Enter the maximum demand during any 15 minute period (kW) and the electricity rate ($/kWh) into the Calculator. The calculator will evaluate the Demand Charge.

## Demand Charge Formula

DC = MD15 * R

Variables:

- DC is the Demand Charge ($/hr)
- MD15 is the maximum demand during any 15 minute period (kW)
- R is the electricity rate ($/kWh)

To calculate Demand Charge, multiply the maximum demand during any 15 minute period by the electricity rate.

## How to Calculate Demand Charge?

The following steps outline how to calculate the Demand Charge.

- First, determine the maximum demand during any 15 minute period (kW).
- Next, determine the electricity rate ($/kWh).
- Next, gather the formula from above = DC = MD15 * R.
- Finally, calculate the Demand Charge.
- After inserting the variables and calculating the result, check your answer with the calculator above.

**Example Problem : **

Use the following variables as an example problem to test your knowledge.

maximum demand during any 15 minute period (kW) = 300

electricity rate ($/kWh) = 4.25

## Frequently Asked Questions

**What is a Demand Charge in electricity billing?**

Demand Charge is a fee charged by utility companies based on the maximum amount of electrical power consumed during a specific period, typically a 15-minute interval. It reflects the cost to the utility company for providing the peak demand capability, not just the total energy consumed.

**How does the maximum demand during a 15-minute period affect my electricity bill?**

The maximum demand during any 15-minute period determines the Demand Charge component of your electricity bill. A higher peak demand results in a higher Demand Charge, encouraging consumers to manage their peak energy usage to reduce costs.

**Why do utility companies charge a Demand Charge?**

Utility companies impose a Demand Charge to recover the costs associated with maintaining the capacity to supply the maximum power that a customer could require at any moment. This ensures the utility can meet peak demand periods and maintain grid reliability.

**Can I reduce my Demand Charge on my electricity bill?**

Yes, you can reduce your Demand Charge by managing and reducing your peak energy consumption. This can be achieved through load shifting, using energy-intensive appliances during off-peak hours, and investing in energy efficiency measures.