When people compare Dominion's time-of-use rate to the standard plan, they talk about cheap overnight energy and the expensive evening window. What almost nobody explains is the demand charge — a separate line item on Rate 7 that can quietly undo your savings if you don't understand how it's measured. I run Rate 7 at my house in Charleston, so here's the plain-English version, the part the rate sheets bury.
What the demand charge actually is
Rate 7 bills you two different ways at once:
- An energy charge for how many kilowatt-hours (kWh) you use, split into on-peak, off-peak, and super-off-peak prices.
- A demand charge for your highest burst of power — measured in kilowatts (kW) — during the on-peak window.
Energy is "how much you used over the month." Demand is "how hard you pulled at your worst moment." They're priced separately, and the demand charge is the one that catches people.
How it's measured: your single worst 15 minutes
This is the key mechanic. Dominion doesn't average your on-peak usage. It looks at every 15-minute interval during the on-peak window all month and takes your single highest one. That one interval sets your demand charge for the entire billing period.
Run your AC, oven, and dryer together for fifteen minutes one Tuesday at 5 p.m., and that spike sets the charge — even if every other afternoon that month was quiet. It's the peak that gets billed, not the pattern.
It scales — it's not all-or-nothing
A common way this gets explained wrong is "miss the window once and you pay the demand charge." That's half right. You don't flip a switch from zero to a full penalty — the charge scales with how big that worst interval was. A small slip (say you pulled a couple of kW for fifteen minutes) sets a small demand charge. A big slip (everything running at once) sets a big one.
So the honest framing is: your worst single on-peak moment sets your demand cost for the month, and the bigger that moment, the more it costs. There's also no "averaging it out" with good days — fifteen good afternoons don't lower the peak that one bad one created.
And because most homes pull something during the late afternoon, there's usually a baseline demand charge every month even when you're careful. The goal isn't zero — it's keeping that worst interval as low as you reasonably can.
What a battery has to do to keep it low
This is exactly what a properly set up home battery handles, and why battery behavior matters more than battery size on the spec sheet. During the on-peak window, the battery should carry the house — supplying your load from stored energy so your draw from the grid stays low even when the AC and appliances are running. Keep the grid-side demand down through the whole window, every day it applies, and your demand charge stays small.
The failure mode is a battery that can't cover your actual peak — undersized for your home's real power draw, or that runs out partway through the window. The moment the grid has to make up the difference, that interval becomes your billed peak. This is why sizing a battery to your peak, not just to "a number of kWh," is the part that protects you.
A note on winter and seasons
The on-peak window isn't the same year-round. In summer (May–September) it's late afternoon; in winter (October–April) it shifts to the morning. The demand charge follows whichever window is in effect, so the time of day you need to protect changes with the season. If you're optimizing aggressively, confirm the current Rate 7 terms directly with Dominion for the season you're in.
Worth flagging: Dominion has proposed time-of-use changes for July 1, 2026 that would adjust the rate periods and treat weekends and holidays like weekdays. If that lands, the windows you're protecting against the demand charge change too — more in Dominion's 2026 time-of-use rate changes.
The bottom line
The demand charge is the single most misunderstood thing on Rate 7, and it's the reason is a battery worth it has a real answer instead of a sales pitch. Cover your on-peak window consistently and it stays small; let one bad interval through and it sets your whole month.