Commercial energy guide
How demand charges affect a commercial electricity bill
Learn why a short period of high electricity demand can influence a commercial bill and what information to review.
Reviewed September 4, 2026 by Crown Energy Soluxions
A demand charge is based on a customer's maximum electric capacity usage under the applicable rate schedule. A short, high-demand interval may therefore affect the bill even when total monthly kilowatt-hour usage is moderate.
Demand is a rate, not a monthly total
The EIA defines a demand charge as the part of an electric-service bill based on maximum capacity usage under the relevant rate schedule. The exact measurement method and charge depend on the utility tariff and account.
Find the drivers
Simultaneous startup of large equipment, heating or cooling loads, charging, refrigeration, and production schedules can contribute to a peak. Interval data is more useful than a monthly total when investigating the cause.
- Confirm the demand measurement interval.
- Compare peak timestamps with operating schedules.
- Check ratchets, minimums, and seasonal rules.
- Review changes with the utility tariff and a qualified professional.
Do not confuse supply savings with demand savings
Changing a supply price may not change utility demand charges. Separate each bill component before estimating the effect of any procurement or efficiency decision.
Primary sources
This guide is general educational information, not legal, regulatory, tax, or individualized procurement advice. Contract terms and market rules vary.
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