What is demand?
Demand is a term to describe how much electricity is used at any given moment. Most businesses have a meter that tracks and records the highest 30-minute level of electricity demand for each billing period. Demand is measured in kilowatts (kW), while the total amount of electricity used is measured in kilowatt-hours (kWh).
Let's compare electricity use between two customers, as an example. Both customers use the same amount of kilowatt hours (kWh) - 20,000 kWh - over the course of a month. The first customer uses a steady amount of electricity over the 30-day period while the second customer uses much of the 20,000 kWh in bursts over a few hours per day or a few days of the month. Although both customers used the same amount of electricity, the second customer would be charged more for placing greater demand on the system during the short periods of time when their electrical use peaked.
Here's another way to think of demand. Imagine that every business in your area receives water through a standard one-inch pipe, and that for most of the businesses in your area, this is sufficient. But you have particular needs that require, on occasion, more water than is possible to deliver through the one-inch pipe. To meet these peaks in your water requirements, the water company must install equipment (larger main lines, a larger service pipe, etc.) to get more water to you. The added costs of this equipment are covered by a "demand" charge when you use more water than can be delivered through the one-inch pipe.
Why does FPL charge for demand?
If your business requires large peaks of electricity, FPL must be able to supply the electricity and have the infrastructure in place to deliver it to you. To supply the increased electricity, we must build power plants and add equipment to our distribution and transformer networks to meet your needs. These additional costs are passed onto users with large peaks in demand in the form of demand charges.