Why is there a demand charge on my bill?
How it works
Electric bills consist of consumption of energy (kilowatt-hours or kWh) and demand (kilowatt-demand or kW) charges. Residential customers have generally steady demand. For business customers, the demand for electricity can vary from minute to minute. Demand may be very high during certain parts of the day, week or year and very low during other times. For instance, an office might have high demand during the weekdays and very low demand during the weekend, while an industrial customer might have its highest demand when it is starting up equipment during the beginning of each shift.
AES Ohio must plan and be prepared to meet each customer’s demand needs even when it is not a daily occurrence. Equipment to meet your energy needs must be on standby and ready to fill your increased need for electricity immediately. This might include installation and maintenance of transformers, wires and substations.
All customers pay for the equipment and maintenance needed to serve their needs. Your demand charge is determined by assigning costs based on your electricity requirements. Larger usage customers typically pay a portion of their bills based on their highest 30-minute demand each billing period, no matter how often that demand is required.
Minimum demand
To ensure we can meet your business’ demand needs, we will either charge your highest demand during the billing period or a minimum demand based on historical information from your last 12 months of usage.
Your billing demand charge is based on the highest of the 3 following numbers:
- Current Use – You are charged for 100% of your highest demand at any time from your current billing period
- Off-Peak – You are charged only 75% of your highest off-peak demand 8pm to 8am (and most holidays and weekends). If your highest off-peak demand was 1,000 kW, then your charge would only be for 750 kW *
- Peak Month – You are charged 75% of your highest billing demand used anytime during June-August and December-February for the last 11 months before your last billing period. If your highest demand during the peak months was 1,000 kW, then your charge would be for 750 kW, instead of any amount used during your current billing period lower than 750 kW.
* In order to be charged by off-peak demand, you must have an off-peak meter. If you do not have an off-peak meter and would like to learn if you could save money by using one, call our business call center at 1-800-253-5801. You can pay $20 a month for a year to see if you could save.
How can you decrease your demand?
One way to reduce your demand while maintaining your energy consumption needs is to spread out your usage throughout the day. Review your business processes and determine if you can perform high energy consuming tasks at different times of the day. Perhaps you can run some equipment in the morning and other equipment in the afternoon instead of all equipment in the morning. You may be able to align your business processes to balance and reduce your demand which will save you money.
Our energy and money saving programs and tools can help you decrease your entire electric consumption and demand too.
Since your demand can be based on historical electricity usage, you may not be able to reduce your demand immediately. You can impact future bills by reducing your demand each month.
