One of the most common questions we get from business customers is, “What is this demand charge on my bill, and how do I lower it?”
While the concept of energy demand can be a little confusing, business owners need to understand how it works so they can consider operational changes that may turn into major savings on their bill.
So, let’s jump into what energy demand is and how you can manage yours to help cut down on your business’s energy costs.
Essentially, energy demand describes how much electricity is used at any given moment. A lot of energy usage is high demand, while little usage would be low demand.
Think about this example of low versus high demand, in the form of light bulb wattage (W). For instance, a 100 W light bulb is your demand, and the energy usage is how long the light bulb runs or is turned on (wattage and time = kWh). You are charged for two portions of your energy: the total kW used (kW/demand) and how long it runs (kWh/energy usage). Add up all the wattages at the same time and that’s your peak wattage or billed demand usage. FPL has to have infrastructure in place to support that max demand, even if you only use it once a month.
For FPL to reliably supply energy even when in high demand, we must establish additional plants and add equipment to our distribution and transformer networks. The demand charge you may see on your energy bill partially offsets the cost of installing this new equipment.
For this reason, businesses with a higher energy demand will see a higher charge than businesses with lower energy demand that does not contribute as heavily to the need for additional infrastructure.
When it comes to energy demand costs, you can save several ways.
First, consider joining FPL’s Commercial Demand Reduction (CDR) program. The CDR helps reduce power usage during peak demand periods, or times when the most energy is being used and supplied at once.
If FPL needs to reduce usage at a certain time, enrollees in this program are notified in advance and have their power either switched to their generator or can drop their energy load. If they switch to their generator, in what is called a load control event, rather than using energy supplied by the grid, participants earn monthly credits — even in months with no load control event.
Also, take a look at the rate your business is charged. For example, a time-of-use (TOU) rate allows a business to use the same amount of energy but get charged less used during non-peak times. If you run a business and can shift energy usage to overnight or early morning, this may work for you.
If you haven’t already, check out the Business Energy Checkup, which you can use to better track, learn and control your business’s energy usage to save on your bill.
Energy demand sounds more complicated than it is, and we want you to know we’re always here for you to discuss your business’s energy usage and all the ways you can cut down on your bill — including through managing energy demand properly.
For more tips on ways to save on your energy bill for home or business, check here.