Electric Demand Charge

Demand is defined as: The maximum amount of electrical energy consumed at a single point in time, measured in kilowatts (kW).

Demand is essentially the energy required to operate every electrical device running in your home, business or farm at a specific point in time. At Stearns Electric Association, demand is calculated in 15-Minute Demand or 60-Minute Demand intervals (referenced in this document as Billing Demand), depending on your specific Rate Class (see question 3 below).

Demand is measured in kilowatts, or kW, and represents the rate at which electricity is being used. It’s the amount of power required in an instant to satisfy the needs of all your connected appliances, lighting, heating and anything else in your home or business requiring electricity, at the exact same time.

The Demand Charge on your bill is determined by multiplying the Billing Demand by the Demand Rate.

Demand is not about how much electricity you use all month - it’s about the peak consumption of electricity used within 60 minutes or within 15 minutes (depending on your Rate Class,) within a monthly billing cycle.

Example: Speedometer/Odometer Let’s compare demand (speedometer) to overall energy used (odometer):

Speedometer: Measures your instantaneous speed (miles per hour). Similarly, demand measures the maximum rate of power you are using at any given second (in kW).

Odometer: Measures the total distance traveled. Just as an odometer ticks up the total miles driven over a year, your energy consumption measures the total kilowatt-hours (kWh) of electricity used in your home over the billing month.

SCENARIO: Imagine taking a road trip and traveling 100 miles.

Scenario A: You drive 100 miles at a steady 10 mph for 10 hours. Your odometer shows 100 miles, but your speedometer peaks at just 10 mph. Your car's engine barely breaks a sweat. When compared to the “Scenario B” below, this would be an example of low demand.

- Energy: 100 kWh

- Demand: 10 kW

Scenario B: You drive those same 100 miles at 100 mph for 1 hour. Your odometer still reads 100 miles, but your speedometer hits a peak of 100 mph. This is an example of high demand.

- Energy: 100 kWh

- Demand: 100 kW

All Stearns Electric members are billed for demand through either a Two-Part Rate Structure or a Three-Part Rate Structure. (see questions 6 and 8 below)

Beginning in 2027, Stearns Electric will implement a Three-Part Rate Structure for a subset of members within specific Rate Classes, and will break out a Demand Charge as a third component on monthly bills.

If you are in one of these Rate Class subsets, you will see a line item of “Demand” (corresponding to the defined term above, Billing Demand,) on the “Current Bill Information” section of your monthly bill beginning in October 2026.

The Demand Rate will be $0 until January 1, 2027, after which the Demand Rate will increase to $1.25. The first Demand Charge you will see will be reflected on the bill you receive in February 2027 for January 2027 usage.

Our residential members make up our largest Rate Class called General Single Phase (GS1). Starting in January 2027, GS1 users who have had a maximum 60-Minute Demand of 20 kW or more within a monthly billing cycle for at least three months within a 12-month period, from June 1, 2025 to May 31, 2026, will move into a new Rate Class: Single Phase Demand (G1A), and will receive a Demand Charge moving forward. This is our new Three-Part Rate Structure.

Additionally, members in our Small Three-Phase Rate Class (OS3) will also move to a Three-Part Rate Structure beginning January 1, 2027. Demand for these members is measured in 15-Minute Demand intervals.

The specific impact on your monthly bill depends on your peak energy consumption within the month, or Billing Demand.

Additionally, the Small Three-Phase members (OS3) and Single-Phase Demand members (G1A) will see a reduced Energy Charge on their monthly bills compared to members within the Two-Part Rate Structure.

By billing demand separately using a Three-Part Rate Structure, you have more control over your monthly bill by choosing when and how you use electricity.

Photo of Charges by Rates Coming Soon

Historically, all Stearns Electric member-consumers were billed for electricity consumption using a Two-Part Rate Structure. Two-Part Rate Structures are simple and easily understood, and in the past, were aligned with available meter technology.

With updated meter data management system technology introduced within the last few years, we can now break apart energy and demand.

These technology advances, combined with how our primary wholesale power providers bill Stearns Electric (see below), make it possible to introduce a Three-Part Rate Structure when we can do so accurately and fairly, starting with member-consumers who have the greatest impact on the power grid.

In 2027, and likely for several years to come, a majority of our members will still be billed using a Two-Part Rate Structure. We will communicate with members if and when their account is planned to be moved to a Three-Part Rate Structure.

Energy Charge: The Energy Charge (kWh) is based on the total amount of electricity you use within the Cooperative’s billing cycle and is measured in kilowatt hours (kWh).

Demand Charge: The Demand Charge (kW) is calculated using the Billing Demand multiplied by the Demand Rate ($1.25/kW in 2027).

Fixed Charge: The Fixed Charge is a monthly charge that helps cover the cost of the infrastructure, employees and equipment needed to deliver electricity to your home or business. This includes things like maintaining power lines, making repairs and having crews and equipment ready to respond when service is needed. These costs exist no matter how much electricity you use. Because these costs don’t change based on usage, the charge is “fixed” and is the same for all members within each Rate Class.

Our primary wholesale power providers, Great River Energy and Western Area Power Administration, bill Stearns Electric a monthly demand charge specific to our Cooperative, which is then passed along to our member-consumers. In a Two-Part Rate Structure, we roll the distribution, transmission, and power supply demand charges into our Energy Charge. Continued rate pressures and opportunities to improve fairness among our member-consumers led to a change in the way we structure our Rate Classes.

Our 2026 cost-of-service study indicated that a switch to our billing structure would better align the cost of peak energy usage with peak power costs on the power grid. Essentially, it called for a switch from a Two-Part Rate Structure (Fixed Charge and Energy Charge) to a Three-Part Rate Structure (Fixed Charge, Energy Charge and Demand Charge). In addition to better alignment with how Stearns Electric is billed for wholesale power, this change improves fairness among all member-consumers of the Cooperative.

The monthly cost of demand to deliver power to your home, farm or business has always been bundled within the Energy Charge, but now we are able to accurately measure demand and bill it separately, giving members the opportunity to control it. Unbundled Demand Charges more fairly distribute the costs of providing service to those members who use large amounts of electricity at one time.

There are several ways to reduce your demand and save money.

a. Shift high-use activities: Major electrical appliances that may contribute to high demand include air conditioners, clothes dryers, water heaters, electric ranges and ovens.

For agricultural members, large electrical equipment like ventilation fans, refrigeration units in dairy barns, vacuum pumps, heating and cooling systems, welders, air compressors and other automated equipment contribute to higher demand.

To reduce demand, spread out your use of major appliances and/or equipment across separate hourly periods beyond when motors and pumps may start throughout the day.

b. Enroll in load management programs: Our energy management programs automatically shift certain appliances to run during off-peak times. Options like Stored Water Heating, Dual Fuel Heating, ChargeWise and Storage Heating not only reduce demand for members, but can also qualify for lower electric rates and rebates.

Additionally, Stearns Electric offers various energy management programs for agricultural members, including the Interruptible program (formerly generator back-up) and Interruptible Irrigation.

These programs are a win-win as they help members save money while keeping costs stable across the entire Cooperative.

To learn how off-peak programs may work for you, please contact our energy services department at (800) 962-0655 or visit stearnselectric.org.

c. Consider innovative energy-saving technology: Stearns Electric offers various rebates for energy-saving equipment and technology. Though more electricity is often used for these upgrades, the combination of energy efficiency improvements and rebates from the Cooperative ultimately lead to bigger savings and lower monthly demand.

For agricultural members, consider installing new ventilation fans, upgrading lighting to LED units in your barn or installing a robotic milking system.

For residential members, consider installing new, energy efficient appliances or smart thermostats.

Learn more at stearnselectric.org/rebates.

d. Use smart controls and timers: Smart thermostats, outlet timers and appliance delay features can make shifting energy usage effortless. These small, automated changes can reduce demand without disrupting your daily routine.

These are just a few simple strategies to shift and spread out your power use and save on your monthly bill. We’re here to help you find the solutions that work best for your needs and budget. If you have questions, contact Stearns Electric at (800) 962-0655.

You can currently track your demand on your electric bill. For applicable Rate Classes, the Billing Demand (kW) is posted on your electric bill in the Service Summary section.

Link coming soon