Effective with January 2026 billings, KEC adopted a new rate design for those members billed under the cooperative’s residential and general service rates. Central to this change was the adoption of the Peak Use Charge. The need for this change has been looming, and growing, for years. The pressures precipitating it are not exclusive to KEC, rather, they are pressures being felt by every utility in the Northwest. These pressures are being driven by factors that are complex, complicated, and not easily resolved.
We want our members to understand what goes into their bills and why bills are increasing. Over the past year, KEC has communicated extensively about these matters and why the introduction of the Peak Use Charge was necessary. However, we also recognize the inevitable: our mission of providing exceptional service to our members frequently results in our being out of their sight and mind. After all, many consumers only think about their electric utility when their rates go up or when the power is out…events we work hard to avoid. Despite our best efforts to communicate these changes to members and the issues that are driving them, we recognize that many members were regrettably surprised by the change.
In this article, I’d like to retell the story behind the Peak Use Charge in as simple and as direct a manner as possible. This article addresses two central questions about the change in rates. First, why is a Peak Use Charge needed? And second, how does it help solve the problems we are facing?
Offering succinct answers to these seemingly simple questions is difficult for me. I deeply want our members to understand the enormous challenges the cooperative is navigating and the extent to which it is striving to keep our rates low and our reliability high. Absent this information, it’s understandable how members may conclude this isn’t the case. So, the simple answers I offer to these two important questions come with an appeal for members to reference the considerable amount of information the cooperative has shared in previous PowerLines articles on these matters, which can be found on our Electrification Unplugged page. With that backdrop, let me offer the following perspectives that I would like all members to understand:
Why is the Peak Use Charge needed? Like all utilities, KEC is connected to “the grid” and all power purchased by KEC and used by our members flows across it. That grid is aging and is increasingly incapable of serving the peak loads placed on it without expansion and upgrades. Absent such, blackouts will result. The expansions and upgrades the grid requires come at considerable cost and require significant planning and time to complete. All utilities in the region must pay their fair share of these costs. To ensure this is the case, utilities pay “demand charges.” These charges recover the costs associated with ensuring the grid is capable of delivering the maximum amount of power used by a utility’s consumers at any given moment of time. In the past, the grid had surplus capacity and demand charges were relatively inconsequential, however, this is no longer the case. Demand charges will soon reflect 25 percent of all power related costs associated with purchasing or producing power on our members’ behalf.
How does the Peak Use Charge help solve these problems? Bluntly speaking, it is only part of the solution.
KEC cannot solve all of the issues the grid faces; we can only do our part. That involves paying for our fair share of the grid improvements needed to ensure long-term reliability and resource adequacy. Those (demand) costs are included in the rates KEC pays its power suppliers on behalf of its members for the power they consume.
As demand charges have increased, some residential and general service members have benefited while others have been adversely affected. Specifically, those members who use the highest amounts of power at any given moment of time contribute the most to the demand charges paid by their utility. The structure of KEC’s Peak Use Charge helps ensure that these costs are paid more uniformly by our members based on how heavily they lean on the grid when it is strained the most. Crucially, those using modest amounts of power during these periods of time, or those capable of easing demands placed on the grid during those times, should not have to pay for the demands that others are imposing.
“Peak use” or demand charges have long been an element of the utility rates for commercial and industrial service. Unlike those recently included in our residential and general service rates, commercial and industrial members face demand charges based on their peak usage regardless of when it occurs. Under KEC’s Peak Use Charge, residential and general service members have an opportunity to lower their impact by shifting loads to other periods of the day.
As mentioned earlier, we are not facing these pressures alone. Many of our utility peers have or soon will be implementing rate structures similar to KEC’s. We understand and appreciate that these charges are unwelcome and, due to them, members are forced to think about when and how they use power. But that’s the point of this change. Through increasing awareness of the cost of delivering power during times when the grid is most strained, we can lower our costs and make the system we have last longer.
We understand that changing long-established energy usage habits or shifting hours of use is challenging. We recognize that reducing demand during peak hours may be easier for some and not others. However, under the new rate structure, the costs associated with high demand will be borne by those placing that demand on the system, rather than being spread across the entire membership. These changes are intended to ensure a fair and equitable recovery of system costs.
At the end of the day, our responsibility to you is straightforward: to deliver reliable power to your home while keeping your electric bills as low as possible. We know many people in our community are facing challenging times and no one wants to see higher electric bills. That reality weighs heavily on every decision we make. While we cannot control all the forces shaping today’s challenges, we are working closely with our generation partners to share costs, increase efficiency, and expand our energy supply in the most responsible way possible. The Peak Use Charge is one part of that broader effort—designed to fairly allocate costs, protect long-term reliability, and help keep the cooperative financially strong for the benefit of all members. We remain committed to transparency, to listening, and doing everything we can to serve you well today and into the future.