Canonical Definition
Billing demand is the demand value, expressed in kW or kVA, that a utility uses to calculate demand charges on a bill. It may equal the metered maximum demand for the period, or it may be adjusted under tariff provisions such as minimum demand levels, demand ratchets that base charges on a percentage of a prior peak, or power factor adjustments. The applicable rules are defined in the customer's rate schedule and vary by utility.
Explanations
Billing demand is the demand number your utility bills on, in kilowatts (kW). It is used to figure any demand charge. It often equals your highest measured demand for the period. But rate rules can adjust it. For example, a rule may set a floor or use part of a past peak. That past-peak rule is called a ratchet. Demand charges are most common for businesses. Some home rates have them too. Details vary by utility and rate plan.
Billing demand is a power number on some bills. It comes from the most power used at once. Sometimes rules bump that number up before it goes on the bill.
Analogy Bank
Billing demand is like a shipping bill based on dimensional weight: it starts from a real measurement, but contract rules can adjust the number you're charged on.
It's like a venue sized and priced for your busiest event of the year — and under a ratchet rule, last summer's big event can still set this month's price.
Think of it like a tollway charging by your single widest vehicle rather than your total trips — with fine print that can round that figure up.
Do Not Say
- ✕Do not assume billing demand equals metered demand; ratchets, minimums, and adjustments may apply.
- ✕Do not quote demand charge prices; they are set by each utility's rate schedule.
- ✕Do not promise that reducing peak usage will immediately lower billing demand; ratchet provisions can keep prior peaks in effect.