Demand charge calculator
The basic formula is billed demand in kW multiplied by the demand rate in dollars per kW-month. Finding the right billed demand is the hard part.
The formula
Demand charge = billed demand (kW) x rate ($ per kW-month)
Billed demand is usually the highest interval average in the month. To get a kW value from a kWh reading, divide energy by the interval length in hours: 100 kWh in 15 minutes is 100 / 0.25 = 400 kW.
Worked example
Illustrative numbers, not a real rate: a demand charge of $15 per kW-month and an energy charge of $0.08 per kWh.
| Peak 400 kW | $6,000 |
| Peak 500 kW | $7,500 |
| Peak 600 kW | $9,000 |
Each extra kW of peak adds $15 for the month at this illustrative rate.
Ratchets
Some tariffs include a ratchet: billed demand is the greater of this month's peak and a percentage of a prior peak. At an illustrative 80% ratchet, a 500 kW peak sets a floor of 400 kW (80% x 500) for later months, so one bad afternoon can keep costing money. Check whether your tariff has one.
Frequently asked questions
Is this calculator exact?
No. Real tariffs can add time-of-use periods, seasonal rates, minimums and ratchets. Use your rate schedule for the exact bill.
How do I get my peak kW?
Your utility interval data (often a CSV from your utility portal) shows each interval. The highest interval average is the peak.
What if my data is in kWh?
Divide each reading by the interval length in hours to get average kW.
Try it on your own numbers
All numbers on this page are illustrative, including the rate. They are not a real utility tariff. Your bill depends on your utility rate schedule; check it before acting. Peak Ledger gives estimates, not a utility bill or an engineering design.