replying to both posts 43 & 44 - i am not an utility expert, but i suspect the time period (5 to 15 minutes) during which the peak is measured still exists in most tariffs is simply due to the fact that most tariffs are re-written with focus on the rate structure (dollars) and not necessarily the billing mechanism. and, as stated in post 44, the primary reason for a demand charge is to reimburse the utility for the cost of building and maintaining the generation plants - and placing that cost on the customers who required the plant to be sized larger, those whose demand is higher.
many, many years ago, my Dad was a pumping station operator for a water utility - the water utility negotiated a peak DAYTIME and a peak NIGHTTIME rate on a monthly basis with the electric utility they purchased power from. every pumping station had a "ticker tape" electric meter in the operator's office space which typed the electric demand every 15 minutes. it was the pumping station operator's duty to make sure the demand did not exceed the agreed-to limit. the electric utility allowed the water company to use double the demand during nighttime hours at the same dollar rate as the daytime charge. when the demand was approaching the peak limit, electric pump motors were taken off line and pressure was maintained using diesel pumps.
i'm sure similar systems were, and still are, in place in other industries to control peak electric demands ... in today's world, those systems may be automatic, but their function remains the same - control the peak KW to help control electric costs.
as a design engineer, we frequently wrote project specifications that required contractors to provide their own power sources for things like welders and other heavy electric equipment during construction ... when we designed remodels for sites like grocery stores and other demand-metered locations, the owner did not want a contractor's welder to spike the demand on their electric service and result in them paying a higher demand charge on their electric bill for 6 to 12 months.
demand costs are on top of consumption and can be tricky to control.