Explaining Energy Demand
Occasionally, we get questions about the line on residential utility bills that shows demand. We have found that it’s often easiest to explain energy demand when we compare it to energy consumption.
Energy Demand is the speed at which you use electricity and is measured in kW (kilowatts). Typically, the highest energy demand recorded in the billing period is what is billed. Similar to how the speedometer in your vehicle measures how fast you are traveling, the electric meter measures how fast (kW) you are using electricity.
Energy Consumption is the amount of electricity you use during a billing period and is measured in kWh (kilowatt hours). Every time you use an electric product or appliance, there will be energy consumption, which is then totaled up for the billing period. Using the vehicle analogy again, the odometer keeps track of every mile travelled just as your electric meter tracks every kWh consumed.
To illustrate both energy demand and consumption, let’s pretend the only electricity you used was to cook a turkey in an electric oven. When you turned the oven on and it heated up to 350 degrees, let’s say it used 3 kW. This 3 kW would be the highest kW needed to cook the turkey, i.e., the energy demand. Assume it took three hours to cook the turkey and the demand stayed at 3 kW all three hours. The energy consumption for the oven was 3 kW X 3 hours = 9 kWh. If electricity was priced at $.09/kWh, then your energy consumption cost for the oven would have been 9 kWh X $.09/kWh = $.81. Currently, DSO does not have a residential energy demand charge, but let’s assume the energy demand charge was $2/kW. Using the 3 kW from earlier, we can calculate energy demand cost as 3 kW X $2/kW = $6. In this example, the electricity bill would show an energy consumption charge of $.81 (for 9 kWh) and an energy demand charge of $6 (3 kW).
Now let’s say that you cooked a second turkey in an electric roaster, which only used 2 kW of energy. The energy consumption for that turkey totaled 6 kWh (2 kW X 3 hours) and would add $.54 to your bill (6 kWh X $.09/kWh). The energy demand, though, would NOT show on your bill because it was 2 kW, which was less than the 3 kW from the oven turkey. In this example, only the HIGHEST demand for the billing period was recorded and billed.
For residential accounts (including some small commercial and agricultural accounts), DSO has indirectly collected demand expenses through the monthly availability and energy charges. For commercial and industrial accounts, DSO charges for demand as a separate line item on the bill.