For our last post in this series, we'll look at peak demand charge management.
While demand charges have been used for commercial and industrial customers for some time, they’re relatively new to residential customers.
Most residential energy bills in the US today include a fixed charge to cover the cost of maintaining the grid infrastructure, which is the same for every customer, and a variable charge based on the amount of energy (kilowatt hours, or kWh) used in a month which covers the cost of generating that energy at a power plant. With peak demand charges, the fixed charge is replaced by a variable charge based on the maximum power (in kilowatts, or kW) that a customer uses in the month at any time. While this might seem like a penalty, it tends to be a good thing for the electricity system as a whole, because utilities need to invest in infrastructure to handle that peak power demand, even if it only occurs for a few minutes each month. Peak demand charges are a way of passing the costs along to the customers that actually incur them.Read More >>