Each month, MLGW records an electric system peak based on simultaneous electricity use among its 400,000-plus customers. This system peak can add hundreds of thousands - sometimes millions - of dollars in demand charges to MLGW’s wholesale electricity costs, which are then passed to individual customers through the electric rates, even if the peak lasts just a few minutes.
The reason is simple: the Tennessee Valley Authority (TVA), MLGW’s electric supplier, must supply enough electricity to meet the system peak, no matter how large it is or how long it lasts. TVA can meet that peak by operating reserve power plants, buying supplemental electricity at market prices and/or building new power plants. Each of these options has a significant cost, so TVA bills utilities for peak demand to encourage utilities-and their customers-to help control that peak. By controlling the peak, everyone helps control power costs.
MLGW’s commercial and industrial customers have paid demand charges for years, providing a financial incentive to manage their facilities as efficiently as possible to reduce operating costs. Many of these customers already participate in activities to lower their impact on MLGW’s system peak and others are joining through new voluntary methods.
Customers can play an important role in controlling those late afternoon and early evening system peaks, which are triggered by the combination of commercial buildings not yet in “overnight mode” and household electricity use for non-essential activities (such as electronics left operating and cooling systems running at low temperatures when no one is home).
All customers can help lower utility costs by voluntarily reducing non-essential electricity use during these peak hours. It’s not about “sacrifice” or “inconvenience”, it’s about making the most responsible choices regarding electricity use.
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