Customers are grouped into classes according to expected energy and demand needs. Small commercial and residential customers pay only customer and energy charges. Large commercial and industrial customers pay customer, demand, and energy charges.
Structure of Electric Rates Electric rates are made up of 3 components including a customer service charge, a demand charge, and an energy charge.
The customer charge is a flat monthly charge which recovers fixed costs such as materials, operations and maintenance, and accounting costs.
Demand charges are in the form of dollars per kilowatt. Demand charges recover the supplier's capital investment and substation costs associated with providing sufficient capacity to a customer, regardless of energy used.
The energy charge is in the form of cents per kilowatt-hour and is for purchased power and fuel.