How maximum demand charges work

Network operators set network charges partly on energy consumed and partly on peak demand, typically the highest average demand over a short window (commonly 30 minutes) at any point in the billing period. Retailers pass this through, sometimes bundled, sometimes as a separate line. A single short-lived spike can set the charge for the entire month. A handful of half-hour intervals shape the bill more than typical operation.

Why this differs from TOU and wholesale exposure

TOU tariffs charge different rates by time of day. Wholesale exposure reflects the 5-minute spot price. Maximum demand responds to the shape of your own load profile rather than market conditions at a point in time. You can reduce spot exposure and still carry a high demand charge if peaks are not addressed separately. Effective load shifting addresses all three. See Price Responsive Control.

Retail offers and structural change

Retail offers vary in how they structure demand charges, TOU periods and network pass-through, which makes headline-rate comparison unreliable. The only reliable comparison is a model against your metered load: Alternate Tariffs does exactly this, and Tariff Optimisation shows what you can achieve within your current demand structure.

For sites with export (solar/battery), the same principle may soon apply in reverse. Export tariffs are being introduced and a monthly peak export charge (like a demand charge on the month’s highest export) has been proposed on one network. Where relevant we model that ahead of time. See the assessment detail on Alternate Tariffs.