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Understanding electricity demand Understanding electricity demand Understanding electricity demand

Understanding electricity demand

Understanding electricity demand Understanding electricity demand

Understanding electricity demand

What is an electricity demand charge?

If you’re a business owner, or will be one soon, you should know that your business energy bill is a bit different than your home energy bill.

The main difference is that a business energy bill is made up of the following two parts:

  • The total amount of energy you use over time
  • How much energy you need at any one time-known as a demand charge

The demand charge refers to how much energy you need, or the specific demand at any one time. For example, if you turn on your HVAC and heavy machinery at the same time, the demand will be very high compared to the average you need over a full business day. To help keep the demand charge lower, it’s helpful to turn on high-usage systems or machinery in stages as opposed to simultaneously.

A demand charge is one of the primary charges assessed by your local transmission and distribution provider (TDSP) for the delivery of electricity to your business. Like all TDSP charges, the demand charge is set by the Public Utility Commission of Texas (PUCT) and is stated in the TDSP’s tariff. Reliant passes that charge on to you as a line item on your Reliant bill without markup.

 

Understanding your bill

The demand charge is bundled with the other TDSP charges as a single line item, as identified on the sample bill below. The customer’s peak demand is also indicated on the bill.

Demand:  The maximum rate of power used in a 15-minute interval during a single billing cycle. Demand can be shown as kW or kVA on your bill and is used by your TDSP to calculate your demand charges.

PRO Document
PRO Document
PRO Document

 

If you’d like to learn more about how your TDSP calculates your demand charge, please visit the rates and tariffs section of the PUCT website.

Business woman on smartphone working from home

Tips to manage your business’s electricity demand

Now that you know how demand works, here are some tips to manage your demand:

  • Slow and steady: Don’t turn all your equipment or HVAC units on at once. This causes demand to quickly peak. Instead, consider a staged start-up.
  • Upgrade: New office equipment that is ENERGY STAR certified may be more energy efficient.
  • Downsize: Equipment that’s larger than it needs to be can result in unnecessarily high demand.

Demand charge FAQs

Show all answers

Even if you are no longer using electricity, the TDSP will continue to assess its charges (including demand charges) until your meter is de-energized. Remember, even if you aren’t open to the public or only visit your business location occasionally, any usage for 15 minutes may set a new peak demand that the TDSP uses to calculate your demand charges.

Demand refers to how much energy you need at any single moment in time, while usage is the total amount of energy used over a given amount of time. Your energy charge is based on how much electricity you use during the entire billing period measured in kWh and multiplied by the price per kWh stated in your agreement with Reliant. Your demand charge is calculated using the maximum power your business requires in a 15-minute period measured in kW or kVA.

You can think of it in terms of how a car works: the rate at which you use energy (kw) is comparable to how fast you’re driving (speedometer), and how much total energy you use is similar to how far you drove on your trip (odometer).

There is a demand charge because ERCOT needs to produce enough energy to deal with any demand peaks at any time. So the system needs to produce extra energy to deal with those demands and upkeep the infrastructure needed to deal with them.

Your monthly bill's demand charge is calculated by taking the single highest 15-minute interval of power consumption multiplied by your current per kW rate.

If you have questions about any other line items on your Reliant bill, we encourage you to visit our Understanding your bill page.