Understanding Demand and Demand Charge

What is Demand?
“Demand” is the total amount of electricity being used by a customer at any one time. Demand varies from hour to hour, day to day and season to season. This usage, which is expressed in kilowatts (not kilowatt-hours), is called “demand” on the system. For the majority of commercial customers, Edisto Electric Cooperative monitors demand over a 30-minute period. The customer is charged for the highest 30-minute average recorded on the demand meter. After Edisto Electric reads the meter each month, demand is reset to zero and the meter starts over, recording the highest 30-minute average for the next billing period.

What is demand charge?
Demand charge is based on each customer’s maximum 30-minute demand on the cooperative’s distribution system each month. Demand is measured in kilowatts (kW). Customers are billed according to kW of demand for their rate.

To illustrate how demand charge can affect an electric bill, look at two simple examples:
• Running a 20 kW load for one hour would result in usage of 20 kilowatt hours (kWh) and accrue a demand charge of 20 kW.
20 kW x 1 hour = 20 kWh.
Demand = 20 kW.

• Running a 2kw load for 10 hours would also result in usage of 20kWh but would only accrue a demand of 2kW.
2 kW x 10 hours = 20 kWh.
Demand = 2 kW.

Both examples use the exact same amount of energy (20 kWh) and perform the same amount of work. However, the resulting bills will be very different.
Applying a rate demand charge of $3.00 per kW and an energy charge of $ .05 per kWh to both examples produces the following results:

Bill Number 1
20 kW x $3.00 = $60.00
20 kWh x .05 = $1.00
Total = $61.00

Bill Number 2
2 kW x $3.00 = $6.00
20 kWh x .05 = $1.00
Total = $7.00