One 15-minute spike can re-price your whole month.
That's the demand charge: a fee on your highest 15 minutes of power use, billed on top of your energy charges. Most owners have never heard of it — until it triples a bill.
The story we've seen more than once
A shop owner wires up a new piece of equipment. Fires it up once, just to check it works. The startup current from that single test puts him on a different rate schedule — and his next bill triples.
He didn't use three times the electricity. He just had one bad 15 minutes. That's the demand charge working exactly as designed — and it's why the line item deserves your attention even when the bill looks normal.
How it actually works
Forget the textbook. Here's the whole concept in three cards:
Your peak
Your meter records your highest 15 minutes of usage (kW) for the month. One spike — everything starting at once — sets the number.
The charge
The utility multiplies that peak by a per-kW rate. The result lands on your bill on top of your energy (kWh) charges.
The whole month
That one 15-minute window prices the entire month's demand charge. Twenty-nine calm days don't offset one loud one.
Where it hides on your bill
The demand line rarely calls itself “demand charge.” Look for words like demand, kW charge, or facilities charge — and the giveaway unit: kW, not kWh. If you see a kW figure with a dollar amount next to it, that's the line.
Can't find it? Upload the bill and we'll point to the exact line — and tell you whether what you're paying for it is fair.
3 moves that lower it
Move 1
Stagger your startups
Don't fire up every motor, oven, compressor, and dryer bank at the same time. Sequencing startups across 30–60 minutes can cut your peak — and your demand charge — without changing total energy use at all.
Move 2
Shift heavy loads where the tariff allows
Some rate structures price peak-window demand much higher than off-peak. Moving the heaviest work out of the peak window, where your operations allow it, directly lowers the billed peak.
Move 3
Get your rate class reviewed
Businesses get put on the wrong rate class more often than you'd think — and the wrong class can mean the wrong demand structure entirely. A review of your actual load profile against available tariffs sometimes finds money with zero behavior change.
Upload your bill — we'll find your demand charge and tell you if it's fair.
Free, no obligation. We'll point to the exact line, explain what's driving it, and tell you what a fair number looks like for your kind of business.
Get My Free Bill ReviewDemand-charge questions, answered straight
What is a demand charge?
A demand charge is a fee based on your highest 15 minutes of electricity use during the billing month, measured in kilowatts (kW). It pays for the grid capacity reserved to serve your peak — and it's billed on top of your energy (kWh) charges.
What's the difference between kW and kWh?
kW (kilowatts) is how much power you draw at one moment — like the speedometer. kWh (kilowatt-hours) is how much energy you use over time — like the odometer. Demand charges are priced on kW, your peak moment; supply charges are priced on kWh, your total usage.
Can I eliminate demand charges?
Usually not entirely — they're part of how commercial tariffs work. But you can often shrink them a lot: stagger equipment startups so everything doesn't spike at once, shift heavy loads where your tariff allows, and make sure you're on the right rate class. A bill review finds the quick wins.
Why is my demand charge so high this month?
Almost always one spike: a single 15-minute window where everything ran at once — equipment startup, HVAC cycling on during production, an extra shift. The demand charge doesn't care about your average; it prices your worst 15 minutes.
Do all businesses pay demand charges?
Most commercial and industrial accounts do, once usage passes a threshold. Small accounts on simple commercial rates may not see a separate demand line — but if your bill shows a kW figure anywhere, you're paying one.