electric strip heat, and an outdoor wood stove. KW (Demand) 4-5 p.m. 5-6 p.m. 6-7 p.m. 7-8 p.m. 20 KW 2 KW 2 KW 2 KW KWH 10 2 2 2 A home with a tank water heater and ground source heat pump. KW (Demand) 4-5 p.m. 5-6 p.m. 6-7 p.m. 7-8 p.m. 5 KW 5 KW 5 KW 5 KW KWH 4 4 4 4 Totals 20 KW 16 KWHs Costs $2,318 co-op cost $1,168 @ 20 20KW x $9.66 x 12 months = $2,318 Totals Costs 5 KW $ 580 co-op cost 16 KWHs $1,168 @ 20 5KW x $9.66 x 12 months = $580

Why not charge a higher availability charge rather than a KW demand charge? Higher Availability Charge Demand Charge

WHY NOT CHARGE A HIGHER AVAILABILITY CHARGE. Availability charges are only a piece of the puzzle. Higher availability charges can punish members who don t contribute to setting a peak. High availability charges give members no options. Demand charges allow all members, low income included, an option to reduce their bill. Availability Charge Demand Charge KWH Charge

What about opt-in demand rates?

What about opt-in demand rates? Opt-In rates are counterproductive Allow solar members an out on paying their fair share

WON T ASSOCIATED JUST RAISE RATES IF EVERYONE GOES TO DEMAND RATES?

3 Possible Options for ASSOCIATED 1) Raise Demand Charges 2) Economic Development which produces load growth. 3) Sell peak power into the market

Howard Electric s residential demand resets every month. Ratcheted demand once a household sets a high peak they keep it for 11 months unless it goes higher. How are co-ops billed for demand?

Do demand rates cause you to sell less KWH s?

Do demand rates cause you to sell less KWH s? Things that are shrinking cooperative KWH sales: AECI s Take Control & Save program Energy efficient appliances

Do demand rates cause you to sell less KWH s? Things that are shrinking cooperative KWH sales: AECI s Take Control & Save program Energy efficient appliances Additional insulation But, demand rates don t shrink KWH s, they move KWHs away from peak. If you dry your clothes in off-peak hours, you re still using the KWHs to dry your clothes.

Why Phase in Demand Rates? Allows members time: Learn what demand is Adjust to new charge on bill Decide if they want to shave peak & how to do it

What products are available to help members shave peak? Water heater timers Programmable thermostats The cheapest and most effective options: Shift usage to outside of these hours. Stagger usage of items during peak hours washer, dryer, hot water heater, dish washer, etc

What other cooperatives are using demand rates? Butler Electric Co-op - El Dorado, Kansas $5 per KW Mid-Carolina Electric Co-op Lexington, South Carolina $12 per KW Howard Electric Cooperative Fayette, Missouri 75 per KW in 2016 increasing to $5 by 2018

The Bottom Line For 2015 the average consumer saved: $138 and $825 over the last 6 years That means the average residential customer, who conserved during our 3 hour peaking window, received approximately 1 month free each year compared to what their bill would have been under the old rate format. The Cooperative saved a similar amount on its Power Bill That s what made this all work

Customer Service Question #3 - Working to Keep Rates Low Poor Fair Good 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2004 1% 2% 3% 1% 4% 5% 8% 9% 7% 9% 7% 14% 15% 23% 25% 22% 27% 27% 33% 32% 38% 42% 69% 58% 62% 67% 75% 69% 57% 72% 51% 85% 83% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2015 Final Customer Survey Results

IOU s - 72 2009-82 2010-80 2011-82 2012-82 2013-84 2014-93 2015-93 2016-94

WHAT PROCESS DID HOWARD ELECTRIC USE TO PUT IN DEMAND RATES? Cost of Service Study Surveyed our members

IF HOWARD ELECTRIC DESIGNED RATES THAT WOULD ALLOW YOU TO CONTROL YOUR RISING ELECTRIC COSTS MORE BY CHANGING THE TIME YOU USE CERTAIN APPLIANCES, HOW LIKELY WOULD YOU BE WILLING TO PARTICIPATE IN THIS PROGRAM, IF IT REDUCED YOUR ELECTRIC BILL? Not interested at all, 12% Don't Know, 1% Definitely Interested, 27% Not very interested, 13% Probably Interested, 47%

WHAT PROCESS DID HOWARD ELECTRIC USE TO PUT IN DEMAND RATES? Cost of Service Study Surveyed our members Employee meetings

WHAT PROCESS DID HOWARD ELECTRIC USE TO PUT IN DEMAND RATES? Cost of Service Study Surveyed our members Employee meetings Backpage communication Webpage / Facebook communication

Howard Electric Demands & Bill Copies

Grain Bins & Demand Rates Grain Bin Capacity KW Demand $ Increase Value of Grain @ $3.00 # of Bushels @ $3.00 to Cover Demand Increase 3,000 6.08 -$0.81 $9,000 15,000 10.6 $7.10 $45,000 2.36 125,000 75.52 $120.71 $375,000 40.24 215,000 81.08 $130.44 $645,000 43.48

Demands During Peak Time for Howard Electric Members January 2015 Demand July 2015 Demand October 2015 Demand In researching the demand on accounts, there are no home only accounts with over a 15 KW demand.

At $2.50 per KW, a Demand Difference of 12.608 = to a cost difference of $31.52 At $5.00 per KW, a Demand Difference of 12.608 = to a cost difference of $63.04

At $2.50 per KW, a Demand Difference of 17.088 = to a cost difference of $42.72 At $5.00 per KW, a Demand Difference of 17.088 = to a cost difference of $85.44

Questions? Richard Fowler, CEO Howard Electric Co-op rfowler@howardelectric.com 660-248-3311