1. What is Demand Charge?

Demand charge is a fee charged by electricity providers based on the maximum amount of power (kW) a customer draws from the grid at any time during a billing period. It reflects the cost of maintaining infrastructure to meet peak demand.

2. How Does the Calculator Work?

The calculator uses the demand charge formula:

Where:

• \( \text{Max Load} \) — Maximum power demand in kilowatts (kW)
• \( \text{Tariff} \) — Rate charged per kilowatt of demand ($/kW)

Explanation: This calculation determines the portion of your electricity bill that is based on your peak power usage rather than total energy consumption.

3. Importance of Demand Charge Calculation

Details: Understanding and managing demand charges is crucial for commercial and industrial customers, as demand charges can represent a significant portion of electricity bills. Proper calculation helps in budgeting and implementing load management strategies.

4. Using the Calculator

Tips: Enter your maximum recorded load in kW and your utility's demand charge rate in $/kW. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between energy charge and demand charge?
A: Energy charge is based on total kWh consumed, while demand charge is based on peak kW demand during the billing period.

Q2: How can I reduce my demand charges?
A: Strategies include load shifting, peak shaving, using energy storage systems, and implementing energy management systems.

Q3: Do residential customers pay demand charges?
A: Typically no, demand charges are primarily for commercial and industrial customers, though some utilities are introducing them for residential users.

Q4: How is maximum demand measured?
A: Utilities use special meters that record the highest average power demand over a short interval (usually 15-30 minutes) during the billing period.

Q5: Can demand charges vary by time of day?
A: Yes, some utilities have time-of-use demand rates with higher charges during peak hours.