What is the difference between demand and energy consumption?
A simple way to understand the difference between demand and energy consumption is to consider the following space heater scenarios from two different customers:
Illustration B requires 6 times more demand. One 1500-watt space heater running for 6 hours uses 9,000 watt hours, which is equivalent to 9 kWh. So does six 1500-watt space heaters running for one hour. But demand on the grid is six times higher when six heaters run simultaneously for an hour.
If both of these customers are only billed for their energy consumption, both would receive the same bill for 9,000 kWh of energy. However, in the second scenario, the customer uses all the energy to power the space heaters within a one-hour period.
A customer who sets a high demand requires more services from the PUD, including additional capacity and more expense for lines, transformers, substation equipment, etc. Because of this, they will see a higher Demand charge reflected on their bill. Customers who consume more energy but have a lower demand will still pay for the energy usage through the Energy charge, but will see less Demand charge.