Understanding demand charges

What is a demand charge?

A demand charge is a fee based on the highest amount of electricity your business uses at any one moment. This charge is applied by your local utility Transmission and Distribution Service Provider (TDSP) and regulated by the Public Utility Commission of Texas (PUCT). This charge appears on your Cirro bill.

The impact of demand charges on your business

Business electricity bills differ from residential bills and include two main components:

Energy usage, which is the total amount of electricity you use over time
Demand charge, which is the highest amount of electricity you use at one time.

Demand charges are calculated based on the highest 15-minute interval of electricity use during your billing cycle, typically when several large systems or pieces of equipment power on at once.

Here are three practical ways to manage your electricity demand:

Turn equipment on in stages to avoid a sudden demand spike.

Choose ENERGY STAR certified equipment, which may use less power.

Use equipment that fits your needs so you’re not using more electricity than necessary.

Where are demand charges on your bill?

The demand charge is combined with other delivery charges and appears as one line item.

You can find additional details by visiting the PUCT’s rates and tariffs page

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Why is my demand charge high if my business has been closed?

Your TDSP may still apply demand charges until your electric meter is fully de-energized. Even if your business is mostly shut down, using electricity for just 15 minutes can set a new peak demand for the month.

What is the difference between an energy charge and a demand charge?

Energy charges reflect the total amount of electricity your business uses over time, measured in kilowatt-hours (kWh) . Demand charges are based on your highest rate of usage during any 15-minute window, measured in kilowatts (kW) or kilovolt-amperes (kVA) . Think of it like driving: Energy is the total distance, and demand is your top speed.

How is a demand charge calculated?

The demand charge is based on your business's highest 15-minute interval of energy use during the billing cycle. This number is then multiplied by the rate in your TDSP’s tariff.