What is a demand charge on an Alberta business electricity bill?

A charge based on the site's highest rate of draw during the billing period, typically measured over a 15-minute interval, billed in kW or kVA. It pays for the grid capacity held ready for the site rather than for total consumption.

What is a demand ratchet?

A tariff provision that carries a site's peak demand forward, so a single high peak can set the billed demand for months afterwards even when actual usage is much lower.

How can a business reduce demand charges?

Staggering equipment start-up, correcting power factor where demand is billed in kVA, scheduling non-critical loads away from peaks, confirming the site is in the right rate class, and in larger cases on-site generation or storage.

What is a demand charge on an Alberta business bill?

Short answer: A demand charge bills you for your highest rate of electricity draw during the billing period — usually the peak measured over a 15-minute interval — rather than for how much you used in total. It pays for the capacity the grid must hold ready for you, and on low-load-factor sites it can dominate the bill.

Last updated September 12, 2026.

Energy versus demand, in one line

Energy (kWh) is how much water you used this month. Demand (kW or kVA) is how wide you opened the
tap at its widest moment. The utility has to build for the widest moment, so it bills you for it.

Why it surprises people

Because it is not proportional to your usage. Two shops can consume the same kWh in a month and
pay very different delivery charges if one of them started everything at once at 7 AM and the other
staggered it. A single unusual event — a test run, an unusually hot afternoon, every compressor
restarting together after an outage — can set a peak that you then pay against for the whole
period, and under some tariffs for months afterwards through a ratchet.

Ratchets are the hidden one. Where a tariff carries your peak
forward, one bad fifteen minutes in July can still be costing you in November. If your billed demand
never seems to fall even in quiet months, this is usually why.

What actually reduces it

Staggered start-up. The cheapest fix available: sequence large equipment instead
of starting it together. It costs nothing and often works.
Power factor correction. Where demand is billed in kVA, poor power factor
inflates billed demand even though your real work has not changed.
Controls and scheduling. Shifting non-critical loads off the peak window.
Right rate class. Some sites are simply on a tariff that punishes their shape.
On-site generation or storage. Relevant for larger, peakier loads.

How to read it on your own bill

Look in the delivery section for a line in kW or kVA with a
dollars-per-unit rate beside it. Compare it to your kWh line over several months. If the demand line
barely moves while your consumption swings, you have a ratchet or a rate class question — both
worth a proper look, and both part of what the Energy Cost Audit checks.

Book a free Energy Cost Audit

Send us one recent electricity bill and one natural gas bill. We review both halves — the
energy you buy and the delivery charges you are billed to receive it — and come back with a
written summary of what we found and what, if anything, is worth changing. No cost, no obligation,
and no requirement to switch anything.

Upload your bills — free Energy Cost Audit

Prefer email? Send your bills to
info@getenergy.ca, or call
(780) 665-4771, Monday to Friday 9 AM–5 PM.

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