One 15-minute power spike sets your peak demand for the entire billing month. You pay for it every single day — whether you reach that level again or not.
"One 15-minute power spike — even if it happened once, even if it was accidental — sets your peak demand for the entire billing month. You pay for it every single day of that month, whether you ever reach that level again or not."
Most businesses think of their electric bill as one number: how much power they used. But commercial customers on utility tariff schedules — such as PG&E Schedules B-19 and B-20 — are billed on three distinct cost layers, not two.
Your energy charge ($/kWh) covers what you consume. Your demand charge ($/kW) covers something different — your highest single 15-minute power draw of the entire month. The demand charge is the cost layer most businesses do not fully understand — and the one with the most room for reduction.
| Billing Layer | When It Applies | What It Means for You |
|---|---|---|
| On-Peak Energy | 4–9 PM, every day, year-round | Highest $/kWh rate |
| Super Off-Peak | 9 AM–2 PM, March–May only | Lowest $/kWh — cheapest window for heavy loads |
| Partial-Peak | All other hours | Mid-tier rate |
| Peak Demand Charge | Highest 15-min reading, entire month | Flat $/kW × 30 days — often your largest line item |
Every 15 minutes, all day, every day of your billing month, your utility records your average power draw in kilowatts. At month end, they find your single highest reading. That one number — your peak demand — is multiplied by a flat per-kW rate and billed for all 30 days.
A facility running normally until one compressor and the HVAC cycle simultaneously can set a demand ceiling that costs thousands — from a single 15-minute window.
"That one 15-minute spike is a tax on your entire month."
Utility demand rates are not flat year-round. Summer months carry significantly higher demand charges, making June through September the most expensive window for any spike to occur.
Highest demand rates of the year. A spike during these months sets your most expensive possible ceiling. On-peak hours (4–9 PM) overlap with peak cooling demand — the highest-risk window in your entire utility calendar. Summer demand management is not optional.
Lower demand rates apply, but the 15-minute interval rule applies equally. A spike in March still costs you for all 30 days of March. Super Off-Peak rates (9 AM–2 PM, March–May) offer the cheapest window to run heavy loads if you can schedule them.
Demand spikes happen during normal operations when the timing of multiple loads overlaps within a single 15-minute window. None of these require a malfunction — they are ordinary operating patterns that happen to coincide.
None of these require a malfunction. They are normal operating patterns that happen to overlap — and the cost is billed for 30 days.
Many common upgrades reduce kilowatt-hour consumption but have no effect on peak demand, because the demand charge is based on your highest 15-minute draw — not total monthly consumption.
| Upgrade or Change | Effect on Demand Charge |
|---|---|
| LED lighting upgrades | No effect. Reduces kWh but does not change your peak power draw during a simultaneous equipment cycle. |
| Solar panels | No effect. Reduces daytime kWh, but solar output can be minimal or zero during a 4 PM spike on a cloudy day. The spike still registers. |
| Battery storage (unconfigured) | No effect. Provides no spike protection unless specifically programmed for demand management with real-time peak monitoring. |
| Energy audits alone | No effect. Identify where you use energy, not when you spike. Usage patterns and demand patterns are different data. |
| Building Automation System (BAS) | Directly addresses the problem. Pre-cools before 4 PM, eases setpoints during peak window, staggers equipment cycles. |
| Load scheduling | Effective supporting strategy. Staggering large motor startups by 30–60 seconds spreads draw across multiple intervals. |
| Battery storage (demand-configured) | Active peak shaving. When sized and programmed to discharge during peak windows, directly reduces your highest 15-minute reading. |
"When peak kW demand is reduced, that lower ceiling persists — every month going forward, your demand charge is calculated from a smaller number."
Your utility's interval data — your actual 15-minute readings for every hour of every day — is available for your account and shows exactly when your peaks occur and what drives them. Before requesting that data, check these indicators first.
Send us 12 months of bills. We will identify your peak demand pattern and show you exactly what is drivable down — at no cost.
This report references PG&E tariff structures and schedules as the primary example. PG&E is the dominant commercial electric utility in Northern and Central California. All California electric utilities — including publicly owned utilities such as City of Lodi Electric, SMUD, TID, and MID — file their own tariff schedules with the CPUC or are governed by locally approved rate schedules. While billing layers, thresholds, and peak hour windows differ by provider, the underlying structure — 15-minute interval demand recording — is standard across California commercial tariffs. Contact Westbrook Utility Management for a demand charge review specific to your utility and tariff schedule.
We review 12 months of your utility bills, pull your interval data, and identify exactly when and why your demand peaks are occurring. If there is a path to reducing your demand ceiling, we quantify it precisely.
These three questions let us review your specific situation before we ever get on a call — so we're not starting from zero.
Peter will be in touch within one business day to schedule your free bill review. Thank you for reaching out.