Utilities Costs - Electricity

​The monthly cost of electricity for your business depends on the customer charge, the demand charge, and the energy charge. The customer charge is a basic charge for the electrical service. The demand charge is based on the peak load during the month. The peak load is the greatest number of kilowatts your business uses at one time during the month. The energy charge is based on the total number of kilowatt hours (kWh) that your business uses during the month. Meters installed at your business record the kilowatt demand and the number of kilowatt hours. The electric company may levy a fuel adjustment charge, sometimes called an "energy cost adjustment," to your monthly bill to help cover increases in the cost of the fuel needed to produce your electricity. The formula is:

​Customer Charge + Demand Charge + Energy Charge + Fuel Adjustment Charge = Total Cost for the Month

​The Acme Manufacturing Company had a peak demand load of 100 kilowatts of electricity during April. The customer charge is $20.00. The demand charge is $6.54 per kilowatt. Acme used a total of 30,000 kilowatt hours of electricity during the month. The energy charge for the first 1,000 kilowatt hours is $0.076 per kilowatt hour. The cost of the remaining kilowatt hours is $0.058 per kilowatt hour. The fuel adjustment charge for April is $0.0155 per kilowatt hour. What is the total cost of the electricity that Acme used in April?

​Step 1: Find the demand charge.

​100 kW x $6.54 = $654.00 demand charge

​Step 2: Find the energy charge.

​First 1,000 kilowatt hours: 1,000 kWh x 0.076 = $76.00

​Remaining kilowatt hours: (30,000 - 1,000) kWh x $0.058 = $1,682.00

​$76.00 + $1,682.00 = $1,758.00 energy charge

​Step 3: Find the fuel adjustment charge.

​30,000 kWh x $0.0155 = $465.00 fuel adjustment charge

​Step 4: Find the total cost for the month.

​Customer Charge + Demand Charge + Energy Charge + Fuel Adjustment Charge

​$20.00 + $654.00 + $1,758.00 + $465.00 = $2,897.00 total cost for the month