Dave from Charlotte. Been auditing utility bills for a few months and I still get turned around on demand charges. I understand the concept of kW versus kWh but when I look at a bill with multiple demand line items I get lost. Can someone walk through what I should be looking at first?
How do demand charges actually work — I keep getting confused
Karen from Boise. Start with the demand meter reading — usually labeled billing demand or metered demand on the bill. That number represents the highest 15-minute average power draw during the billing period. Everything else on the demand side of the bill flows from that number.
Derek from Charlotte. The thing that tripped me up early was that there are often two demand charges on the same bill — a customer charge based on meter size and the actual demand charge based on metered kW. They look similar but they are very different things.
Derek, so when I see Distribution Demand and Transmission Demand as separate line items — are those both based on the same metered reading?
Usually yes, same underlying demand reading but different rate components applied to it. The utility disaggregates the demand charge into cost components for its own regulatory purposes. For audit purposes they all trace back to that single highest 15-minute demand.
Tom from Seattle. Also make sure you find the demand interval. Most utilities use 15-minute intervals but some older territories use 30-minute. That interval length makes a significant difference for clients with brief sharp demand spikes.
Karen again. Tom's point is important. A spike that lasts 10 minutes will show up fully in a 15-minute demand calculation but may only partially register in a 30-minute calculation. Knowing the interval tells you how exposed your client is to brief peaks.