WattThe / Commercial / Demand charge / TOU
Commercial bills have two meters in one: energy (kWh) and demand (your single highest kW). See how the pieces combine — and what shaving the peak is worth.
Commercial and industrial tariffs bill two different things. Energy charges pay for the kWh you consume, usually split into on-peak and off-peak time-of-use windows. Demand charges pay for capacity: the utility takes your single highest average draw over any 15-minute interval in the month and multiplies it by a $/kW rate — commonly $10–30. One clumsy half-hour, three motors starting while the HVAC runs flat out, can set the demand charge for the entire month.
For many facilities, demand is 30–50% of the bill, which makes peak management the highest-leverage efficiency work available. The playbook, in rising order of capital: stagger equipment starts and interlock large loads so they can't coincide; shift flexible processes into off-peak windows; add controls that monitor interval data and shed load as the building approaches a new peak; and finally, batteries that discharge briefly during peak events — an application where storage often pays back faster than in any residential use.
The starting point is your interval data — most utilities provide 15-minute load profiles on request. Knowing exactly when and why your peaks occur turns demand charges from a mystery line item into a controllable one, and it's the first artifact to bring to any tariff-optimization or storage conversation.
A monthly fee based on your highest average power draw over any single 15-minute interval, billed in dollars per kW. It pays for the grid capacity that must stand ready to serve your peak, regardless of how briefly you hit it.
Prevent large loads from running simultaneously: stagger motor starts, schedule flexible processes off-peak, install peak-alert controls, and for persistent peaks, use battery storage to shave the top off demand events.
Time-of-use rates price energy differently by time of day — on-peak periods (typically weekday afternoons and evenings) can cost two to three times off-peak. Shifting consumption into cheap windows lowers the bill without reducing total usage.
Estimates are for planning and education, not engineering design or financial advice. Verify rates with your utility and confirm electrical work with a licensed engineer or electrician.
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