Electric utilities can ask for kilowatt increases every three years from the State Corporation Commission.
Currently, the A-15 residential tariff allows the Shenandoah Valley Electric Cooperative to charge 6.38 cents per kW up to 800 kW and 9.024 cents for over 800. Every year this number can go up. They have a monthly charge of $30, which is a flat charge. They also have PCA charges (pass through from their distributor) that are added to the bill.
Commercial properties pay a separate amount added to their bills called a demand charge. This number is a secret calculation that can be as much as 47 percent of the total bill.
In 2020 and 2021, SVEC tried to add demand charges to their A-14 residential tariff, (SCC PUR-2021-00054), which would have been an additional tax on every residential account in the SVEC territory. The SCC allowed SVEC to raise the per kW charge amount, but failed to allow SVEC to add the demand charges because SVEC did not have the residential electric meters on its 100,000 accounts to track demand.
Currently, only one other utility in Virginia has demand charges on residential accounts, and that utility has only 13,000 customers.
Since 2021, SVEC has been adding the meters necessary to track demand to all residential accounts.
We know what’s coming next!
What is a demand charge, and how is it calculated?
Demand charges were designed years ago for utilities across the country to recover high kW usage of electricity by commercial properties. An example would be when a large factory runs machinery for a short period of time daily causing a sudden spike of electric usage.
The utilities argue that even though the machine runs for a short period of time, the utility must build their infrastructure to meet that demand continuously for every minute of the month. We can debate whether this is a good argument for adding nearly 50 percent more to the bill in a commercial environment but regardless they add it. And it is calculated based on the highest spike for any 15-minute block of time and applied for the whole month even if it only occurs once that month.
Real world effects for a residential customer
SVEC wants to add the demand charge tariff to your residential account. It is applied in the following example:
Example 1: The highest electricity hour usages on residences occur between 4 p.m. and 8 p.m. If you are using your electric stove for cooking each burner uses 1,000 to 3,000 kW. The oven may use 5,000 kW. Although this seems high, it is not a significant amount of total electricity you use that month.
If you run your dryer at the same time, it can average up to 5,000 kW. Your hot water heater uses up to 5,500 kW. If you run all of these in the same 15 minutes during the 4-8 p.m. time frame, your total kW for those 15 minutes can be a 10,000 to 15,000 kW spike.
That high spike will cost you a significant bump in your electricity bill if SVEC is allowed to add demand charges to your residential account. That spike could add up to 47 percent to your electricity bill.
This is exactly what happened to me with my detached garage on my farm in Stuarts Draft. SVEC has decided my detached residential garage meter is a commercial meter, and it has demand charges added to it currently.
Example 2: My garage averages 800 kW per month. In 2023, I purchased an electric Ford F150. I charge it on a 60-amp electric vehicle (EV) charger attached to my garage. I charge one to four times a month. The truck uses 14,400 kW when charging.
The total time usage of electricity is as low as 3 percent of the total hours in a month, but the bill last July (2026) for one electric vehicle charge that month was $69.10 of demand charge added to my bill.
My total bill was $146.85. That $69.10 is 47 percent of my total garage bill. I used a total of 491 kW in July. Without the demand charge, my bill would have been $77.75.
This is important: you cannot see the line item or calculation for demand charges on your SVEC bill. They do not want you to ask about demand charges, so they don’t show it on the bill.
Workarounds
I have been trying to lower my electric bills since 2023. I have added solar panels to my garage. I have reduced my electric usage, but as my kW usage declines, my demand charge goes up so I do not get the full savings of my efforts. This is counterintuitive, but that is the secret calculation that SVEC uses to keep my bill higher than it should be.
If you add an electric vehicle charger to your house, if you add an electric just-in-time electric water heater, if you run your stove, air conditioning and dryer in the same 15 minutes one evening, if you have a hot tub, if you have any spikes in usage even for a 15-minute time slot, you will add a significant amount to your electric bill under their next tariff.
I filed a formal complaint to the SCC in April about my detached garage being commercial, and the complaint was heard in a formal hearing on Aug. 18.
I did this without an attorney.
You can see the documents here under PUR-2026-00066: scc.virginia.gov/docketsearch#caseDocs/146932
The hearing examiner has not yet ruled on my complaint.
My complaint was not directly about demand charges initially but about whether my detached garage should be classified under a commercial tariff – incurring demand charges.
However, demand charges were discussed at the hearing examiners request, and SVEC had to bring in an expert from Boston to explain to the hearing examiner what demand charges on an electric account were because SVEC did not have anyone on staff who could explain them.
If the SVEC does not understand them, we will not understand them, and they are counting on us not understanding demand charges. The whole hearing lasted almost six hours. I learned a lot. It was exhausting.
One important piece of information that came out in the hearing (one of many) was that no one other than me has complained about demand charges on a detached garage or other residential outbuilding or accessory building. I think the reason for this is that the demand charges are hidden in the bill, and it is so complicated that we just do not understand, I didn’t.
SVEC testified that they do not do community outreach to explain demand charges and only answer questions if you ask them. The last time they publicized anything on demand charges was in their monthly magazine in 2022.
Demand charges were never designed for residential properties. There are only five or six utilities in the U.S. that apply demand charges to residential properties.
Dominion Energy excludes garages and other residential outbuildings from demand charges directly in their tariff.
If I was a Dominion Energy customer, my electric bill would be up to 47 percent lower than SVEC’s bill to me!!
This is a tax on several types of residential properties
Here are some examples:
- If you are a low monthly kW usage house, but add a high demand item like an EV charger or just in time electric water heater, you will get a high demand use tax for the month. Your bill will go up significantly.
- If you are a high use property and have had your electric contractor run lines from the house to your accessory buildings, hay barns, horse barns, garages or other buildings and you run welders, or EV chargers for electric carts or charge EVs, you will get the high demand use tax for the month.
- If you have a large family and use high kW during the 4-8 p.m. (even occasionally), you will get the high demand use tax added to your bill for the entire month.
How do we stop the SVEC from adding demand charges in the next tariff
- We need to complain to SVEC if you have a residential outbuilding with a meter that is tariffed (all are) under a commercial tariff.
- We need to show up at their annual meetings and when they file for their next tariff, we need to complain.
- We need to engage organizations that do not want demand charges added to residential accounts.
- We need to organize: contact me at [email protected]
They tried this once and got shot down, they will try again.
If we do not organize, we will lose this battle.
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