Demand Charges

A demand charge bills you for the highest rate of consumption your facility reached during the billing period, usually averaged over a fifteen-minute interval, and it is priced in dollars per kilowatt rather than cents per kilowatt-hour. Two plants can consume identical annual energy and receive bills that differ substantially, entirely because of when that energy arrived. This section covers what the charge is measuring and why utilities levy it, how the demand interval is defined, the difference between facility, on-peak and coincident demand, what a ratchet clause does to a single bad afternoon, and how to locate the demand component inside your own statement. The arithmetic is not difficult. The definitions are where the money is.