What Is Demand?
Electric Demand, measured in kilowatts (kW), expresses the maximum or "peak" rate-of-flow of electricity. Larger commercial customers are metered and billed monthly for peak electric kilowatts as well as for cumulative electric usage measured in kilowatt hours (kWh). These terms, kilowatts and kilowatt-hours, are often confused.
It helps to understand that kW and kWh are analogous to familiar everyday water measurements: Gallons-Per-Minute (the rate of usage), and Gallons (the amount of usage), respectively. Demand billing is based on a customer's highest integrated demand in any 30-minute metering interval during the billing month.
An example: A printing facility has varying levels of electrical demand each day. But out of the 1,440 half-hour periods in their 30-day utility billing month, one particular half hour will establish the peak level of electric demand that's never surpassed in any other half-hour period of the month. Demand billing is based on that peak half-hour.
Some details that are important to understand if you are managing (limiting) demand to save money:
a) Demand billing is not based on the height of a single short-duration spike or needle-peak of demand. Instead, demand billing is based on the highest integrated (averaged) half-hour period, which may encompass multiple peaks-and-valleys of demand.
b) Unlike the energy usage (kWh) register on the electric meter, which counts along cumulatively from month to month, the meter's demand (kW) register resets to zero at the beginning of each billing month. There is no month-to-month demand billing ratchet. For kW demand billing, each metering/billing month starts at zero.
c) The half-hour metering intervals are not rolling or sliding or subdivided intervals. Instead, they follow one after another, stepwise, the first 30-minute interval of each month beginning at the instant the meter is read-and-reset to zero.
Residential and small commercial customers are metered and billed monthly for their electricity use based on a single unit of measure: the kilowatt hour, which is a measure of energy use.
By contrast, larger commercial customers are billed based on two measurements. In addition to their kilowatt hour usage, these customers pay a charge based on their maximum demand for the month, which is measured in kilowatts.
Why Is There a Demand Charge?
The demand charge recovers part of the cost for providing the large infrastructure (power plant, transmission, substation, distribution, and transformer capacity and equipment) needed to serve a customer's peak demand. The larger the peak demand, the larger the power plant, wires, transformers, etc. needed.
For residential and small commercial customers, these costs are recovered through a single kilowatt hour energy charge for simplicity and ease of billing. For larger commercial customers, the use of both energy and demand charges allows more accurate measurement and billing of the cost to provide service.
Can I Get Off or On Demand Billing?
If a commercial customer is metered and billed for demand, but the customer's metered demand is less than 25 kW for the previous eleven months, that customer may request to receive electric service under the general service non-demand rate or any other applicable rate schedule. Conversely, if a commercial customer is currently billed under a non-demand rate schedule but has peak demand levels under 25 kW but over 9 kW, that customer can request to switch to a demand-billing rate schedule.
If you are demand billed and you believe a change in facility equipment or functioning has permanently lowered your peak demand below 25 kW and you wish to request a speedier switch to a non-demand rate schedule, call Your Own Utilities at 891.4YOU (4968) for consultation. You will benefit by scheduling a free commercial energy audit provided through the City's Energy Smart Plus (e+) initiative.
Be aware that for customers with consistent steady levels of electric usage, electric costs will most likely be lower on the demand rate schedule than on the non-demand schedule. Your energy auditor can determine how you would fare under a demand vs. non-demand rate schedule.
How Much Is the Demand Charge?
The current demand charge is $10.23 per kW. For example, if a customer's peak metered demand for the July billing is 36 kW, then the demand portion of their bill is 36 x $10.23 = $368.28, not including taxes. See all current rates.
Regardless of their metered demand, customers must pay for a minimum of 10 kW each month. Note that demand-billed customers pay for both metered kW and metered kWh, but pay a lower cost-per-kWh than non-demand-billed customers.
Tips for Lowering kW Demand
- Minimize the simultaneous operation of high wattage equipment like pumps, chillers, air conditioning compressors and air handlers.
- Avoid concurrent testing of multiple large stormwater pumps or other large equipment that gets infrequent use.
- If possible, avoid concurrent operations if you have multiple HVAC (heating, ventilation and air conditioning) systems.
- Take actions to reduce internally generated building heat:
- Install energy-efficient l, low-wattage lighting. Ffor example compact fluorescent lamps or T-5 or T-8 fluorescent lamps with electronic ballast.
- Turn off unused computers, copiers, lights.
- Consider installing solar film or solar screens on east, west or south-facing windows.
- Call Your Own Utilities at 891.4YOU (4968) to schedule a free Commercial Energy Audit.
Who Is Metered and Billed for Demand?
Larger commercial electric customers are billed for demand. The demand rate is applicable to all general service commercial electric customers with maximum demands of 25 kW or more in any of the last 12 months. At the option of the customer, the demand rate is available to any general service commercial electric customer with demands of 10 kW or more but less than 25 kW, if the customer agrees to pay for service under the demand rate schedule for 12 consecutive months.