Strategies for Small Businesses to Reduce Their Demand Charges in ComEd Territory (2026 Updates)

For small business owners in Northern Illinois, opening a ComEd bill can feel like deciphering a secret code. You might see your total energy usage (kWh) stay flat or even decrease, yet your total bill continues to climb. The culprit is often a line item that many overlook: Demand Charges.

As we move through 2026, ComEd’s rate structures have evolved. With the ongoing implementation of the Climate and Equitable Jobs Act (CEJA) and new delivery rate filings, understanding how to manage your "peak" is no longer just a good idea—it’s a survival strategy for your bottom line. Demand charges can account for 30% to 70% of a commercial energy bill, meaning that if you aren't managing your peak, you are likely overpaying by thousands of dollars a year.

In this exhaustive guide, we will break down exactly what these charges are, how to find them on your bill, and the specific strategies Illinois businesses are using in 2026 to neutralize them.

Section 1: What Are ComEd Demand Charges & Why Are They Secretly Draining Your Profits?

To understand demand charges, you have to understand the grid. ComEd (Commonwealth Edison) is responsible for maintaining the wires, transformers, and substations that deliver power to your business. They must build this infrastructure to handle the maximum amount of power all customers might need at any single moment—not just the average.

The Speedometer vs. The Odometer

The most common analogy used by energy consultants is the car analogy:

• Energy Consumption (kWh): This is your odometer. It tells you how many total miles you drove this month. If you leave a 100-watt lightbulb on for 10 hours, you've used 1 kWh.
• Demand (kW): This is your speedometer. It tells you how fast you were going at your peak. If you turn on ten 100-watt bulbs all at once for just 15 minutes, your "speed" (demand) was 1 kW for that interval.

ComEd charges you for the "odometer" reading (Supply and some Delivery) and the "speedometer" reading (Distribution and Transmission).

The Physics of Peak Demand: Why 15 Minutes Matters So Much

To truly master demand management, you must understand the "inrush" phenomenon. When an electric motor starts—whether it's in your rooftop HVAC unit, a commercial refrigerator, or a power tool—it requires significantly more current to get the rotor spinning than it does to keep it running. This is called "Locked Rotor Amps" or "Starting Current."

If five large motors in your facility all cycle "ON" at the same moment, your electrical draw will spike for just a few seconds. However, ComEd's smart meters aggregate usage into 15 or 30-minute intervals. If those startups happen within the same interval, they contribute to a higher average demand for that window. In 2026, ComEd's meters are more sensitive than ever, catching these overlaps with precision. By simply ensuring that motors aren't starting simultaneously, you are fighting the physics of the grid to your advantage.

Why Small Businesses Are the Hardest Hit

Small to mid-sized businesses (SMBs) often lack the sophisticated Building Automation Systems (BAS) that large factories use to smooth out their energy usage. A local bakery that turns on three industrial ovens, the proofing box, and the air conditioning at 5:00 AM creates a massive "spike" in demand. Even if they turn everything off by 10:00 AM, that one 15-minute window of high usage sets the price for the entire month.

Furthermore, many SMBs are on the "Standard" or "General Service" rates where demand charges are bundled in a way that makes them hard to see without an expert audit. For those on BES-H (Hourly), the "Coincident Peak" charges can be even more punishing, as they are tied to the grid's most stressed hours.

The 2026 Context: The ICC and the "Multi-Year Rate Plan"

In late 2025 and throughout 2026, the Illinois Commerce Commission (ICC) has been intensely reviewing ComEd’s multi-year rate plans. Under the CEJA framework, ComEd is required to shift toward a "Performance-Based Ratemaking" (PBR) model. What does this mean for your small business?

1. Grid Modernization Surcharges: To support the influx of renewable energy and EVs, the delivery portion of your bill is seeing new riders and adjustments designed to recover the cost of "smart" transformers and high-capacity lines.
2. Decarbonization Incentives: There are more credits available for businesses that can prove they are reducing their peak during the most carbon-intensive hours (usually summer afternoons).
3. Transmission Costs: Transmission charges (controlled by PJM) are rising as aging infrastructure is replaced across the regional grid. Since transmission is almost entirely demand-based, this line item is becoming a larger percentage of your total spend.

Section 2: How to Uncover Your Peak Demand Charges on Your ComEd Bill (with Examples)

You cannot manage what you cannot measure. Many business owners look only at the "Total Amount Due." To reduce your costs, you need to dive into the Delivery Services section of your ComEd bill.

Decoding the Line Items

On a standard ComEd small business bill (Rate BES-H or BES-M), look for these specific terms:

• Distribution Facilities Charge: This is based on your highest 30-minute demand (in kW) recorded during the month. It pays for the local poles and wires.
• IL Electricity Distribution Charge: A state-mandated charge that often scales with demand.
• Transmission Service Charge: This is often the most expensive demand-based component. It’s based on your Peak Load Contribution (PLC), which is determined by how much energy you were using during the five specific hours of the previous year when the entire PJM grid was at its highest point.

A Real-World Example: The "15-Minute Mistake"

Imagine a small Chicago-based machine shop.

• Average usage: 40 kW.
• One Tuesday morning: They start all their CNC machines simultaneously while the HVAC is running at full blast. For 15 minutes, their demand hits 120 kW.
• The Rest of the Month: They go back to 40 kW.

ComEd will bill them for 120 kW of demand. At a hypothetical rate of $10 per kW for distribution, that 15-minute spike cost them an extra $800 that month (120kW - 40kW = 80kW extra; 80kW * $10 = $800). Over a year, that single recurring habit could cost $9,600.

How to Access Your "Green Button" Data

The best way to see these spikes is not the paper bill, but your Interval Data.

1. Log into your ComEd Business Account.
2. Search for "Green Button Data" or "Interval Usage."
3. Download the CSV or XML file for the last 12 months.
4. Look for the "Peak Demand" column. If you see a specific time of day where usage regularly doubles, you’ve found your primary savings opportunity.

For a deeper dive on bill reading, see our guide on ComEd Delivery vs Supply: Reading the Bill.

Section 2.5: The "Ratchet Effect" - How One Bad Day Haunts You for 11 Months

One of the most predatory aspects of commercial utility billing is the "Demand Ratchet." While ComEd's current small business tariffs have moved away from some of the most extreme historical ratchets, the principle still applies to many medium-sized commercial rate classes.

What is a Ratchet?

A ratchet clause states that your demand charge in any given month cannot be lower than a certain percentage (usually 80-100%) of your highest peak in the previous summer.

Scenario:

• August: Your AC fails, and you bring in portable industrial chillers. Your peak hits 200 kW.
• January: You are barely using any energy, and your actual demand is only 50 kW.
• The Ratchet: If you have a 100% summer ratchet, ComEd bills you for 200 kW in January, even though you only used 50 kW.

In 2026, many Illinois businesses are finding that their "Capacity Tag" (PLC) acts like a one-year ratchet. If you hit a massive peak on a hot July afternoon when the grid is stressed, you will pay for that "Capacity" every single month for the next year. This is why "Peak Shaving" during PJM Coincident Peak events is the single highest-ROI activity a business can perform.

Section 3: 5 Proven Strategies to Immediately Lower Your ComEd Demand Charges

Reducing demand doesn't always require buying expensive equipment. Often, it's about changing when you do what you do.

1. Load Sequencing and Staggering (The "Soft Start")

This is the lowest-cost strategy. Instead of turning on every piece of equipment at the start of a shift, stagger them by 20-30 minutes.

• Example: A laundromat turns on its 10 largest dryers. If each pulls 5 kW, that’s a 50 kW spike. If they start 2 dryers every 15 minutes, the peak demand remains significantly lower because the initial "inrush current" of the motors is spread out.

2. Pre-Cooling and Thermal Mass

In Illinois summers, HVAC is the primary driver of peak demand.

• The Strategy: Set your thermostats to 68°F at 6:00 AM when the outdoor air is cool and electricity demand is low. At 1:00 PM (when ComEd peaks usually occur), raise the thermostat to 74°F.
• The Result: The building's structure (its "thermal mass") stays cool, and your AC compressors don't have to work as hard during the most expensive hours of the day. This is a classic peak shaving strategy.

3. Employee Behavioral Training

Your staff controls your energy bill. A kitchen crew that turns on the dishwasher, the pizza oven, and the walk-in freezer defrost cycle all at once is accidentally spending your profit.

• Pro Tip: Create a "Power Up Schedule." Post it near the breaker panel or main switches. "Ovens at 7:00, Dishwasher at 7:30, Lights at 8:00."

4. Demand Response Programs (VLR)

ComEd’s Voluntary Load Reduction (VLR) program pays you to be flexible. When ComEd anticipates a grid peak, they send you an alert. If you successfully reduce your usage during that window, you earn credits. This doesn't just lower your current bill; it also helps lower your PLC (Capacity Tag) for the following year, creating a double-win. Learn more about Demand Response for Commercial Tenants.

5. Small-Scale Battery Storage

By 2026, the cost of "Behind the Meter" (BTM) battery storage has dropped enough to be viable for many small businesses.

• How it works: The battery charges at night when demand is low and electricity is cheap. During your business's peak hour, the battery discharges, "shaving" the peak off your ComEd meter.
• Incentives: Under CEJA and the Federal Inflation Reduction Act (IRA), Illinois businesses can often recover 30-50% of the cost of these systems through tax credits and rebates. Check our guide on Illinois Energy Storage Incentives 2025-2026.

Section 3.5: Industry-Specific Playbooks for Demand Reduction

Every business uses energy differently. Here is how specific Illinois industries are tackling demand charges in 2026:

The Restaurant Playbook: "The Defrost Shuffle"

Restaurants are demand-heavy due to refrigeration and cooking equipment.

• Defrost Timing: Most commercial reach-ins and walk-ins have a defrost cycle that runs every 4-6 hours. If four freezers all defrost at the same time, your demand spikes. Have a technician stagger these cycles so they never overlap.
• Ventilation: Use Variable Frequency Drives (VFDs) on your kitchen hood fans. Instead of running at 100% all day, they can scale down during slow prep hours, significantly reducing kW draw.
• Dishwashing: Run large dishwashing loads after the lunch rush and before the dinner rush to avoid overlapping with high AC or lighting loads.

The Small Manufacturing Playbook: "Compressor Control"

In shops that use CNC machines or air compressors, the "Start-Up Spike" is the enemy.

• Compressed Air: Leaks in air lines cause compressors to cycle on and off all day. A single 1/8-inch leak can cost $2,000 a year in demand and energy charges. Fix your leaks and use a large "receiver tank" to store air, allowing the compressor to stay OFF during peak hours.
• Staggered Shifts: If possible, move your most energy-intensive process (like heavy welding or heat treating) to a second shift. ComEd demand charges are often lower (or nonexistent) during "Off-Peak" hours for certain rate classes.

The Retail and Office Playbook: "Lighting and Envelope"

For retail and office spaces, it's all about the "Envelope."

• LED Retrofits with Dimming: Moving to LEDs saves energy (kWh), but using dimmable LEDs with daylight sensors reduces demand (kW). As the sun comes through your windows, the lights dim automatically, keeping your total kW draw flat.
• Door Management: In retail, "air curtains" can prevent your AC from working overtime every time a customer walks in. By keeping the cool air in, you prevent the massive 20-30 kW compressor spikes common in high-traffic shops.

Section 4: Future-Proof Your Business: Advanced Tactics & What the 2026 ComEd Changes Mean for You

As we look further into 2026 and toward 2027, the Illinois energy landscape is shifting from "passive consumption" to "active management."

The Rise of AI-Driven Energy Management Systems (EMS)

Small businesses no longer need a full-time engineer to manage power. Modern, cloud-based EMS can now integrate with your ComEd "Smart Meter" and automatically throttle non-essential loads (like water heaters or hallway lighting) when they sense a demand spike approaching.

• Impact: These systems can often reduce peak demand by 10-15% with zero human intervention.

Understanding the 2026 Rate Filings

ComEd is moving toward more "Granular Pricing." This means that the time of day you use power will matter more than ever. In 2026, we are seeing a push for more businesses to move toward Hourly Pricing (BESH).

• Risk: If you are on hourly pricing and don't manage demand, a single hour of high prices combined with a demand spike can be devastating.
• Opportunity: If you can shift your load, hourly pricing allows you to buy power when it's virtually free (or even negative during high wind/solar periods).

The EV Charging Trap

If you are installing EV chargers for customers or employees, be careful. A Level 2 charger can pull 7-10 kW. If four people plug in at once, that’s 40 kW of new demand—potentially doubling a small office's peak.

• Solution: Use "Managed Charging" software that limits the total draw to stay under a specific kW threshold.

Strategic Procurement: Fixed vs. Index

When you work with a commercial energy broker in Illinois, ask about "Load Following" vs. "Block and Index" contracts.

• If your demand is highly volatile, a Fixed Rate might protect you from price spikes, but you still pay the high delivery demand charges to ComEd.
• A Block and Index strategy allows you to buy a "block" of cheap power for your base load and only pay market rates for your spikes. This is particularly effective for businesses that can use interval data platforms to predict their needs.

Section 4.5: Calculating the ROI of Demand Mitigation

How much is it worth to spend on demand reduction? In 2026, the average ComEd demand rate (including distribution and transmission) ranges from $12 to $22 per kW per month.

If you can permanently "shave" 10 kW off your peak, you are saving:

• Monthly: 10 kW * $15 (average) = $150
• Annually: $150 * 12 = $1,800

If a piece of equipment (like a high-efficiency motor or a basic sequencer) costs $3,000 to install, your ROI is less than 2 years. If you factor in the Capacity Tag savings (PLC), which can be an additional $3-$7 per kW depending on the year, the savings can double.

Section 5: Common Myths About ComEd Demand Charges

To help Illinois businesses navigate 2026, we must debunk several common misconceptions:

Myth 1: "If I turn off all my lights for an hour, my demand charge will drop."

• Reality: Only if that hour was your peak. If your peak happened at 2:15 PM and you turned the lights off at 4:00 PM, your demand charge remains the same. You saved energy (kWh), but you did nothing to lower your demand charge (kW).

Myth 2: "Demand charges only happen in the summer."

• Reality: While the highest charges often hit in June-September, most commercial rates have a year-round distribution demand charge. Furthermore, PJM's capacity and transmission charges are often set in the summer but billed every single month of the year.

Myth 3: "My solar panels will eliminate my demand charges."

• Reality: Solar is great for kWh, but unless you have a battery, a single passing cloud during your peak usage window can result in your solar output dropping and your grid demand spiking. ComEd will bill you for that spike.

Section 6: Advanced Coincident Peak Management for 2026

For larger "small businesses"—those with a peak demand consistently over 100 kW—the stakes are even higher due to Coincident Peak (CP) charges. In the PJM region, which includes Northern Illinois, the grid's "Five Peaks" (the 5 hours of highest system-wide usage during the summer) determine your Capacity Tag for the entire following year.

Why 2026 is Different

In 2026, the PJM grid is facing tighter supply margins due to the retirement of older coal plants and the slow interconnection of new renewables. This means that "Peak Events" are likely to be more frequent and potentially happen outside the traditional "2 PM - 5 PM" window.

Tactics for Coincident Peak Shaving:

1. Alert Services: Use a service that monitors PJM load in real-time. When the grid approaches a historical peak, you receive a text or email alert.
2. The "Curtailment Drill": Have a pre-set plan. "When an alert hits, we turn off the warehouse charging stations, dim the showroom lights by 50%, and raise the AC setpoint by 4 degrees."
3. Generator Integration: If you have an emergency backup generator, check local Illinois environmental regulations. Many "Peak Shaving" permits allow you to run your generator during these 5 critical hours to drop your grid demand to zero. This single move can save a medium-sized business $20,000 to $50,000 in annual capacity costs.

Conclusion: Taking Control of Your Peak in 2026

The era of "set it and forget it" energy bills is over for Illinois small businesses. ComEd demand charges are a reflection of the grid's limitations, but they are also a roadmap for savings. By staggering your equipment, utilizing pre-cooling, and exploring new technologies like battery storage or AI-management, you can turn one of your largest overhead costs into a managed, optimized line item.

If you’re unsure where to start, the first step is always a professional Energy Bill Analysis & Audit. Our team can help you download your interval data, identify your "Peak Hours," and build a custom strategy to reduce your demand charges in ComEd territory.

Don't let a 15-minute spike dictate your monthly profit. Start managing your demand today.

Your 2026 Demand Reduction Checklist

Use this checklist to ensure your business is ready for the upcoming billing cycles:

• Audit Your Bill: Find the "Actual Demand" line item on your last 12 months of ComEd bills.
• Pull the Data: Download your Green Button interval data from ComEd’s portal.
• Identify the Spike: Determine if your peaks are daily, weekly, or seasonal.
• Stagger Operations: Create a startup schedule for heavy equipment.
• Check Thermostats: Program your HVAC for pre-cooling (cool early, drift late).
• Inspect for Leaks: (If applicable) Fix air compressor or steam leaks.
• Review Contracts: Talk to your energy broker about how your current supply contract handles "Capacity" and "Transmission" pass-throughs.
• Enroll in VLR: Join ComEd’s Voluntary Load Reduction program for low-risk revenue.

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Internal Resources for Further Reading:

• How to Lower Your ComEd Bill: 10 Practical Tips
• Small Business ComEd Rates Explained
• ComEd Peak Demand Management Guide
• Demand Response Programs in Illinois: A 2026 Update

External Sources:

• ComEd Official Business Rates
• Illinois Commerce Commission (ICC)
• Citizens Utility Board (CUB) - Small Business Energy Guide