Demand Charges: The Hidden Fee Driving Up Business Electricity Costs

If you’ve ever wondered why your bill spiked even though usage was flat, the culprit is probably demand charges. They can make up 30–70% of a commercial bill.

What Are Demand Charges?

Demand charges are utility fees based on your highest short-term power usage—often the single biggest factor driving high electricity bills for businesses.

How Utilities Measure Peaks

Utilities track your power demand in 15-minute intervals and charge you for the highest spike, even if it happens just once during the billing period.

Why Businesses Are Vulnerable

When multiple energy-hungry devices run at once, brief surges can trigger costly demand charges that don’t reflect your overall energy use.

Quick Fixes Without New Equipment

By staggering equipment schedules and managing startup times, businesses can often cut demand charges significantly—without buying anything new.

Frequently Asked Questions

How do I find my peak window?

Your utility tariff defines peak hours, but your actual bill data (usually recorded in 15-minute intervals) shows when your highest demand occurs. Reviewing that data helps pinpoint the specific windows where your costs spike.

Can I eliminate demand charges completely?

No. Demand charges are built into most commercial rate structures. But you can minimize them by flattening peaks, shifting usage outside of peak hours, and strategically managing equipment schedules.

Will solar/batteries reduce them?

Yes—especially batteries. Solar offsets overall energy consumption but doesn’t always align with peak demand. Batteries can be programmed to discharge at your peak times, directly lowering demand charges. The best results usually come from combining solar, batteries, and smart controls.

Ready to Uncover Hidden Overcharges?

Don’t let billing errors cost your business thousands. Get your free utility bill screening today and discover potential savings.

ChuckTralka