Your electric bill has two charges. Most people only understand one.
kWh vs kW — two different measurements
Energy charge (kWh): How much electricity you used over time. Measured in kilowatt-hours. Like miles driven. Demand charge (kW): The highest rate at which you used it. Measured as peak kilowatts in any 15-min interval. Like top speed reached. You pay for both. Separately.
How demand is measured
The utility records your power draw in 15-minute intervals. The highest 15-minute average in the billing period = your peak demand. You pay a $/kW rate on that single peak.
Bakery example: Monthly consumption: 8,400 kWh Energy rate: $0.11/kWh Energy charge: $924 Peak demand: 85 kW (all ovens + mixer + HVAC at 4 AM) Demand rate: $14.68/kW Demand charge: 85 × $14.68 = $1,248 The 15-minute spike costs MORE than the entire month. Why it happens
The utility sizes infrastructure — transformers, cables, switchgear — for your peak load. Even if 85 kW only happens once per month, the equipment must handle it. Demand charges pay for that capacity.
Where peaks hide
Simultaneous startup: Oven 1: 18 kW Oven 2: 18 kW Oven 3: 18 kW Mixer: 12 kW Proofer: 8 kW HVAC: 11 kW ────────────── Total: 85 kW ← all in one 15-min window Average load rest of month: 28 kW The peak is 3× the average. The demand charge reflects the peak, not the average.
The fix: stagger, don't reduce
Before (simultaneous): 4:00 AM — all equipment starts → 85 kW peak After (staggered): 3:45 — Oven 1 preheats (18 kW) 4:00 — Oven 2 preheats (18 kW), Oven 1 drops to 6 kW 4:15 — Oven 3 preheats (18 kW), Oven 2 drops to 6 kW 4:30 — Mixer starts (12 kW), Oven 3 drops to 6 kW 5:00 — HVAC starts (11 kW) Peak 15-min window: 52 kW Same total kWh. Same production. Different sequence.
The savings
Before: 85 kW × $14.68 = $1,248/mo After: 52 kW × $14.68 = $763/mo Savings: $484/mo = $5,813/year No new equipment. Just a startup schedule. Demand charge rates by facility type
Facility Typical Peak $/kW Rate Monthly Demand ───────────────────────────────────────────────────────────────── Small retail 30-50 kW $8-12/kW $240-600 Restaurant 50-100 kW $10-15/kW $500-1,500 Small manufacturing 100-300 kW $12-18/kW $1,200-5,400 Office building 200-500 kW $12-20/kW $2,400-10,000 Data center 500-2,000 kW $15-25/kW $7,500-50,000 Demand charges are typically 30-50% of the total commercial electric bill.
The check
1. Find "Demand" or "Peak Demand" on your bill (kW, not kWh) 2. Note the $/kW rate 3. Request 15-minute interval data from your utility 4. Find the time window of the peak 5. List every piece of equipment running in that window 6. Stagger startup times across different 15-min intervals The energy cost per piece of equipment determines when the peak happens. Know each load, schedule the startup, and the demand charge drops without reducing production.
