Small Business Electricity Rates in Texas
Demand Charges in Business Power Bills: A Quick Example
The TDU tariff category can have a major impact on business power bills. Here is a simplified example that demonstrates how this works:
- Assume two small businesses are consuming 3,500 kWh per month with an energy charge of 9 cents/kWh, in the Oncor service territory.
- However, Company #1 has a peak demand of 8 kW while Company #2 reaches 16 kW.
In this case, both companies get the same energy charge of $315 ($0.09 x 3,500 kWh), but their TDU charges are very different.
Company #1 has a peak demand of 8 kW, which means there is a fixed fee of $8.12 and a variable fee of 3.7487 cents/kWh. The total TDU charge is $139.32, and the total amount billed after adding the energy charge is $454.32.
Company #2 has a peak demand of 16 kW, which means there is a fixed fee of $40.07 and two variable fees: 0.0637 cents/kWh and $9.729361/kW. The total TDU charge is $197.97, and the total amount billed is $512.97.
Note how the power bill increases by nearly $60 due to TDU charges for Company #2, even when both have the same consumption and energy price. Residential consumers only need to watch their kWh usage, but peak demand is also important for businesses.
