Flathead Electric opts for peak-hour pricing structure

April 11, 2019

Flathead Electric Cooperative’s Board of Trustees recently approved a new residential rate structure to reflect changes in how wholesale power provider Bonneville Power Administration charges the cooperative.

Because Flathead Electric now pays a premium for power used during peak hours, the trustees have approved a demand charge for the busiest times to cover those costs.

They aim to keep the new rate structure revenue-neutral, with a reduction in the co-op’s energy charge, and also agreed there would be no increases on any of the rate classes.

“Over the last few years, we have had to make small incremental rate increases as our wholesale rates have increased. We’ve opted not to do that this year,” Flathead Electric Public Relations Officer Wendy Ostrom-Price said.

The new rate structure will be reflected on members’ June bills for May electricity usage. Flathead Electric estimates most members’ residential bills will decrease or increase by less than 2 percent.

“Most people won’t even notice a change,” Ostrom-Price said. “The base fee will not change, because we’re putting a demand rate in there. We’re not charging more, just restructuring how costs are collected.”

By shifting energy usage to off-peak hours, and avoiding the use of large appliances during peak hours, customers can reduce demand and decrease bills, she said.

“It’s more fair for us to put that charge on the cost-causers, when people are demanding that power,” Ostrom-Price said. “But by the same token, it’s an opportunity for people to change their power use, how and when they use it. It gives them more control.”

Ostrom said peak-hour pricing is a growing trend among not-for-profit electric cooperatives and that Flathead Electric’s elected trustees took member feedback and extensive staff research into account when creating the new rate structure.

“They don’t make these decisions lightly,” Ostrom-Price said. “Our bottom line is to keep rates affordable and reliable and equitable.”

The new demand charge of 26 cents per kilowatt is based on the highest demand measured during the co-op’s peak hours in each member’s billing cycle. Peak hours occur Monday through Friday from 7 to 10 a.m. and 5 to 8 p.m., not including weekends or major federal holidays. Respectively, the cooperative’s energy charge (the amount billed for each kilowatt hour) will decrease by 1.2 percent for the first 600 kilowatt hours, 1.9 percent for the next 601 to 3,500 kilowatt hours, and 3.1 percent for 3,501 kilowatt hours and above.

For more information or to use Flathead Electric’s residential-rate calculator to see impacts to electric bills, visit www.flatheadelectric.com/demand.

Reporter Heidi Gaiser may be reached at 758-4438 or hgaiser@dailyinterlake.com.