Business customers are charged both for the amount of power they use, and the peak rate at which they use it. Demand is a measure of the peak rate of power use – the highest capacity your business required during the past month.
- Total electricity used for the month.
- The highest recorded demand during the month.
Total electricity use versus demand
Your electricity use is the total amount of electricity you use during the month. It’s measured in kilowatt-hours. Demand is the highest rate you use electricity in 15 minutes. Demand is measured in kilowatts.
Here’s a common analogy: Think of your car. Your odometer measures how far you’ve driven (total usage), while your speedometer measures how fast you drive (demand). The demand charge is like a snapshot of the highest point your speedometer reached in the past month.
Why is a demand charge needed?
Some businesses use power at a steady rate, while others have spikes where they use a lot of power in a short time. Businesses with high spikes pay a higher demand charge to help cover utilities’ added costs to meet those extraordinary needs.