Demand Rates, Explained

If you are on a demand rate, your electric bill not only includes a Customer Charge and Energy Charge, but it also includes a Demand Charge, which is a charge for an electrical "demand" that occurs during each monthly billing cycle. This charge is designed to cover part of the actual costs of providing electricity to your home.

Electric demand is measured in kilowatts (kW). It is a measure of the period during the month when the greatest amount of power was required.  Another way to think about it is the point in the month when the greatest number of electrical appliances and other loads operated at one time. If your demand exceeds 20kW, or your energy use exceeds 5000kWh, then your account may be moved to a demand rate per our TARIFF.

Demand rates, the math behind the numbers.

Alaska Electric Light & Power meters measure demand by identifying the 15-minute window during which the greatest amount of energy was consumed, as shown in this example.  Assume the peak energy consumption for a home over 15 minutes during a billing period is 5 kilowatt-hours (kWh).  To calculate the average power (demand) over that 15 minutes, we use the following formula:

5 kilowatt-hours   =   5 kilowatt-hours x 4   =   20 kilowatts

     ¼ hours                        1 hours

In this example, the home’s peak demand was a period when the average power consumption was 20 kW over 15 minutes.  This could’ve been caused by exactly 20 kW of load operating for 15 minutes or more, or it could’ve been 10 kW for 7.5 minutes followed by 30 kW for 7.5 minutes, followed by 10 kW or less for 7.5 minutes.  Because the demand peak records the highest average power over 15 minutes, the instantaneous peak power might be higher than the billed demand peak. 

Still have questions?

If you are curious about AEL&P’s demand rates, including our Residential Heat Pump rate schedule, give our energy expert, Lori Sowa, a call at 907.463.6303.