Commercial Electricity Bill

How to Identify a Commercial Electricity Bill

A commercial electricity bill can be identified by three structural features that rarely appear on residential electricity bills: a demand charge measured in kilowatts (kW), a nonresidential delivery class such as Small Load or Large Load, and separate sections for electricity supply and electricity delivery.

Demand charge (kW)

Commercial bills include a demand charge based on the highest level of electricity demand recorded during the billing period. The charge is typically calculated as peak demand (kW) multiplied by a demand rate ($/kW). Residential electricity bills do not include demand charges and only bill for energy usage in kilowatt hours (kWh).

Nonresidential delivery class

Commercial accounts are usually assigned a delivery class such as Small Load, Medium Load, or Large Load. Utilities use these classes to categorize facilities according to their peak electrical demand.

Separate supply and delivery charges

Commercial electricity bills usually separate the cost of electricity supply from the cost of delivery through the utility grid. Supply represents the cost of purchasing electricity from a supplier, while delivery represents the cost of transporting electricity and maintaining the grid infrastructure.

If a bill includes a demand charge based on peak demand and separates supply and delivery charges, it is almost always a commercial electricity account.

Example of a Commercial Electricity Bill

Identifying a commercial electricity bill begins with understanding the two major components that determine most electricity costs: electricity supply and electricity delivery.

Supply represents the cost of purchasing electricity from the supplier. It is calculated by multiplying total electricity usage, measured in kilowatt hours (kWh), by the electricity supply rate.

Supply cost = electricity usage (kWh) x supply rate ($/kWh)

For a facility that uses about 80,000 kWh in a billing period at a supply rate near $0.10 per kWh, the supply cost is roughly:

80,000 kWh x $0.10 = $8,000

This represents the portion of the bill associated with purchasing the electricity itself.

Delivery represents the cost of transporting electricity through the utility grid and maintaining the infrastructure required to serve the facility. Delivery charges typically include a demand charge based on peak power demand. Delivery charges are explained in detail in the article on why electricity delivery charges can be high.

Demand charge ($) = peak demand (kW) x demand rate ($/kW).

Demand charges are explained in more detail in the article on what a demand charge is and how utilities calculate it.

Peak demand is the highest metered power demand recorded during the billing period. Even if that level of demand occurs only briefly, the electrical grid must be capable of supplying it.

For the same facility, a peak demand near 240 kW billed at a demand rate around $15 per kW produces:

240 kW x $15 = $3,600

A demand charge of this size can account for the large majority of the delivery portion of the bill, even though it derives from a single interval rather than from total energy use.

The grid must be built to serve your highest demand, not your average usage.

How Utilities Measure Peak Demand

Utilities determine peak demand by identifying the highest level of electrical power a facility draws from the grid during the billing period. This value is measured in kilowatts using interval meters that record electricity usage throughout the day.

Demand is measured in kilowatts (kW), which represent the rate at which electricity is being used at a specific moment. This differs from electricity usage, which accumulates over time and is measured in kilowatt hours (kWh).

A Real Commercial Bill, Reconciled

The line items are easiest to trust once they reconcile against the meter. On one recent ComEd Small Load bill using the utility's 2026 format, the delivery section listed two demand lines explicitly: a Peak Period Distribution Facilities Charge covering 9:00 AM to 6:00 PM on weekdays, and a paired Off Peak line covering all other hours at 0 dollars per kilowatt. The bill states the on-peak-only rule on its own face.

The billed demand on that peak period line was 46.20 kilowatts. Reconstructing it from the site's thirty minute interval meter data produced a site coincident on-peak peak of 46.20 kilowatts, matching the bill, and a recomputed Distribution Facilities Charge equal to the bill to the cent. The demand charge was not an estimate on the bill and not an estimate in the reconstruction. It was the same measured interval, read two ways.

The value of reading a commercial bill this way is not to find an error. On a correctly issued bill there is none. The value is seeing how the charge was constructed, which the bill states but does not show.

Why Electricity Bills Alone Cannot Explain Your Costs

Electricity bills summarize the final billing determinants, but they do not show how electricity demand changes throughout the day.

The bill shows the total electricity usage and the highest recorded demand, but it does not reveal when that demand occurred or what equipment was operating at the time.

For example, the bill may show a peak demand of 240 kW, but it does not explain whether that demand occurred during normal operating hours, during equipment startup, or during a brief spike in electricity usage.

Interval meter data provides a more detailed view by recording electricity demand at regular intervals throughout the day.

By analyzing interval data, building operators can identify when peak demand occurs, which systems are contributing to demand spikes, and whether electricity usage patterns can be adjusted to reduce demand charges.

Without this additional data, the electricity bill alone provides only a partial explanation of electricity costs.