![/quote]Isn't that because once a demand meter is bumped up to a certain peak demand, all future electricity is priced at that demand level until the end of that billing cycle?
Practices vary a lot between utilities and different states. I don't know a term for what Don described, but a similar concept is the Demand Ratchet, which can set demand charges that continue forward for up to a year, regardless of how low your demand falls during that year. Each time you hit or exceed that high demand paint, the clock is set for another 12 months of charges going forward. The reasoning is that the utility has to build and maintain infrastructure to support that high level of demand even if you're not using it often.
I'm lucky to have a pretty straightforward system. We pay demand charges for the highest demand averaged across a single 15 minute period in the month, and that demand charge is unrelated to the energy charge per kWH, regardless of when consumed (no Time of Use pricing). If we improve operations, the savings materialize within a month, instead of waiting up to a year for a full return on the investment.
Here's a more detailed description from the WSU Energy Extension Service:
Ratchet Demand Charge
Some utilities have a ratchet charge on the demand. The highest monthly demand experienced for the year becomes your annual peak. The annual peak is then used to ratchet the monthly demand peaks for the next 11 months. For example, the minimum demand charge for any month is 60 percent of the highest demand in the preceding 11-month period. Demand is a very important target for reduction if your utility has a ratchet clause on the demand.
Examples of a ratchet demand charges:
Your demand in December is 800 kW, and you pay $5 per kW
You will pay a $4,000 demand charge for December
The following June, the demand meter reads 150 kW. You are charged $2,400 rather than $750 (60 percent of 800 kW is 480 kW, times $5 per kW, equals $2,400)
This increase in demand cost of $1,650 is due to the ratchet clause in the rate schedule. This same ratchet will be charged in all warm months, even when demand is low.
2012 i-SE "MR BEAN" 110,300 miles
2016 KIA SOUL EV, 90 kW, 27 kWh, 34k miles
2000 Mazda Miata EV, 78 kW, 17 kWh
1983 Grumman Kurbwatt EV,170 kW, 32 kWh
1983 Mazda RX-7 EV 43 kW 10 kWh
1971 "Karmann Eclectric" EV 240 kW 19 kWh