You pay for the pipe, not just the water
Think of electricity like water service. The kilowatt-hours (kWh) are the volume of water you used. The kilowatts (kW) — your peak demand — are the diameter of the pipe the utility had to keep ready for you. Energy charges bill the volume. Demand charges bill the pipe.
For most homes, the pipe barely matters. For commercial and institutional buildings, it can rival the energy charge itself. And unlike energy, demand is set by your worst moment: a single short spike can define what you pay all month — or, in some provinces, all year.
How Canada bills peak power: three examples
The mechanism exists from coast to coast, but the rules differ — and the details decide how much you pay.
Québec — Hydro-Québec's Rate M. This is the rate for medium-power commercial and institutional customers (office buildings, hospitals, and the like). The billing demand is the month's maximum power demand — but it is never less than the minimum billing demand, set at 65% of the highest demand recorded during a winter-period billing month over the previous 12 months. Translation: one uncontrolled January morning inflates your bills until next winter.
Hydro-Québec adds a second subtlety: billing demand is the greater of real power (kW) or 90% of apparent power (kVA). A building with a poor power factor pays for phantom capacity it never really used — which makes power-factor correction one of the cheapest demand-charge projects available.
British Columbia — BC Hydro's Large General Service rate. It applies to business customers with an annual peak demand of at least 150 kW, or more than 550,000 kWh a year, served under rate schedules 1600, 1601, 1610 or 1611. Here too, a monthly demand charge applies to peak power on top of the energy charge — so shaving the top off the load curve pays every month.
Manitoba — Manitoba Hydro's general service small–demand rate. The first 50 kVA of monthly measured demand is free; everything above it is billed per kVA. Small commercial customers cross that threshold with a single rooftop unit cycling at the wrong moment.
Four levers that actually move the number
- Stagger start-ups. The classic spike: chillers, rooftop units and EV chargers all switching on within minutes of each other. Sequencing start-ups is often a controls change, not new equipment.
- Shift flexible loads out of the peak window. Pre-cool the building, run hot water or charging overnight — the same kilowatt-hours, a smaller peak.
- Fix the power factor. Where utilities bill apparent power (as Hydro-Québec does with its 90% rule), capacitor banks or corrected drives shrink the billed demand without touching a single load.
- Watch demand live, not monthly. Demand is measured in short intervals; a paper bill arrives weeks after the spike is locked in. Real-time demand monitoring with an alert before a new monthly maximum is set turns an unpleasant surprise into a routine decision.
In Québec, buildings can go further by enrolling in Hydro-Québec's Gestion de la demande de puissance program (options GDP Latitude and GDP Engagement), which pays participants to curtail load during grid peaks — attacking the demand charge and earning a credit on top.
Start with your own bill
Pull up the "details of demand" section of your last bill and compare two numbers: the billing demand you paid for, and the peak you actually reached. If they diverge for months at a time — the signature of a winter ratchet — you are paying for capacity you no longer need. That gap is the business case for peak management.
A platform like Tenergen OS makes the case automatic: it watches demand in near real time, sequences flexible loads so peaks never stack, and flags a building drifting toward a new monthly maximum before the meter locks it in.