Kilowatt-hours (kWh) measure how much electricity you used. That is the odometer. Run a 1,000-watt space heater for one hour and you have used 1 kWh. Utilities have billed this way for a century, and most people assume it is the whole bill.
Kilowatts (kW) measure how fast you were pulling electricity at one moment. That is the speedometer. If your air conditioner, water heater and dryer all happen to run in the same half hour, your speedometer spikes, even though the odometer barely moves.
On a demand rate, the utility bills you twice. Once for the odometer, and once for the single highest speedometer reading of the entire month. On a 30-minute plan like SRP's, a billing month contains roughly 1,400 intervals. One of them sets your demand charge. The other 1,399 do not matter.
That is the whole idea. Everything below is detail.
The block of time your utility uses to average your demand before recording it. Common intervals are 15, 30 and 60 minutes. A one-second surge when the compressor starts does not set your demand, because the utility averages the whole interval. SRP's Manage Demand plan uses a 30-minute window; APS demand plans average over a full hour.
A longer interval is more forgiving, because a short spike gets diluted by the quieter minutes around it.
The rate at which your building is drawing electricity right now. Add up everything running at this instant, in kilowatts, and that is your demand. A 4.5 kW water heater plus a 3.5 kW air conditioner plus 1.5 kW of lights, refrigerator and electronics equals about 9.5 kW of demand. Turn one of them off and demand drops immediately, even though nothing about your monthly usage has changed much.
Demand is the number your utility multiplies by the demand charge rate. It is also the number you have the most control over.
A line item that bills you for your highest demand during the billing period, expressed in dollars per kilowatt. It exists because the utility has to build and maintain enough generation, wires and transformers to serve your worst moment, not your average one. On residential demand plans in Arizona the charge is typically in the low-to-mid teens per kW in summer. Commercial rates in other territories run considerably higher.
This is often 30 to 50 percent of a bill on a demand plan, and it is calculated from one interval.
The ceiling you set for your building's demand. On an Energy Sentry system this is the DL setting on the front panel, and it is the one number the homeowner is meant to adjust. Raise it and you get more simultaneous appliance operation and a higher bill. Lower it and the system works harder to keep loads from overlapping. Bill Brayden, who invented the system, describes it as cruise control for the house.
Your demand limit is your savings-versus-comfort dial. Most residential customers land somewhere between 4 and 6 kW after a season of tuning.
The total quantity of electricity you consumed over the billing period. This is the number that has always been on your bill and the number most people mean when they say "usage." It is measured by multiplying power by time, so 5 kW running for two hours is 10 kWh.
Energy charges are real and worth managing, but they are the part solar addresses. Demand is the part it does not.
The ratio of the energy you actually used to the energy you could have used if you had run at your peak demand the entire billing period. Calculate it by dividing monthly kWh by (peak kW × 24 hours × days in the period). A church that spikes on Sunday and sits dark all week might run 15 percent. A convenience store humming along at the same draw all day might run 65 percent. Bill Brayden calls it electrical miles per gallon.
Low load factor means you are paying for capacity you barely use. Those buildings have the most to gain from demand control.
Shedding means turning something off to reduce demand. Sequencing means deciding the order in which things run so they do not overlap in the first place. The distinction matters because shedding is reactive and sequencing is planned. A crude device sheds after demand is already too high. A demand controller sequences continuously, holding one load for a few minutes so another can finish, then swapping them back.
Sequencing keeps your peak flat without anything in the house going cold, because nothing is off for long.
The hours your utility considers expensive versus cheap. On-peak windows are typically weekday late afternoon and early evening, when air conditioning demand is highest across the whole system. SRP's Manage Demand plan puts on-peak at 5 to 10 p.m. weekdays. Weekends and holidays are usually off-peak all day.
On most residential demand plans, only your on-peak demand counts. What you do at 10 a.m. Saturday is free of demand consequences.
The single highest averaged demand interval recorded during the billing period. "Billing determinant" is the utility's term for a measured quantity they multiply by a rate to produce a charge. Your peak demand is a billing determinant in exactly the same way your kWh total is.
One interval, once a month, sets this charge. Miss it by 2 kW and you pay for 2 kW every day of that month.
A tariff provision that keeps billing you based on a past peak even after your demand comes down. A common structure charges you the greater of this month's peak or a set percentage of your highest peak over the last eleven months. Ratchets are common in commercial tariffs and rare in residential ones. Some tariffs will reset a ratchet if you can show you have installed demand-reduction equipment.
Under a ratchet, one bad afternoon in July can inflate your bill through the following spring. Read your tariff before assuming the damage is temporary.
The category your utility assigns you to based on service size, usage or business type, which determines which tariff you are billed under. Small general service, medium general service, residential, and houses of worship are all rate classes. Crossing a threshold, often stated in kW, moves you into a different class with a different fee structure.
Sometimes the biggest win is not saving kilowatts. It is staying below a threshold so you never get reclassified into a tariff with a demand charge and a much higher service fee.
A rate design that charges different prices for energy depending on when you use it. TOU applies to kWh. It is often bundled with a demand charge on the same plan, which is why people confuse the two. On a TOU-plus-demand plan you are billed for when you used energy, how much you used, and how fast you were pulling it at your worst moment.
Shifting usage helps your TOU charges. It does very little for your demand charge, because demand is about simultaneity, not timing.
Not sure whether your bill has a demand charge?
Look for a line item measured in kW rather than kWh. If you find one, send us a copy and we will tell you what it is costing you and whether demand control makes sense for your situation. No obligation.
Monday–Friday, 8:00 AM–5:00 PM Arizona time · help@energysentry.com
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