The Restaurant Demand Charge Problem: One Rush Can Set Your Rate for 30 Days.

Demand charges are calculated based on the highest 15-minute interval of electricity demand during the billing month. For most commercial operations, this peak demand occurs predictably and is relatively stable from month to month.

Restaurants are different. The lunch rush is brief, intense, and driven by simultaneous equipment startup: the hood fans run continuously, the ovens cycle up, the fryers are brought to temperature, the HVAC system compensates for a full dining room. In that 15-minute window, every major load in the building may be running simultaneously.

That single interval — perhaps occurring twice a month during the biggest rushes — sets the demand charge for the entire 30-day billing period. For a restaurant spending $8,000 per month on electricity with demand charges representing 35%-40% of the bill, the demand component is $2,800 per month.

The audit question is whether the demand calculation is being applied correctly. Peak interval selection methodology, demand measurement windows, and the specific tariff provisions governing food service accounts vary by utility — and errors in their application occur. We also examine whether the restaurant is eligible for any demand charge mitigation options that have never been applied.