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


  • 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.

  1. First, determine the maximum demand during any 15 minute period (kW). 
  2. Next, determine the electricity rate ($/kWh). 
  3. Next, gather the formula from above = DC = MD15 * R.
  4. Finally, calculate the Demand Charge.
  5. 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.