Demand Charge

Author: E.E. Kimberly

The load factor of all consumers is not the same. That is, one consumer may use 5000 kw-hr of energy per month with a nearly continuous load, which never exceeds 10 kw. The physical plant equipment necessary to provide the maximum demand service for this consumer will be only that required for 10 kw, and so the fixed charges to be passed on to him should be only those associated with 10 kw of equipment capacity. Another consumer may also use only 5000 kw-hr of energy per month, but may demand as much as 500 kw through only a few hours of use. In this case the physical plant equipment to be allotted to him is 500 kw, and so the fixed charges associated with his service would be 50 times as great as those for the other consumer. For this reason there is a "demand charge" based on the maximum demand for power made by the consumer.

The demand charge is sometimes based on the horsepower of connected load, which is considered to be the consumer's continuous threat of demand for service. Another method of determining the demand for billing purposes for moderately large consumers is to place a demand meter on the premises two or three times in a year, and to use the reading taken at a certain time as a basis for charge until the next reading is made, regardless of possible changes in operating conditions in the interim. In the case of very large consumers a demand meter is permanently installed and is read every month at the time the kilowatt-hour meter is read. The demand meter consists of a graphic wattmeter which produces a continuous record to be analyzed monthly, or of a kilowatt-hour meter with a high-speed register which is automatically reset to zero at the end of every time interval of 10, 15, 30, or 60 minutes, according to the choice of the utility. An indicator, which can be reset to zero by the meter reader only, shows the maximum demand since the last resetting.