Defined term

Electricity demand charge

An electricity demand charge is the portion of an electric-service bill based on the customer's measured or calculated maximum capacity usage under the applicable rate schedule.

Also known as billing demand charge

grid · Concept code GS-CONCEPT-062 · Last verified August 20, 2026

Definition and boundaries

Definition

An electricity demand charge is the portion of an electric-service bill based on the customer's measured or calculated maximum capacity usage under the applicable rate schedule.

Applicable jurisdiction: US; rate schedules vary

Definition claim verification: Verified August 20, 2026

In plain language

For Electricity demand charge, the controlling utility tariff, interconnection document, meter arrangement, and jurisdiction matter more than a generic national description.

What it is not

It is not a charge based only on total monthly kilowatt-hour consumption.

Decision context

Why it matters

The demand interval, ratchet, season, time period, measurement, minimum, units, and customer class must be read from the tariff before solar or storage savings are modeled.

Applicable jurisdiction: US; rate schedules vary

Decision-context claim verification: Verified August 20, 2026

Information boundary

This page provides general educational context, not a site design, production guarantee, utility determination, contract interpretation, legal opinion, tax conclusion, or individualized financial advice. Verify property, equipment, utility, jurisdiction, program, and agreement details before acting.

Concept relationships

Broader concepts

  • Electricity pricingPublished conceptElectricity demand charge is a more specific concept under Electricity pricing

Affects

  • Payback periodPublished conceptElectricity demand charge can affect how Payback period is evaluated

Primary sources

What to do next

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