How Electricity is Used – Demand (kW)

The concept of a "demand charge" can best be explained with the following analogy:

If you wish to stay at a San Diego hotel during a summer holiday weekend, you can expect to pay the highest prices of the year. With so many travelers in search of a room, demand is high. However, if you’re in San Diego on a Wednesday in February, you should have no problem finding a room, and the rate will be lower.

Electricity demand is similar.

During certain hours of the day and months of the year, our customers use more power. When energy demand is high, power generation systems nearly reach their capacity, and the cost to generate or purchase power increases.

Therefore you can lower your energy bill by spreading out your business’ electricity usage. By doing so you are charged less, on the average.

The highest average energy use in any 15-minute period during the billing month establishes the kilowatt (kW) demand charge. 

Note: The demand also determines how much of the energy you use is charged at the highest kWh rate. 

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