1. What is Capacity Charge?

Capacity charge is a fixed cost component in utility billing that is based on the maximum capacity (in kW) a customer requires from the electrical system. It covers the utility's investment in infrastructure needed to provide that capacity.

2. How Does the Calculator Work?

The calculator uses the capacity charge formula:

Where:

• Fixed Cost per kW — The predetermined rate set by the utility (currency/kW)
• Installed Capacity — The maximum power capacity required (kW)

Explanation: This calculation determines the fixed portion of an electricity bill that covers the cost of maintaining the infrastructure needed to deliver the maximum required power.

3. Importance of Capacity Charge Calculation

Details: Accurate capacity charge calculation helps utilities recover infrastructure costs and encourages efficient energy use by customers. It's an essential component of utility revenue planning and rate design.

4. Using the Calculator

Tips: Enter the fixed cost per kW as specified by your utility provider and the installed capacity in kW. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between capacity charge and energy charge?
A: Capacity charge is a fixed cost based on maximum power requirement, while energy charge is variable based on actual energy consumption (kWh).

Q2: How often is capacity charge calculated?
A: Typically calculated monthly as part of the utility billing cycle, though some utilities may use different billing periods.

Q3: Can capacity charge be reduced?
A: Yes, by reducing peak demand through energy efficiency measures, load shifting, or demand response programs.

Q4: Do all utilities charge capacity fees?
A: Most commercial and industrial rate structures include capacity charges, but residential rates may combine costs differently.

Q5: How is installed capacity determined?
A: Usually based on the maximum power demand recorded during a billing period or the capacity of installed equipment.