What to establish before acting
Request both interval data and the tariff, then distinguish measured peak from billed demand. Several loads may overlap, but a visible spike matters only if it affects the tariff’s measurement. A demand ratchet can delay benefit after a reduction, and a system-coincident allocation can use different intervals from the site’s monthly maximum. Preserve essential operations when testing schedules. Project economics need installed cost and verified billing effects rather than a universal savings percentage.
Illustrative decision boundary
An illustrative $10/kW-month charge on 100 kW is $1,000. If a control change lowers measured demand to 80 kW but a ratchet still bills 90, the modeled charge becomes $900, not $800. Real formulas differ, so use the actual account rule.
Documents for a useful review
- Actual tariff, demand units, interval duration, and historical peak rules.
- Interval records and equipment or occupancy schedules.
- Measured and billed demand with a verified control or project scenario.
Questions & answers
What is the difference between kW and kWh?
kW expresses power at a rate; kWh measures energy over time. Equal monthly kWh can be delivered with different peaks and therefore different demand charges.
Can lower consumption leave demand unchanged?
Yes. If the reduction misses the counting interval or a minimum still applies, demand cost can remain while energy cost falls. Estimate those benefits separately.
How long is the measurement interval?
It varies by tariff and metering. Confirm it rather than assume every account uses 15 minutes or that a momentary equipment surge is the billed quantity.
Will a battery always pay for itself?
No. Dispatch, duration, peak predictability, degradation, efficiency, installation, safety, and tariff rules require qualified modeling. A simple kW nameplate multiplication is insufficient.
Is coincident peak the same as monthly peak?
Not necessarily. A system-based charge uses specified grid intervals; a local monthly demand charge can use the facility’s own maximum. Identify each obligation separately.
Sources & scope
Primary references reviewed October 15, 2026. These sources support the stated concepts; actual tariffs, program rules and signed agreements govern the account. Decision examples and operational worksheets are original educational analysis.
- DOE FEMP: Evaluating your utility rate options
Demand, ratchets, time-of-use rates, coincident peaks, and standby charges. - FERC: Wholesale electricity markets overview
Wholesale energy, capacity, and ancillary-service functions. - DOE FEMP: Light commercial heating and cooling
Equipment sizing, installation, economizers, and control requirements.