Demand Charges Explained: The Fee Nobody Understands
Every Arizona utility now offers a plan where part of your bill isn't about how much power you used — it's about your single worst hour. Demand charges fund the grid capacity your biggest spike requires, and they're the most misunderstood line item in Arizona billing. Misjudge them and the "cheap" plan becomes the expensive one.
What a demand charge actually measures
The math: one bad hour, priced twelve ways
Who wins on demand plans
Who should stay away
See whether a demand plan actually beats a straight time-of-use plan for your usage — the calculator estimates the demand fee from your household profile. And if you're adding a big new load like an EV charger, wiring it for off-peak charging is half the battle: EV charger installation cost.
Frequently asked questions
What is a demand charge in one sentence?
A monthly fee based on your single highest average draw (in kW) during on-peak hours — one bad hour sets the charge for the whole month.
Can a demand plan still be the cheapest?
Yes — demand plans pair the fee with much lower per-kWh rates, so households with steady, spike-free evening usage often come out ahead. Households that run oven + dryer + AC simultaneously at 6pm usually don’t.