Buyer tool / Electric demand
A short peak can have a different cost from total energy.
Model one monthly demand component and see how a billed-demand floor can limit the result of reducing a measured peak.
Editable example, not a utility quote or an achievable-savings promise. Enter the demand rate from your tariff.
Annualization repeats this exact scenario twelve times. It is not a seasonal forecast. Other demand periods, energy charges, capacity, transmission, taxes and project costs are excluded.
The calculation, with units visible
Modeled billed demand = the larger of measured peak kW and the entered minimum or ratchet floor. Monthly modeled charge = billed demand kW × dollars per kW. The reduction scenario first lowers measured peak by the entered percentage, then applies the same floor.
Worked example: why a ratchet matters
At a measured 500 kW and $18/kW, the component is $9,000. A 20% peak reduction gives 400 kW and $7,200 if there is no floor. With a 480 kW minimum billed floor, it gives $8,640 instead: a $360 monthly difference. These are independently constructed inputs, not a tariff quote or client outcome.
Why the annual number is labeled annualized
Multiplying one month by twelve assumes identical peak, floor, rate and reduction in every month. Actual weather, operations, tariff periods and ratchet history vary. A budget should use the relevant month-by-month records rather than treating the annualized sensitivity as a forecast.
Read the tariff before choosing an action
The applicable tariff may define intervals, seasonal periods, separate on-peak or off-peak demand, minimums and ratchets differently. Capacity or transmission allocation may use regional coincident peaks rather than the highest interval at the facility. The model does not simulate those rules or determine which charge the account actually pays.
Measured reduction is an operating assumption
Staggering equipment, shifting suitable loads, thermal storage or batteries can alter demand under some conditions. Critical loads, safety, comfort, production quality and equipment constraints can limit those changes. Any engineering or control decision belongs with qualified facility personnel. Include project and maintenance costs before claiming a financial return.
Demand and supply are separate reviews
A new commodity rate does not automatically change the utility demand tariff. An operating change does not automatically change a supplier agreement. Use the offer comparison tool for supply arithmetic, keeping the components separate to avoid double counting.
Background: DOE industrial demand response and EIA electricity cost context. The tariff controls the actual bill.