# What is the Demand charge?

The Demand charge is a variable charge that covers the costs of maintaining the distribution system, including poles, wires, substations, trucks, and line crews. It is based on the energy demand during a billing period, and is calculated by taking the highest demand recorded in a billing period (in kW) and multiplying it by a demand rate (currently set at \$1.00/kW).

The more high-energy appliances the customer uses at the same time within a one-hour period, the higher the demand.

For example, if a customer turns on their oven (5kW) and clothes dryer (5kW) and runs both at the same time within an hour for 30 minutes, then their average demand for that time interval would be measured as: ((5kW x 30m) + (5kW x 30m)) / 60m = 5kW. If this is the highest average demand interval recorded in the billing period, then that would be the demand usage for that billing period. The Demand charge would then be calculated as: 5kW x \$1.00/kW = \$5.00.

However, if the customer turns on the oven and runs it for 30 minutes, then turns on the clothes dryer for the next hour and runs it for 30 minutes, the average demand usage would be: (5kW x 30m) / 60m = 2.5kW. If this is the highest average demand interval recorded in the billing period, then that would be the demand usage for that billing period. The Demand charge would then be calculated as: 2.5kW x \$1.00/kW = \$2.50.