SMPA’s Demand Rates Continue to Confound
by Peter Shelton
Jan 16, 2012 | 1659 views | 0 0 comments | 10 10 recommendations | email to a friend | print
Tri County Confab on Peaks and Balance

RIDGWAY – Once again San Miguel Power Association, the electric supplier to much of San Miguel, Ouray and San Juan counties, with customers in the West End of Montrose County as well, found itself in public-relations hot water (or a high-voltage situation, if you like) on Monday at a quarterly work session in Ridgway attended by commissioners from all four counties.

The utility co-op has taken heat in recent months for its PR failures regarding the new Two-Way Automatic Communication System, or so-called “smart meters,” it is installing throughout its service area. Now SMPA General Manager Kevin Ritter and Manager of Member Services and Marketing Brad Zaporski found themselves defending the concept of demand metering, which has caught many SMPA customers by surprise.

Althought it shouldn’t be a surprise, Zaporski said during his power-point primer, as the co-op has done its best to inform customers about the concept, and its justification, and has not switched anyone from general service to demand rates without proper notice and discussion.

Many of the commissioners have heard complaints from constituents. Commissioners Heidi Albritton and Lynn Padgett of Ouray said they had multiple complaints of vastly increased power bills, and $500 surcharges, with little or no explanation coming from SMPA.

Ritter countered that there is no surcharge, that demand rate can actually be cheaper for some customers, and that customers are always given advice on how to get their use below the demand-rate threshold.

Still, both Ritter and Zaporski struggled to make simple the notion of energy use versus energy demand.

Zaporski likened energy use, which is measured in kilowatt hours (kWh), to the odometer on a car: it measures how much electricity (the miles) are used in a given period – a monthly billing cycle, for example. Demand, which is measured in kilowatts (kW – how much juice you are drawing right now), he equated with the car’s speedometer: how fast did you go while traveling those miles. In terms of SMPA’s costs, a steady-speed driver costs less to supply than does a driver with an occasional lead foot. Wholesale supplier Tri State charges SMPA more for peak power. Big spikes in demand cost SMPA more to supply, even when the miles driven over the month average out the same.

“We have to build our system to serve the peak demand,” Zaporski said. “We cannot dictate how much and when people use power.”

This awkward situation is called “cost causation,” and SMPA’s multiple rate structures are designed, Zaporski said, to balance what ratepayers pay, so that all members pay their fair share. Put simply: “If you cause costs, you should pay for it.”

In response to a question from San Miguel County Commissioner Art Goodtimes, Ritter said that yes, demand rates were implemented to address the kind of imbalance that occurs when a second-home owner, say, arrives for the New Year’s weekend. “He turns on all the lights, the TVs, turns up the heat, cranks up the hot tub,” etc. His average use for the month may be relatively low, if he’s not there for the rest of the billing period, but that big spike in load profile above the 20 kW threshold costs SMPA plenty.

“If we just charged for the average,” Zaporski said, if there was only one rate structure, “we’d have no way to recoup our peak costs,” other than to have the broad base of customers subsidize the high-demand users, and that would not be fair.

Joan Shapiro of Ridgway was one of the customers, she said, blindsided by demand-metering charges. (Shapiro has written a “Speaking Truth to Power” manifesto regarding the issue, which she distributed at the meeting.) She was told this summer by SMPA that her high monthly energy use made her a candidate for demand metering and a potential doubling of her electric bill.

“I’ve solved my problem,” she said, “by switching my heat to natural gas. So I don’t have a dog in this fight.” But she was adamant that inconsistencies and inadequacies remained, and voiced concern that demand rates would negatively impact businesses and others in this fragile economy.

Zaporski replied that SMPA now has a three-step notification program, which should mean that no one is surprised when they’re bumped up to demand rate. When a customer exceeds 4,000 kWh per month in general service use, SMPA will send an alerting letter; that’s step one, and SMPA will work with the customer to reduce power consumption, if that is the customer’s goal. Step two kicks in once that customer exceeds 5,000 kWh per month. At this point, SMPA will install a demand meter, to measure the spikes in demand. If the demand meter shows peaks in excess of 20 kW, then, by law, that customer will begin paying the demand rate. Measurements will still be taken, but the rate will apply for 12 months, even if the demand falls. In some cases, Zaporski emphasized again, the customer will actually save money on the demand rate.

Why does a member stay on the demand rate for 12 months minimum? Is the 15-minute rolling measurement period fair? These were two questions raised at the meeting. And what about renters, Padgett asked, and low-income people who are getting heating-bill help from LEAP, Colorado’s Low-Income Energy Assistance Program?

There were clearly more questions to be answered, and more educational work for SMPA to do. “I think it would have been lovely if you’d done this [education] a year ago,” concluded Goodtimes.

“But you’re doing an excellent job now,” he added.

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