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In this work, we address the problem of optimizing the electrical consumption patterns for a community of closely located households, with a large degree of flexible consumption, and further some degree of local electricity production from solar panels. We describe optimization methods for coordinating consumption of electrical energy within the community, with the purpose of reducing grid loading and active power losses. For this we present a simplified model of the electrical grid, including system losses and capacity constraints. Coordination is performed in a distributed fashion, where each consumer optimizes his or her own consumption pattern, taking into account both private objectives, specific to each individual consumer, as well as objectives common to all consumers. In our work, the common objective is to minimize active losses in the grid, and ensure that grid capacity limits are obeyed. These objectives are enforced by coordinating consumers through a nonlinear penalty on power consumption. We present simulation test-cases, illustrating that significant reduction of active losses, can be obtained by such coordination. The distributed optimization algorithm employs the alternating directions method of multipliers.