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Demand refers to how much power you require at a single point in time, and is measured in kilowatts (kW) or kilo-volt amperes (kVa). In contrast, consumption is the quantity of energy you use over a period of time, measured in kilowatt-hours (kWh). For example, fifty 20-watt light bulbs “demand” 1000 watts, or 1 kW, of electricity from the power grid. If you leave all 50 lights on for two hours, you would “consume” 2 kWh of electricity over that given time.

For residential customers, TDSP charges are based on how much electricity you use, not necessarily how you use it. This is because most homes never draw that much power from the grid at any one point in time, and usually have consistent electricity demands (e.g. running the A/C). You can find a table with the TDSP charges according to your region here.

For commercial customers, TDSP charges are based predominately on “how” you use your electricity and not exactly “how much” you use. As an example, let’s look at a restaurant and a concert venue. Bob’s Burgers is a small mom and pop restaurant open 24/7, consuming 100,000 kWh of electricity annually. Since the diner is always consuming electricity, their demand is relatively low. In contrast, a concert venue might also consume 100,000 kWh of electricity annually, but only in short bursts from 9 p.m. to midnight every day on weekends. Because the concert venue uses the same amount of electricity in a shorter time span, it’s peak demand (in kilowatts) is higher, and the TDSP charges will be considerably higher than that of the restaurant. You can find some more examples that discuss demand vs. consumption here. When a facility has an immediate increase of usage, the grid must be able to react instantly to the demand.