PCRF & Demand Charges
The electric utility industry (like most industries) is incredibly overstocked with its own set of acronyms. PCRF is another one in that long list. PCRF is an acronym for Power Cost Recovery Factor and it is something Cooke County Electric Cooperative (CCEC) deals with on a monthly and sometimes daily basis. The PCRF is the rate component, on all electric bills, that is a direct reflection of the fluctuating cost of natural gas, coal, hydropower, nuclear energy, and wind generation required to run an electric generation plant.
Since CCEC is a distribution cooperative, our wholesale power is purchased from a generation company, Brazos Electric Cooperative. When prices rise on fuels to produce electricity, it costs Brazos more to produce electricity and this is passed through to CCEC and its members by an increase in the PCRF. So while CCEC's rate for the price of electricity has not changed, members will see a fluctuation in the PCRF. When the price of fuels used to produce electricity goes up, the PCRF charge goes up. The cheaper the cost of fuels to generate electric, members will see a credit on their electric bills.
One way to think about PCRF is to compare it to the cost of gasoline for your car. Even though your monthly car payment (the rate) hasn't gone up, the car you drive is costing more or less to operate because just as fuel prices rise and fall, so goes gasoline prices at the pump (the PCRF).
The demand (kW) is the greatest amount of electrical power supplied to you at a specific interval during the billing period. Demand charges cover the costs incurred by the cooperative to build and maintain a system of the correct capacity to serve the facility. The costs for demand pay for the cooperative to have lines of appropriate size, a transformer that can meet peak requirements, and services (equipment, supplies and personnel) that can meet all of the needs. The demand charge is calculated on the basis of the highest demand over a short period of time (15 minutes) during the billing period. This amount covers the cooperative's cost of capacity so it can meet demand for power at any time during the entire billing period.