Ozark Electric Cooperative members caught off guard by new demand fee

Since the start of April, members of the Ozark Electric Cooperative (OEC) saw a new charge on their monthly bills — a demand charge. This charge is based on the maximum drawn power averaged from a 15-minute block in a month, meaning the highest amount of power that a household uses within 15 minutes of the month is charged on top of the total kilowatts per hour rate that is traditionally charged.

The OEC includes 27,000 meters across nine counties in Southwest Missouri, including Greene, Christian and Stone counties. For many members, like Lisa Roller of Republic, the demand charge came as a surprise.

OEC General Manager Patrick Oehlschlager said after the board of directors decided to institute a demand fee, information about the upcoming charge has been communicated in the Rural Missouri magazine and on OEC's social media channels since January.

How does demand work?

For OEC, customer meters measure the power used in kilowatts during a rolling 15 minutes. Residential and Small Commercial members are charged $3.75 per kW on their bill based on that month's maximum demand. Each month, the demand recording starts anew.

"We do it in the 15-minute blocks, because it's the most accurate way to track what each person is doing at their home and ask them to pay for their fair share of what that is," Oehlschlager said.

In addition to the demand charge, OEC members pay a $35 facilities charge and an 8.9 cents per kilowatt hour energy usage charge. At the same time that demand was added, the usage charge was lowered from 9.7 cents to 8.9 cents per kWh.

Demand charges are not uncommon, though other cooperatives have approached them differently. For example, Osage Valley Electric Cooperative uses a "Time of Use" demand system where demand is recorded at 6-9 a.m. and 4-8 p.m. with the highest use at those times charged as the demand. Oehlschlager said OEC decided not to go with this approach because of how it can negatively target the lifestyles of working people who have to use the most electricity at those times. He also noted that the "Time of Use" approach also often brings pricing points higher than the $3.75/kW that the OEC is offering for their demand. Osage Valley's demand rate is $5.60/kW.

Why was the demand charge added to bills?

Oehlschlager said the demand charge was added due to the increasing cost for OEC to buy power from its power provider. For the cooperative, a demand charge has been a part of the electricity it purchases for decades, he said, and this was a way to recoup some of those costs. Even with the collection of the demand fees, he said the demand charges collected from members do not completely cover the demand bill from the power provider. Unlike member demand that resets every month, demand for the cooperative as a whole is averaged for the entire year and set to be the same cost every month.

While before, without the addition of the demand charge, all members paid equally regardless of whether they were adding to the overall peak demand that determined OEC's costs or not, now, Oehlschlager said the demand system allows the burden of demand to be distributed fairly — "decoupling" those who spend more versus those who spend less.

"Each member is going to pay for what they uniquely asked for in the delivery of electricity needs to their home, and it provides freedom and decouples folks that in the past, we had to just lump all together," he said. "kW is never going to be zero. If you're using energy, there is a demand component to what we have to deliver to those members, so it will always be there. We encourage folks to get to an optimal kW demand number for their home and continue to try to monitor their kilowatt hour consumption."

In order to lower the demand, Oehlschlager recommends staggering the use of appliances throughout the day. He said the adjustment will take time as it requires members to reconsider their day-to-day routine.

The long-term goal, Oehlschlager said, is to communally lower the demand for the cooperative as a whole. That way, OEC does not have to pay as much to its power provider in their own demand fees because the grid does not experience such a substantial energy request at the same time.

"All members of Ozark Electric will benefit if we collectively can curb our appetite for an overall system demand that we end up paying for," Oehlschlager said.

Members feel the effects, are left confused

Roller, who lives right outside of Republic, was blindsided by the addition of the demand fee on her bill. Roller's household includes just her and her husband, both of whom are retired. Roller's husband uses a CPAP machine, which adds to the couple's use of electricity.

She said it's unfair to make members "uncomfortable in our own homes." The Rollers remain conservative with the use of electric appliances as much as they can — washing dishes by hand, opening the windows when the weather is nice, washing clothes just once a week and letting them air dry. Yet, their bill increased from $98 to $141 as the demand fee rolled out. The impacts higher bills can have surmounted with rising costs of other necessities like groceries amid high inflation.

Wayne Morris of Springtown, Texas, had just purchased his property in Everton when the demand charge went into effect. Although he said he has not yet moved into the house and therefore does not utilize the electricity at the house much, Morris noted that he was still paying a demand charge, which is higher than the actual usage fee.

Morris plans to build another home on the property to accommodate his mother. With both houses under the demand system, he said it will be impossible to avoid running multiple appliances at the same time.

"We can't live that kind of a schedule where okay, we can only take showers if we're not doing anything else. We can only cook dinner if I use one burner at a time. I can't use my burner and my oven at the same time because that pushes the current up," he said. "It's not something that you can really manage like you could if it was just on consumption. See I can control my consumption and I can cut down on my energy usage."

A "time of use" approach to demand in Morris's eyes can be easier to schedule around because then those times are set rather than considering use of appliances throughout the entire day.

"This particular scheme in here it's not an incentive to change behavior, it's a penalty for change of behavior," Morris said.

Particular concern has risen for those who may be on a fixed income or receiving Social Security benefits. Oehlschlager said that OEC partners with other entities that offer energy assistance programs and offer various options like pre-pay, levelized billing and payment plans to help members who may be struggling.

More: Bolivar water rates could more than double next year. Here's what to know

Future of demand

Members unhappy with demand fee and the way it was communicated are hoping to make a change. The co-op's annual meeting, where board members are elected, is 10:30 a.m. to 1 p.m. Friday at Mount Vernon High School, with voting allowed in person and via drive-thru. This year, all three board seats up for election include challengers running against incumbents, with the demand charge a significant topic in those races.

Oehlschlager said just like any rate increase, the demand charge will be reviewed by the board each year and will ultimately be up to the elected representatives to decide on any changes.

Marta Mieze covers local government at the News-Leader. Have feedback, tips or story ideas? Contact her at mmieze@news-leader.com.

This article originally appeared on Springfield News-Leader: Ozark Electric Cooperative members caught off guard by new demand fee