Demand is one of the key drivers of electricity costs and a factor in your eligibility for business pricing plans. Electricity consumption, as measured in kilowatt-hours (kWh), represents the amount of energy used over a given period of time. Whereas electricity demand, as measured in kilowatts (kW), represents the rate at which electricity is consumed at a given point in time.
Three types of Demand charges
- Non-coincident: This applies to 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. A component of the Utility Distribution Company Total Rates (UDC), the non-coincident demand charge recovers the SDG&E costs of building out the electric infrastructure e.g. transmission and distribution substations, lines) in support of non-generation related costs necessary to meet demands.
- On-peak: This applies to 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. A component of the Utility Distribution Company Total Rates (UDC), the on-peak demand charge recovers SDG&E’s cost of building out the electric infrastructure (e.g., transmission and distribution substations, lines) in support of non-generation related costs necessary to meet peak demands.
- Generation: This applies to 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. The generation demand charge is similar to the on-peak demand charge but is a component of the Electric Energy Commodity Cost (EECC).
Say your business has equipment that always demands 2kW from the grid the instant it’s on. The longer the equipment stays on, the more energy it consumes (kWh) over time – but the demand (2 kW) remains the same.
It’s important to pay attention to demand because it affects:
- Your eligibility for certain pricing plans. For example, if your demand goes over 20 kW, you may be moved to a pricing plan that has demand charges or different Time-of-Use periods.
- Your monthly energy bill, which is based on both the amount of energy you use and when you use it. Even if your pricing plan doesn’t include demand charges, the basic service fee is typically linked to your demand.
You’ll find demand displayed in two spots on your SDG&E bill.
If your pricing plan includes demand charges, then demand charges will be:
- A larger portion of your bill if you use a lot of electricity over a short period of time (see left graph below).
- A smaller portion of your bill if you use electricity more consistently (see right graph below).
COMPANY A is an auto repair shop that is open 30 hours a week and requires 40 kW over the course of the 120-hour month. For one hour every month they require 100 kW to start up the machines in their shop. This means their monthly energy use is 4,800 kWh (40 kW X 120 hours) but their maximum demand is 100 kW. This means in addition to their energy charges for the 4,800 kWh, they will also pay demand charges for the 100 kW.
COMPANY B is a printing business that is open 40 hours a week and consistently requires 20 kW over the course of a 160-hour month. Their energy use is 3,200 kWh (20 kW X 160 hours). Their maximum demand is 20 kW. In addition to the energy charges for the 3,200 kWh, Company A will also pay demand charges for the 20 kW.
It depends. You may get bumped to a pricing plan for bigger businesses if your demand rises enough to change your eligibility. With just a bit of effort to manage demand, you can remain eligible for your current plans as follows:
- f you’re already on a pricing plan for small businesses (demand under 20 kW), you only need one month per year when your demand is under 20 kW to stay on your current plan for another year.
- If you’re already on a pricing plan for mid-sized businesses (demand between 20 kW and 40 kW), you can stay on it by avoiding three consecutive months of over 40 kW demand.
- Understand your pricing plan. Know how the features of your current plan mesh with your business operations. Get personalized comparisons of the plans available to you in My Account. Check back occasionally for a refreshed comparison, since changes in your demand may change your options.
- Install energy-efficient equipment to lower overall demand. Visit our savings center.
- Track and manage your energy use information in My Account.
- Evaluate your operations to even out or lower demand. Consider shifting energy use to different time periods, staggering the use of heavy equipment to eliminate spikes in demand, and using equipment at a lower intensity.
- Learn about energy solutions that worked for a variety of local businesses in short video testimonials by Energy Showcase winners in 2018 and 2019.