Why is my business electric bill so high?
Supply prices, delivery costs and the way your facility uses power all shape the bill. One busy 15 minutes can set a large demand charge, even when your total energy use barely changes.
What runs a commercial electric bill up the most?
Often the demand charge, especially for facilities with sharp peaks. On most commercial and industrial rates, the single highest 15 minutes of power use in the month is billed per kilowatt, so one short peak can set a large share of the whole bill.
What makes up a business electric bill
Supply and delivery are the two main parts. Demand and capacity explain costs within them, so these four boxes help you read the bill; they are not four separate charges to add together.
Supply
The electricity you buy, usually priced per kWh. Depending on your market, you may buy it from the utility or a competitive supplier. Check whether the quoted price includes capacity costs or passes them through separately.
Delivery
The cost of getting power to your facility through wires, substations and transformers. Delivery can include energy charges, demand charges and fixed fees. Changing suppliers does not change the utility’s delivery tariff.
Demand charges
Charges for how much power you need at once, measured in kW. Many commercial tariffs use your highest 15-minute average during their billing hours. Minimum billing demand, power factor and other tariff rules can also affect the charge.
Capacity costs
The cost of keeping generation available for the regional grid’s peak. In markets such as New England, it may be included in supply or passed through separately. Your supply contract determines how changes in your capacity tag affect what you pay.
One spike, the whole month
Add one high 15-minute interval to an ordinary month. In this illustration, that interval sets the billed peak even though every other day stays the same. Your tariff determines which intervals count and whether minimums or other adjustments apply.
- Each day’s busiest 15 minutes
- Weekend
- The spike
- Billed peak, normal month
- 297 kW
- The month’s busiest 15 minutes
- Demand charge, with the spike
- +26%
- Billed on 375 kW
One 15-minute spike of 80 kW on Tuesday the 9th sets the month’s peak at 375 kW and raises the whole month’s demand charge by 26%.
Illustrative plant. On most commercial rates the demand charge is set by the single busiest 15 minutes of the billing month, inside the rate’s demand hours.
Why business electric bills run high
Three things about commercial rates make a business power bill behave differently from a home bill.
01
You pay for your biggest spike
Many commercial rates add a demand charge, billed per kW on the highest 15-minute average during the tariff’s billing hours. Your bill may call it demand, max kW or distribution demand. Most homes don’t pay one, which is why a plant’s bill can be high even when its kWh look reasonable.
02
Peak hours cost more
On time-of-use rates, power in the utility’s peak hours, often late afternoon and evening, costs more per kWh, and some rates add a second demand charge just for those hours.
03
Where you are matters
Fuel, grid and policy costs differ by region. Massachusetts and California pay some of the highest commercial prices in the country, for different reasons.
Why commercial electricity is expensive in Massachusetts Why commercial electricity is expensive in California
Why did our electric bill suddenly go up?
Compare what changed in your use of power with what changed in the price. These five checks help separate an operating change from a rate or contract change.
01
One new spike
The big one for factories and warehouses. A morning when everything started together, a new machine, a test run: one busy quarter-hour can set the demand charge for the whole month.
02
A seasonal switch
Many rates change price with the season. California utilities move to higher summer demand and peak-hour charges in June; Massachusetts basic service supply prices climb every winter.
03
A rate change
Utilities change delivery rates several times a year, and a change in your size or voltage can move you onto a different rate schedule. The rate name is printed on the bill.
04
A supply contract renewal
When a fixed supply contract ends, the account can roll onto the utility’s default supply or a new price. A renewal signed at a different time of year can price very differently.
05
More usage
New equipment, an extra shift, a hot month for cooling or a cold one for electric heat all show up as more kWh, and often as a higher peak too.
Keep the spikes down: don’t start everything at once
Where production allows, start large equipment in turn so warm-ups do not overlap in the same demand interval. Compare simultaneous and staggered starts in this illustration.
- Lights and base load
- Oven or furnace heat-up
- Chiller pull-down
- HVAC after the weekend
- Air compressor start-up
- Highest 15 minutes
- 435 kW
- What the meter bills
- Demand charge vs all at once
- 0%
- It scales with the billed peak
The highest 15 minutes average 435 kW, starting at 7:00 am. Every start-up lands in the same interval.
Started together, the warm-ups stack to 435 kW. Started in turn from 5:00 am, the same machines peak at 280 kW, a 36% smaller demand charge.
Illustrative loads. A motor’s start-up surge lasts seconds and barely moves a 15-minute average; what sets the charge is several machines working hard through the same quarter-hour, like a warm-up after a weekend.
Staggering loads can lower demand when it reduces the intervals your tariff bills. Production schedules may limit what you can move, and another busy interval can still set a higher peak. A battery can supply part of that short burst of power, reducing the draw at your meter while equipment keeps running. The result depends on your load, tariff and system size.
What to do if you think your bill is too high
Start with the billed demand and energy use, then check prices and contract terms. Compare a full year before choosing a different rate or supplier.
01
Find the demand line
Look for the kW figure, not just kWh. Compare it with last month and the same month last year: a jump there can explain a higher demand charge.
02
Compare like with like
Set the bill beside the same month last year, not last month. Seasonal prices and weather make month-to-month comparisons misleading.
03
Check the rate and the supply
Confirm the rate schedule on the bill hasn’t changed, and whether a supply contract ended or a default price reset.
04
Get your interval data
Request a year of interval data from your utility, often recorded in 15-minute intervals. It shows exactly which day and time set the peak, which a monthly bill can’t.
How to get it from your utility05
Ask for a review
If a read looks impossible, ask the utility to check it. If the rate may be wrong for how you run, ask for a rate review, or send us the bill.
Look at your rate and contract as well as your peak
A lower price per kWh does not always mean a lower total bill. Use 12 months of bills and interval data to compare the delivery options you qualify for and, where available, your supply offers.
Compare eligible delivery options
Your utility’s tariff determines which peaks matter, the billing hours and any minimum demand. Compare the full annual bill under each eligible option before switching. Model load shifting or a battery separately, because changing the rate can change which hours offer the most value.
Read the whole supply offer
We compare supplier offers against your bills and interval data, including fixed-price and capacity pass-through terms, to see which structure makes the most sense for your facility.
In markets with competitive supply, check renewal dates, fees and whether capacity costs are bundled or passed through. A lower peak may affect future capacity costs differently under each contract. The terms determine when the benefit reaches your facility.
Questions about high business electric bills
Why is my business electric bill so high all of a sudden?
Check the demand (kW) line first. A sudden jump can come from one new peak raising the month’s demand charge, a seasonal rate switch such as summer pricing, a utility rate change, a supply contract ending, or simply more usage.
Why is my business electric bill a few hundred dollars more than normal?
On a business rate, a few hundred dollars can be a few kW. Published demand charges run from about $10 to more than $80 per kW a month depending on the utility, rate and season, so a peak just a few kW higher than usual, for a single 15 minutes, can add a few hundred dollars. Compare the demand line with last month’s before looking anywhere else.
Why is business electricity more expensive?
Per kWh, it usually isn’t. In 2025 the average U.S. commercial price was 13.37¢ per kWh against 17.23¢ for homes, according to the EIA, and commercial averaged below residential in California and Massachusetts too. The EIA average already includes demand charges; a facility with sharp peaks can pay well above it, because many demand-billed rates charge per kW on a 15-minute peak and some rates charge more during peak hours. When and how hard you draw power matters as much as how much you use.
Do start-up surges spike my power bill?
Not the surge itself. A motor’s start-up surge lasts seconds, and demand is averaged over 15 minutes. What sets the charge is several machines working hard through the same quarter-hour, like compressors, ovens and HVAC all warming up together after a weekend.
What is the difference between kW and kWh on my bill?
kWh is how much energy you used over the month, like the miles on a trip. kW is the rate at which you draw power. For demand billing, it is usually averaged over a metered interval, often 15 minutes. Energy charges bill the kWh; demand charges follow the tariff’s peak hours and billing rules.
What can I do if I think my business electric bill is too high?
Compare the demand line and the kWh with the same month last year, check whether the rate schedule or supply price changed, and get a year of your 15-minute interval data from the utility to see what set the peak. If a meter read looks impossible, ask the utility to check it.
Sources (4)· Last reviewed October 26, 2026
- U.S. EIA, Electric Power Annual 2025, Table 2.10 (opens in a new tab), average price by sector
- National Grid Massachusetts, Rate G-3 (M.D.P.U. 1591) (opens in a new tab), demand measurement and billing rules
- National Grid Massachusetts, Summary of Electric Delivery Service Rates (opens in a new tab), published G-3 demand charges at the low end of the range
- PG&E Electric Schedule B-19 (opens in a new tab), high end of the demand charge range, summer 4–9 pm
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