Warehouse Demand Charges: Finding Your 15-Minute Peak

A warehouse bill has two halves. One half counts every kilowatt-hour you used all month. The other half looks at a single fifteen-minute window, finds the hardest your facility ever pulled on the grid, and bills you for that number whether it happened once or every day. Operators manage the first half instinctively. The second half is where distribution centers quietly overpay, because the event that set the peak usually lasted less time than a coffee break and nobody knows which morning it happened.

This guide shows you how to find it. Below: what the terms on the bill actually mean, how demand lands on a warehouse bill in Texas specifically, the operating events that typically set a warehouse's peak, and a practical workflow for pulling your own interval data and walking it back to a cause.

kWh, kW, and the Interval Between Them

Kilowatt-hours (kWh) measure how much energy you consumed over time — the odometer. Kilowatts (kW) measure how fast you were drawing it at a given moment — the speedometer. Two facilities can consume identical kWh in a month while one of them hits twice the kW peak, and the peaky one pays meaningfully more.

Interval readings are how the meter sees your day: Texas TDU tariffs settle demand on 15-minute intervals, so a month of data is 96 readings a day and roughly 2,900 in total. Billed demand is the kW or kVA figure your utility's tariff derives from those intervals — and the details belong to each utility's tariff, not to a universal formula. Depending on the utility and rate class, billed demand may be this month's highest interval, a ratcheted figure carried from a previous month, or a value expressed in kVA rather than kW.

Finally, the bill splits into supply charges — the energy price you contracted with your retail electricity provider — and regulated delivery charges from your transmission and distribution utility (TDU), which no provider can discount. Demand-based billing lives mostly, though not exclusively, on the delivery side. For the full definitional treatment, see what a demand charge is and how it's calculated and how capacity charges differ from energy charges. This article assumes those basics and stays on the warehouse-specific question: where is your peak, and what caused it?

How Demand Lands on a Texas Warehouse Bill

Texas has no single demand-charge formula. Each TDU — Oncor, CenterPoint, AEP Texas, TNMP — publishes its own tariff, with its own demand definitions, rate classes, and ratchet provisions. The two territories that cover most Texas warehouse space show how far the mechanics diverge.

Oncor. Under its Tariff for Retail Delivery Service, secondary-service treatment turns on two conditions, not one. If your highest 15-minute NCP kW in the preceding 11 months was 20 kW or less, you are billed the current month's peak. Above that threshold it depends on Annual Load Factor: above 25%, the distribution system charge is the higher of the current month's peak or 80% of the highest monthly peak in those 11 months — the 80% ratchet. At or below 25%, the distribution system charge uses the current month's peak, though the NDC, DCRF, RCE, ISR, and MG riders can still be ratcheted.

Most warehouses land in the ratcheted group. Annual Load Factor is Oncor's own calculation — kWh over the 12 billing months ending in December, divided by the maximum NCP kW across those months times the hours in the period — but as a screening rule of thumb our load factor guide puts steady warehouse and cold-storage accounts around 50–75%, comfortably above the 25% line. The practical consequence: one loading-dock morning in August can keep billing a Dallas distribution center for the next eleven months.

CenterPoint. Its Tariff for Retail Delivery Service measures everything in kVA — apparent power — and defines NCP kVA as the kVA supplied during the 15-minute period of maximum use in the billing month. On the Secondary Service Greater Than 10 kVA schedule, the billing kVA for the distribution system charge is simply that month's NCP kVA: no ratchet. The 80% ratchet lives on CenterPoint's primary-service schedule instead.

The kVA basis is the thing to notice, because it makes power factor visible on every bill: at the same real-power demand, a facility with poor power factor — common where large motor loads like compressors and conveyors dominate — shows a higher kVA and pays for the difference automatically.

That does not make power factor an Oncor customer's problem to ignore. Oncor bills demand in kW, but under Section 5.5.5 of its tariff, if power factor measures below 95% lagging the utility may require correction — and if it is not corrected, may adjust billed demand by (actual NCP kW × 0.95) ÷ current month power factor, applied to both NCP and 4CP demand. The difference between the territories is therefore automatic versus contingent, not present versus absent. Both can charge you for a poor power factor; only one does it on every bill without anyone having to act.

Both tariffs also change how they treat you once you get large enough, and it is worth keeping two separate things straight. ERCOT's rule governs the physical meter: an interval data recorder is mandatory at any premise with a peak demand above 700 kW — 700 kVA in CenterPoint's territory — or served at transmission voltage above 60 kV (ERCOT Nodal Protocols, Section 18.6.1). The tariffs' thresholds are a billing classification, which is not the same thing: CenterPoint applies its IDR-metered charges once a customer has established NCP demand above 700 kVA in any previous billing month, and its tariff says so explicitly — regardless of whether the installed meter is an IDR, a standard meter, or another type. Oncor's transmission-charge trigger works the same way, at 700 kW NCP in any previous billing month.

Crossing either line once moves the account into that treatment going forward, so evaluate the metering requirement and the tariff classification separately rather than assuming one follows from the other.

AEP Texas and TNMP publish their own tariffs with their own provisions. The practical rule: before assuming any demand mechanics apply to your account, check the tariff for your TDU and your specific rate class. Our breakdown of Texas TDU delivery charges for businesses covers who your TDU is and what else sits on that side of the bill.

One more demand-shaped cost hides upstream, though it does not reach every account. For premises billed on 4CP transmission determinants, ERCOT identifies the single highest 15-minute system-wide interval in each of June, July, August, and September, and the customer's average demand across those four intervals sets the transmission billing determinant for the following period. Both tariffs lock that figure in and hold it — Oncor updates it on January 1 and fixes it for the calendar year, CenterPoint with the February billing month.

Whether you are on it depends on size. Oncor assigns 4CP billing to premises that have established an NCP of at least 700 kW in any previous billing month; CenterPoint's equivalent threshold is expressed in kVA. Smaller accounts are billed transmission on an NCP basis instead, and retail supply contracts fold transmission and capacity exposure in through their own structures. So check which basis your account actually sits on before spending operational effort curtailing against summer system peaks — for a mid-size warehouse it may not be the lever it looks like.

What Sets a Warehouse's Peak

The peak-setting event in a warehouse is almost never a mystery once you look. It is usually several ordinary loads starting at the same time. Common candidates to investigate:

• Forklift and pallet-jack battery charging. A charging bank energizing at shift change is one of the largest single loads in a dry facility — and it is the most schedulable load in the building.
• Refrigeration compressor restarts. After a defrost cycle, a door-open period, or a warm-product receiving event, compressors restart under maximum load, often together.
• Conveyor, sorter, and ASRS startup. Automated lines starting in a coordinated burst at the top of a shift stack motor inrush on top of base load.
• HVAC or refrigeration recovery after setback. Equipment catching up — cooling recovery on a summer morning, heating recovery in winter — runs everything simultaneously at full output.
• Morning pile-up. The most common pattern of all: lights, chargers, conveyors, dock equipment, and HVAC recovery all landing in the same 15-minute window at shift start.
• Seasonal compounding. A Texas summer afternoon raises the baseline — condensers work harder, HVAC runs at maximum — so an operational burst that is invisible in March sets the annual peak in August. In ratcheted territory, that August number then follows you for months.

The Interval-Data Review Workflow

You can run this yourself in under an hour. You need one recent bill and a login.

1. Pull your interval data

In ERCOT's competitive areas, Smart Meter Texas provides free 15-minute interval data for advanced-metered accounts. Register with the ESI ID and meter number printed on your bill, then export the interval history as a spreadsheet or as Green Button XML. The portal caps how far back interval data goes — check the window available on your own account before planning a seasonal comparison. Facilities large enough to require an interval data recorder typically get the data through their retail provider or consultant instead. If you cannot access it, your provider or broker can.

2. Find the top intervals

Check what your export contains first. If it reports interval consumption in kWh, multiply each 15-minute value by four to get the average kW during that interval — but if the export already carries a demand or kW field, use it directly and do not multiply again. Then pull the top ten intervals. If they cluster at the same time of day, you have a schedule problem, which is fixable. If they scatter randomly, you are looking at equipment coincidence, which is fixable differently.

3. Walk each peak back to an operating event

Match date and time against the shift calendar, charging schedule, defrost timers, receiving log, and weather. Comparing peak timestamps against operating records will often narrow the cause to one or more identifiable events — usually from the list above.

4. Check what you are billed against what you actually hit

Compare the demand figure on the bill to the highest comparable interval in the data. If billed demand exceeds it, work through the list: an applicable ratchet, a kW-versus-kVA difference, a power-factor adjustment, a contract minimum, estimated or corrected meter data, or a bill and an export that simply do not cover the same period. In Oncor territory a gap of roughly this shape is usually the 80% provision; in Houston it is at least as likely to be the kVA basis. Confirm against your own TDU tariff and rate class before concluding anything.

5. Sort findings into two piles: operational and procurement

This is the step most reviews skip, and it determines who fixes what.

Two Levers, Two Different Lines on the Bill

Operational fixes change the billing determinant itself. Stagger charger energization across the shift instead of at one moment. Sequence conveyor and compressor starts minutes apart rather than seconds. Move schedulable load — charging above all — off the window where everything else stacks. Power-factor correction belongs on the same list: it lowers billed kVA in CenterPoint territory, and power-factor-adjusted kW where Oncor applies its adjustment. No supply contract does any of this. One caveat: if a ratchet applies, the bill may not follow the improvement until the old peak rolls out of the lookback window.

Procurement changes what your profile costs you. A supplier cannot discount regulated delivery charges — but your peak-to-average shape, your load factor, directly affects the supply pricing you are offered, how capacity pass-throughs are structured in your contract, and whether your flat overnight refrigeration load is being priced as the asset it is — the argument a refrigerated facility should be making, which we lay out in cold storage vs. dry warehouse electricity. A warehouse that has just flattened its peak operationally has a materially better story to take to market — which is why the sensible order is: find the peak, fix what is free to fix, then shop the improved profile.

Mixing the two levers up is how operators end up disappointed — efficiency projects that were supposed to cut the bill but left the demand line untouched, or a new contract that was supposed to fix a problem only a charging schedule could fix.

Demand is one of two questions worth asking about a warehouse bill. The other is whether your total consumption is where it should be for your facility type in the first place: our companion guide to Texas warehouse electricity costs per square foot sets the sourced benchmarks for dry, cooled, and frozen space, and the math to apply them to your own footprint. Consumption tells you whether the building is efficient; interval data tells you whether the bill is.

Frequently Asked Questions

What is a demand charge on a warehouse electricity bill?

It is a charge based on your highest rate of electricity draw — kW or kVA — measured over a short interval during the billing month, rather than on total consumption. Texas TDU tariffs measure that draw over 15 minutes. For a warehouse the peak is typically set by battery charging, compressor restarts, and equipment startup landing in the same window.

What is the difference between kW and kWh?

Kilowatt-hours measure how much energy you used over time; kilowatts measure how fast you were using it at a moment. Consumption fills the energy line of the bill; the single highest sustained draw sets the demand line. Two warehouses with identical kWh can pay very different totals if one has a sharper peak.

How do I get interval data for my facility?

In ERCOT's competitive territories, register at Smart Meter Texas with the ESI ID and meter number from your bill. The portal is free and provides 15-minute interval data, downloadable as a spreadsheet or as Green Button XML. There is a limit on how far back the interval history runs, so check the window available on your account. Facilities large enough to require an interval data recorder typically receive the data through their retail provider or consultant instead.

What is a demand ratchet?

A tariff provision under which billing demand reflects a past peak, not just the current month. Under Oncor's Tariff for Retail Delivery Service, secondary-service loads whose highest 15-minute NCP kW in the preceding 11 months exceeded 20 kW, and whose Annual Load Factor is above 25%, are billed the higher of the current month's peak or 80% of the highest monthly peak in those 11 months. Loads at or below a 25% Annual Load Factor use the current month's peak for the distribution system charge, though certain riders stay ratcheted. Ratchet provisions differ by utility and rate class, so check your own tariff.

Do all Texas utilities calculate demand the same way?

No. Oncor bills secondary-service demand in kW and applies an 80% ratchet above 20 kW when Annual Load Factor exceeds 25%. CenterPoint bills in kVA, so power factor shows up automatically, and its secondary-service distribution charge uses the current month's peak with no ratchet — the 80% ratchet sits on its primary-service schedule instead. Power factor is not irrelevant in Oncor territory either: below 95% lagging and uncorrected, its tariff permits a demand adjustment. Check your own TDU tariff and rate class rather than assuming one territory's mechanics apply in another.

Can procurement lower a demand charge, or only operations?

Procurement cannot change the regulated TDU tariff or the facility's billing determinant. Lowering the measured peak is operational, and so is power-factor correction where it applies — both can reduce billed demand. A ratchet may nevertheless keep billed demand above the current month's peak until the historical peak rolls out of the lookback window. Procurement works on the other lines: a better load profile earns better supply pricing, and contract structure determines how capacity costs are passed through. The two are complementary, and the no-capital one — shopping supply — is worth pulling first.

The Bottom Line

Your warehouse's demand charge was set by a specific fifteen minutes on a specific day, and your meter recorded exactly when. Most operators never look. The ones who do usually find something schedulable — a charging bank, a startup sequence, a defrost cycle — sitting inside the peak window, plus, often enough, a ratchet or an aging contract billing them for a peak that no longer exists.

Operating more than one facility, or evaluating a building you don't yet occupy? Our warehouse and storage page covers how multi-site procurement and new-location setup work.

Advise warehouse operators? Property managers, industrial brokers, and consultants who introduce us to operators earn on every account they refer — and their clients get the interval review at no cost. Partner with us.