Understanding Demand

What is Demand?

Demand is the rate at which your business consumes electricity. It’s the greatest amount of electricity needed to power your business at any given point in time and is measured in kilowatts. Demand is different than energy use. Energy use is how much electricity you use and is measured in kilowatt-hours.

Here's an example:

Company A is a printing business that is open 40 hours a week and consistently requires 20kW over the course of a 160-hour month. Their energy use is 3,200kWh (20kW X 160). Their maximum demand is 20kW. In addition to the energy charges for the 3,200kWh, Company A will also pay demand charges for the 20kW

Company B is an auto repair shop that is open 30 hours a week and requires 40kW over the course of the 120-hour month. For one hour every month they require 100kW to start up the machines in their shop. This means their monthly energy use is 4,800kWh (40kW X 120) but their maximum demand is 100kW. This means in addition to their energy charges for the 4,800kWh, they will also pay demand charges for the 100kW

Demand charges will be a larger portion of your bill if you use a lot of electricity over a short period of time (Like Company B) and a smaller portion of your bill if you use electricity more consistently (Like Company A).

Understanding Demand Chart

Three types of Demand charges

  1. Non-coincident: a component of the Utility Distribution Charges (UDC), this is the highest kW demand peak in any 15-minute interval in the billing month, or 50% of the highest peak in the last 11 months. Non-coincident demand can occur any time, day or night, on-peak, off-peak or super off-peak. It recovers the costs SDG&E incurs to serve individual customers, such as transformers located at customer’s site, sized to customer’s specific load requirements.
  2. On-peak: a component of the Utility Distribution Charges (UDC), this is the highest kW demand in a 15-minute interval that occurs during the on-peak time period. The on-peak period varies by summer and winter seasons. Summer: June 1 to October 31. Winter: November 1 to May 31. It recovers SDG&E’s cost of building out the electric infrastructure (transmission and distribution substations, lines, etc.) in support of non-generation related costs necessary to meet peak demands.
  3. Generation: a component of Rate Electric Energy Commodity Cost (EECC), similar to On-Peak, this is the highest kW demand in a 15-minute interval that occurs during the on-peak time periods which vary by winter and summer seasons. Summer: June 1 to October 31. Winter: November 1 to May 31. It recovers the generation costs of meeting energy demands on-peak.

Check your pricing plan to find out if your plan includes demand charges.

Watch this video to learn more

Tips for managing Demand

  • Understand your pricing plan: Know what plan your business is on and your available options. You can get personalized comparisons of the plans available to you by visiting My Account.
  • Energy-efficient upgrades: Install energy-efficient equipment and lighting.  Visit our savings center
  • Know your data: Use our Business Energy Advisor tool to help monitor and analyze your energy use.  Log in at sdge.com/BEA
  • Evaluate your operations: Even out your electricity use to reduce any spikes in demand. Create a schedule so heavy equipment doesn’t operate all at once or use equipment at a lower intensity.