Demand charges are fees based on the highest rate of electricity consumption recorded during a billing period, measured in kilowatts (kW). Unlike energy charges based on total kWh consumed, demand charges reflect the peak load a customer places on the grid. They are most common for commercial and industrial customers. A factory that draws 500 kW for one hour will pay a higher demand charge than one that draws 100 kW consistently, even if total consumption is similar.
Demand Charge
A fee based on the maximum rate of electricity consumption (peak demand in kW) during a billing period.
Related Terms
Peak Demand
The maximum electricity consumption in a grid during a specific period, typically hot summer afternoons.
Electricity Rate
The price charged per kilowatt-hour of electricity, varying by customer class (residential, commercial, industrial).
Time-of-Use (TOU) Rates
Pricing that varies by time of day, with higher rates during peak demand hours and lower rates off-peak.
this entity is one of the U.S. state-level electricity rates and generation mix concepts that recurs across this site. The definition above is the technical answer; the paragraphs below add the practical context for how the concept connects to the the EIA Open Data API and State Electricity Profiles data behind every per-entity page on the site.
In the the EIA Open Data API and State Electricity Profiles data, this concept shapes one or more of the fields that drive the per-entity grades and rankings on this site. The methodology page describes which fields feed into which output; this glossary entry documents the underlying term.
Source: U.S. Energy Information Administration, 2026.