Demand rates send price signals that encourage customers to reduce peak usage

September 27, 2016

APS Director of State Affairs and Compliance Greg Bernosky deftly explains the widespread benefits of demand rates in a new article from energy trade outlet Utility Dive

The article by Dr. Herman Trabish provides an extensive look at our proposal for demand rates as part of the 2016 rate review. In a recent interview with Trabish, Bernosky explained why demand charges are an effective way to manage peak demand.

“If we have a price signal that gets customers to scale back their energy use during our peak demand period between 3 p.m. to 8 p.m. on weekdays, we can spend less on infrastructure and fuel costs,” Bernosky said. “We have to provide a precipitous amount of energy in that peak demand period and that is a real cost driver because that system peak costs a lot of money.”

We have proposed adding two more off-peak hours and moving on-peak hours later, from noon to 7 p.m. to 3 to 8 p.m. on weekdays. As Bernosky noted, this more accurately reflects when customers' usage peaks and the costs to meet customer demand are highest.

Bernosky also emphasizes the value of demand rates for customers.

“We are trying to roll up our sleeves and think about the impacts on solar customers and non-solar customers, storage developers, people with load control and smart thermostat technologies,” he said. The demand charge “better informs customers who are considering adopting the new technologies that will help them help us by reducing their peak period usage.”