A demand charge is a fee that commercial customers pay based on their highest rate of electricity usage during a billing cycle. It reflects the maximum amount of power your business draws at any one time—measured in kilowatts (kW)—not the total energy consumed. Utilities use demand charges to recover the cost of maintaining enough capacity to meet customers’ peak requirements. Because the fee is calculated from your single largest demand spike, even a short period of high usage can significantly affect your bill. Reducing or shifting peak loads, staggering the start‑up of equipment and using load management systems can help lower demand charges.
Need help managing demand charges? Contact us to learn more about demand management solutions.