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Many OPPD rates have a demand charge. The demand charge requires calculation of a billing demand. The design of the billing demand calculation allows the District to recover its investment in power plants, and the cost of transmission and distribution of electricity to the customer.
The billing demand considers not only the current month's demand, but all demands from the last year. All demands used in the billing demand calculation have been power factor corrected. This is also known as a demand ratchet.
Below is the standard billing demand calculation:
The current month's billing demand is the highest of the following:
- 85% of a previous actual demand read in a summer month within the last year
- 60% of a previous actual demand read in a winter month within the last year
- The current month's actual demand
- The rate schedule's minimum demand
Again, all demands have been power factor corrected.
Why Ratchet?
Demand charges recover utility investment in power plants and transmission and distribution facilities. Ratcheting allows the District to recover these fixed costs each month from each customer.
Since power plants and power lines are fixed, the District incurs related costs whether they are fully utilized or not. Therefore, the demand charge recovers the cost of having facilities in place to deliver electricity to the customer whenever the customer needs it.
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