SRP Demand Charges Explained: How to Lower Your Electric Bill in 2026

If you're an SRP customer and your electric bill seems higher than it should be, demand charges are probably the reason. Unlike APS, which charges you purely based on how many kilowatt-hours you use, SRP adds a separate charge based on your peak power draw during on-peak hours. This one line item can add $50-$150+ to your summer bill — and most homeowners don't even know it exists.

What Is a Demand Charge?

A demand charge is based on the highest amount of power your home draws in a single hour during on-peak periods in a billing cycle. It's measured in kilowatts (kW), not kilowatt-hours (kWh).

Think of it this way: your energy charge is like paying for the total gallons of water you use in a month. Your demand charge is like paying extra based on the fastest flow rate you ever turned on — even if it was just for one hour.

So if you ran your AC, pool pump, oven, and dryer all at the same time between 2-8pm on one hot July afternoon, that single hour sets your demand charge for the entire month.

SRP Demand Charge Rates (2026)

Under SRP's E-27 TOU plan, demand charges vary by season:

What This Actually Costs You

Let's say your home peaks at 8 kW during on-peak hours on a hot summer day (running AC, cooking dinner, charging an EV). Your demand charge alone would be:

A typical Arizona home with a 5 kW peak demand pays about $72.50/month in summer demand charges. Larger homes or homes with EVs and pools can easily exceed 10 kW, pushing demand charges past $145/month.

How SRP Measures Your Peak Demand

SRP uses a smart meter to track your power usage in real time. They record the highest single on-peak hour reading each billing cycle. Key details:

• Only on-peak hours count: 2:00 PM – 8:00 PM, Monday through Friday. Weekend and holiday usage doesn't affect your demand charge
• One bad hour sets the rate: Even if you're careful 29 days of the month, one high-demand hour determines your charge
• It resets monthly: Each new billing cycle starts fresh — your demand charge doesn't carry over
• Solar can help or hurt: If your solar panels produce during peak hours, they reduce your net demand. But when the sun goes down at 6-7pm and your AC is still blasting, your demand spikes

Why APS Customers Don't Have This Problem

This is a key difference between the two Arizona utilities. APS uses a pure TOU energy model — you pay per kWh with higher rates during peak hours, but there's no separate demand charge. SRP's demand charge model means your bill strategy is fundamentally different.

For SRP customers, it's not just about when you use electricity — it's about how much you use at the same time.

5 Strategies to Reduce Your SRP Demand Charges

1. Stagger Your Appliances During Peak Hours

The simplest free strategy: never run multiple high-draw appliances simultaneously between 2-8pm. Avoid running the dishwasher, laundry, and oven at the same time during peak hours. Even spreading them 30 minutes apart can reduce your peak by 2-3 kW.

2. Pre-Cool Your Home Before 2 PM

Set your thermostat to 72-74°F before the 2pm peak window, then let it rise to 78-80°F during peak hours. Your AC won't need to work as hard, reducing your demand spike. This alone can save 1-2 kW of peak demand.

3. Schedule EV Charging for Off-Peak

Level 2 EV chargers draw 7-10 kW — more than your AC. If you charge your EV during peak hours, your demand charge will skyrocket. Set your EV to charge after 8pm (or ideally after 11pm for the lowest rates). Every modern EV has built-in charge scheduling.

4. Use a Smart Thermostat with Peak-Aware Settings

Smart thermostats like Ecobee or Nest can pre-cool your home and reduce AC cycling during peak hours automatically. Some can integrate with SRP's rate schedule to optimize your usage around demand charges.

5. Install a Home Battery (The Biggest Impact)

This is the most effective strategy by far. A home battery like the Tesla Powerwall 3 or EcoFlow DELTA Pro Ultra can:

• Discharge during peak hours to supplement your grid draw, cutting your peak demand by 50-70%
• Charge from solar during the day or from the grid during off-peak hours (when there's no demand charge)
• Automatically manage peak shaving — modern batteries know your SRP rate schedule and optimize discharge

Solar + Battery: The Complete SRP Strategy

Solar panels alone have a complicated relationship with SRP demand charges. Your panels produce during peak hours, which helps — but production drops off in late afternoon (6-7pm) while your AC still runs at full blast. That late-afternoon spike can still set a high demand charge.

The winning combination for SRP customers:

1. Solar panels generate power during peak hours, reducing grid draw
2. Battery stores excess solar during midday
3. Battery discharges 4-8pm when solar production drops but AC demand stays high
4. Net result: Grid demand stays low across the entire peak window

This is why batteries are even more valuable for SRP customers than APS customers. On APS, batteries help with energy arbitrage. On SRP, batteries save you on both energy and demand charges — a double benefit.

How to Read Demand Charges on Your SRP Bill

On your SRP bill, look for these line items:

• "On-Peak Demand" or "Demand Charge" — This shows your peak kW and the rate applied
• "On-Peak kW" — The actual peak kilowatt reading from your smart meter
• "Service Charge" — A flat monthly fee (separate from demand charges)

If your "On-Peak kW" reading seems surprisingly high, think back to whether you had multiple appliances running simultaneously on a weekday afternoon that month. One Thanksgiving dinner prep session while the AC runs can set your demand for the entire billing cycle.

SRP Customer Generation Plan: Demand Charges + Solar

If you have solar on SRP, you're likely on the Customer Generation Plan. This plan still includes demand charges, plus a $32/month service charge for solar customers. The demand charge is calculated after netting your solar production, so panels do help reduce your measured demand during sunny hours.

However, the late-afternoon demand spike (when solar fades but AC doesn't) is why adding a battery is the most impactful upgrade for SRP solar customers. Our Battery Calculator shows the exact demand charge savings for your situation when you select SRP as your utility.

The Bottom Line

SRP demand charges are the hidden driver of high electric bills for over a million Arizona households. The behavioral strategies (staggering appliances, pre-cooling, off-peak EV charging) are free and can save you $20-40/month. But for the biggest impact — cutting demand charges by 50-70% — a home battery paired with solar is the most effective long-term strategy.

Ready to see exactly how much a battery would save you on SRP? Our Battery + VPP Calculator lets you select SRP and see demand charge savings calculated with real SRP rates.