Imagine opening your electricity bill to find that it was $1,000 higher than the month before—and that you didn’t even use more energy. Situations like this are caused by what utilities call “demand charges.” Demand charges are based strictly on your restaurant’s highest rate of usage or energy spike in a 15- or 30-minute timeframe—any time of day or night.

Utilities impose this fee on businesses because they need to cover the cost of providing sufficient infrastructure—generation, transmission, and distribution—to deliver enough power at any given time to meet your business’s peak power needs. Don’t confuse demand charges with “time of use” (TOU) pricing, in which utilities charge more for electricity across the board during typically high-use times (from 12 p.m. to 6 p.m., generally).

When you’re incurring demand charges, you’ve probably got all of your kitchen equipment, ventilation, refrigeration, heating/air conditioning, and lighting running at full tilt. Your peak energy demand will likely occur during the height of your busiest time and busiest day of the week. It’s those few minutes of your highest demand that utilities are measuring. In some cases, demand rates are fairly low, perhaps only a few dollars per kilowatt. But they can range up to $20 or more per kilowatt. A peak demand of 90 kilowatts and a rate of $12/kW will add $1,080 to a monthly bill.

And scarier yet, some utilities charge what is known as “full ratchet” demand rates, which are based on the peak demand at any time during the year, rather than the month. They will retroactively charge the same fee for every month of that year. That’ll drive a spike right through the heart of your business!

So let’s see how you can tame this cost and take control of your energy destiny. Remember, energy dollars that are saved go straight to the bottom line as pure profit. Some of these tips can help you control both the TOU and demand charges since your highest usage is likely to fall during those TOU peak hours.

1. Ice Machines: Here’s one of the easiest changes to make. Determine how much ice your operation uses during a day and, assuming you have ample storage capacity, make that ice during the overnight hours. Turn your ice machine off during the day—it’s just like storing energy. And because the heat that results from the ice-making process won’t be emitted into the kitchen during peak hours, the kitchen cooling load during peak hours is also reduced. A simple mechanical timer will do the trick.

2. Staggered Start-up Schedule: Rather than turning on all your kitchen equipment, ventilation, heating/air conditioning, and lighting at once, stagger the schedule so you ramp up energy usage more gradually and avoid that demand spike.

3. Digital Demand Controllers (DDCs): These small, relatively inexpensive devices can control the operation of water heating, air conditioning, electric space-heating units, and refrigeration equipment. Because you’re dealing with thermal energy, the power to these items can usually be interrupted for periods of 10 to 30 minutes without incident.

Control and monitoring are critical to these spike-reduction strategies. An energy management system can help with that, and can detect spikes in electricity consumption. Monitored in real time, the system can alert restaurant managers to a spike in enough time to take action to reduce the magnitude. Even more importantly, an energy management system can reveal, over time, the small day-to-day changes needed to systematically reduce the likelihood of higher demand charges. For information on one such system that monitors, provides alerts, and allows you to control thermostat settings remotely, as well as provide the data needed for long-range energy planning, visit Powerhouse Dynamics.

The opinions of contributors are their own. Publication of their writing does not imply endorsement by FSR magazine or Journalistic Inc.