In general, the charges on your utility bill fall into one of two categories, demand based charges and usage based charges. Usage based charges are based on the amount of electricity you are consuming within an hour, measured in kilowatt-hours (kWh), and will typically be billed monthly.
Demand based charges are calculated based on your peak electricity usage in any one hour, measured in kilowatts (kW), during a specified period of time, usually a month or the entire year. Demand charges appear on both the utility distribution portion and the energy supply portion of your utility bill. Attempting to control these demand based charges is referred to as Peak Load Management.
In the energy supply bill the demand charge is called a capacity charge. A capacity charge can be described as “a charge that is levied upon all users so that the electricity grid has sufficient energy available for all users when the demand for electricity is at its highest, so that blackout or brownouts can be avoided”.
To calculate the amount of this capacity charge that you have to pay, the utility grid operators measure the amount of energy that you are using at the time when the grid is at its peak demand. Based on your usage at times of grid peak demand, you are required to pay a demand charge that is called capacity charge.
In most cases, demand based charges are included as a part of your utility distribution costs on your utility bill. Typically, these charges are based on your peak demand during any hour of the billing cycle on your electricity bill.
In order to manage these demand based costs, you must first understand what operations and systems are contributing to your consumption during peak demand periods. Once you have this understanding, you may be able to take actions that will reduce your peak demand such as reducing your lighting and air conditioning load for short periods, and as a result lower your peak demand based charges on your utility and/or energy supply bills.
Premier Power Solutions works with you to understand your peak demand and to predict when these peak demand hours will occur. By making targeted adjustments to energy usage during these hours, you can reduce your overall energy costs.