demand charges explained
Demand charges are a significant cost on your overall electric bill but very few people understand what a demand charge really is. I recommend everyone who is considering to do energy efficiency upgrades or install solar panels and wind turbines start with analyzing a 12 month history their electric bill first. Understanding the rate you are being charged per kWh and other elements of your billing is important for you to make effective energy reduction decisions.
Demand charges are a cost on your electric bill which are based on the greatest amount of electricity used in any half hour period during the billing period. The charges are represented as a dollar per kilowatt (kW) and is applied to your maximum kW demand also know as the highest rate at which you required energy. Demand is the rate of how fast electricity is delivered to you over a half hour period of time.
For example, if you have all your appliances running at your house at the same time your electric meter would spin forward really fast therefore your demand charges would skyrocket. Demand charges represent the rate of how fast you are consuming electricity.