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Technical Atricle

Engineering article useful for electrical and mechanical engineers prepared on the basis of practical experience in the

different industries.

Tuesday, 6 December 2011

Calculation of Electrical Maximum DemandAbstract:

The Electricity provider does charge the fixed charges on the basis of consumers maximum

Electrical Demand. Consumer shall restrict the power consumption under the contracted maximum

demand. This article furnishes calculation for Maximum Contract Demand.

1. Introduction:

The Electricity provider does record maximum demand in pre-defined interval (e.g. 30 minutes or 15

minutes) through duly sealed and calibrated energy meter. Generally Maximum Demand denotes in

kVA for billing purpose.

Consumer need to sanction Maximum demand from Electricity Provider considering type of industry

and operation pattern of the equipments. Consumer shall pay fixed charges on the basis of

Maximum Demand obtained from the provider i.e. the maximum rate at which an electrical power

has been consumed during any period of defined consecutive minutes in the billing month.

2. Analysis:

General Formula to calculate the Maximum Demand is described below:

Maximum Demand= Connected Load * Load Factor / Power Factor.

Where,

Connected Load = Total Connected load in the facility in kW.Load Factor = Utility Factor * Diversity Factor.Power Factor = System average Power Factor.

Example:

Total connected load of facility: 6500 kWLoad Factor: 0.4 (Considering steel plant type)

Power Factor: 0.95

Maximum Demand= 6500 * 0.4 / 0.95

= 2737 kVA

Utility Factor and Diversity Factor can be finding out by the Time Profile of load and usage of theequipment. All equipments of facility may not operate at similar time and also may not run with

full load.Hence, Diversity Factor in percentage = Installed load / running load.
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3. Conclusion:

Consumer should sanction Maximum Demand after studying the load pattern of the electrical

installation. Obtaining higher Maximum Demand shall result higher minimum fixed charges plus

higher deposit, and if sanctioned Maximum Demand exceed than consumer shall confront penalty.Posted byKrishnasinh K. Jadeja at03:46

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1 comment:

1.

Gopal30 June 2014 02:38

Very useful sir....

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o Discharge lamps

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Power loading of an installation

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1- Factor of maximum utilization (ku)
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2- Diversity factor - Coincidence factor (ks)

3- Diversity factor for an apartment block

4- Rated Diversity Factor for distribution switchboards

5- Diversity factor according to circuit function

All individual loads are not necessarily operating at full rated nominal powernor necessarily at the same time. Factors ku and ks allow the determination of

the maximum power and apparent-power demands actually required to

dimension the installation.

Factor of maximum utilization (ku)

In normal operating conditions the power consumption of a load is sometimesless than that indicated as its nominal power rating, a fairly common occurrence

that justifies the application of an utilization factor (ku) in the estimation ofrealistic values.

This factor must be applied to each individual load, with particular attention toelectric motors, which are very rarely operated at full load.

In an industrial installation this factor may be estimated on an average at 0.75

for motors.

For incandescent-lighting loads, the factor always equals 1.

For socket-outlet circuits, the factors depend entirely on the type of appliancesbeing supplied from the sockets concerned.

For Electric Vehicle the utilization factor will be systematically estimated to 1,as it takes a long time to load completely the batteries (several hours) and a

dedicated circuit feeding the charging station or wall box will be required by

standards.

Diversity factor - Coincidence factor (ks)

The determination of ks factors is the

responsibility of the designer, since it requires a

detailed knowledge of the installation and theconditions in which the individual circuits are to

be exploited.
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For this reason, it is not possible to give precisevalues for general application.

It is a matter of common experience that the simultaneous operation of all

installed loads of a given installation never occurs in practice, i.e. there isalways some degree of diversity and this fact is taken into account for

estimating purposes by the use of a factor (ks).

This factor is defined in IEC60050 - International Electrotechnical

Vocabulary,as follows:

Coincidence factor:the ratio, expressed as a numerical value or as a

percentage, of the simultaneous maximum demand of a group of electrical

appliances or consumers within a specified period, to the sum of their

individual maximum demands within the same period. As per this definition,

the value is always 1 and can be expressed as a percentage

Diversity factor:the reciprocal of the coincidence factor. It means it will

always be 1.

Note:In practice, the most commonly used term is the diversity factor, but it is

used in replacement of the coincidence factor, thus will be always


7/52

10 to 14 0.63

15 to 19 0.53

20 to 24 0.49

25 to 29 0.46

30 to 34 0.44

35 to 39 0.42

40 to 49 0.41

50 and more 0.38

F ig. A10:Example of diversity factors for an apartment block as defined inFrench standard NFC14-100, and applicable for apartments without electrical

heating

Example(see Fig. A11):

5 storeys apartment building with 25 consumers, each having 6 kVA ofinstalled load.

The total installed load for the building is: 36 + 24 + 30 + 36 + 24 = 150 kVA

The apparent-power supply required for the building is: 150 x 0.46 = 69 kVAFrom Figure A10, it is possible to determine the magnitude of currents in

different sections of the common main feeder supplying all floors. For vertical

rising mains fed at ground level, the cross-sectional area of the conductors canevidently be progressively reduced from the lower floors towards the upper

floors.

These changes of conductor size are conventionally spaced by at least 3-floorintervals.

In the example, the current entering the rising main at ground level is:

the current entering the third floor is:


8/52

F ig. A11:Application of the diversity factor (ks) to an apartment block of 5

storeys

Rated Diversity Factor for distribution switchboards

The standards IEC61439-1 and 2 define in a similar way the Rated Diversity

Factor for distribution switchboards (in this case, always 1) IEC61439-2 also

states that, in the absence of an agreement between the assembly manufacturer

(panel builder) and user concerning the actual load currents (diversity factors),the assumed loading of the outgoing circuits of the assembly or group of

outgoing circuits may be based on the values in Fig. A12.
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If the circuits are mainly for lighting loads, it is prudent to adopt ks values close

to unity.

Type of load Assumed loading factor

Distribution - 2 and 3 circuits 0.9

Distribution - 4 and 5 circuits 0.8

Distribution - 6 to 9 circuits 0.7

Distribution - 10 or more circuits 0.6

Electric actuator 0.2

Motors 100 kW 0.8

Motors > 100 kW 1.0

F ig. A12:Rated diversity factor for distribution boards (cf IEC61439-2 table

101)

Diversity factor according to circuit function

ks factors which may be used for circuits supplying commonly-occurring loads,

are shown in Figure A13. It is provided in French practical guide UTE C 15-105.

Circuit function Dive

Lighting 1

Heating and air conditioning 1

Socket-outlets 0.1 to

Lifts and catering hoist(2)

For the most powerful motor

For the second most powerful motor

For all motors

1

0.75

0.60

(1) In certain cases, notably in industrial installations, this factor can be higher.(2) The current to take into consideration is equal to the nominal current of the


10/52

motor, increased by a third of its starting current.

F ig. A13:Diversity factor according to circuit function (see UTE C 15-105

table AC)

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Estimating Power Demand Using IEC Methods

BySteven McFadyen on July 27th, 2011

Estimating power demand is combination of science and art. It is an area of electrical engineering where

there is no correct answer. Plug the figures in your preferred method of calculation and then as an

engineer you need to relay on instincts to say if the answer feels right or not. This is a look at one

method inline with what could be considered IEC practice.

reproduced from

Schneider's 'Electrical Installation

Guide - According to IEC International Standards' Estimating power demand is combination of science

and art. It is an area of electrical engineering where there is no correct answer. Plug the figures in your

preferred method of calculation and then as an engineer you need to relay on instincts to say if theanswer feels right or not.

Individual loads do not necessarily operate at full rated nominal power nor at the same time. Estimating

power demand involves both looking at the total connected load and the maximum expected demand

on the system. As we will see these are not the same.

Contents [hide]

IEC Method

Typical Utilisation & Simultaneity Factors

Utilization Factor (ku)

Simultaneity Factor (ks)

Basic Demand Data and Preliminary Planning

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IEC Method

Depending where you are, different methods, figures and procedures are used to estimate the power

demand of an installation. This is a look at one method inline with what could be considered IEC

practice.

To get going it is useful to understand some basic definitions:

voltage V - the voltage of the electrical system

load current Ib - the current required to operate an item of equipment

apparent power kVA - the product of the voltage V and load current Ib

real power kW - the actual power consumed by the load or equipment

power factor - the ratio of the real power to apparent power (kW/kVA)

utilisation factor ku - see below

simultaneity factor ks - see below

Utilisation factor ku - name plate ratings invariably list higher values of current than will be seen in use,

motors rarely run at full load, etc. A utilisation factor can be applied to these ratings to establish a more

realistic load current, thereby not overestimating the demand.

Simultaneity factor ks - not all equipment runs a the same time; for example one motor may be duty and

the other standby. The same applies to installations; for example a group of houses or apartments will

not all consume the full design current at the same time. Applying a simultaneity factor takes care of

this. Often the term diversity is used and has the same meaning.

The diagram illustrates how the utilisation and simultaneity factors are used to estimate the power

demand of an installation. Click on the image for a larger version.

Following the diagram, the apparent power of the load or equipment is multiplied by the utilisation

factor to give a realistic power demand to be supplied by a distribution board. Summing these power

demand figures gives the total connected apparent demand (at that board). The distribution board

would normally be sized for this demand.

An appropriate simultaneity factor is applied to the connected apparent demand at the distribution

board and this [diversified] load is carried upstream to higher levels boards. Repeating this procedure

will lead to an expected total demand for the full installation.

In a nutshell, thats all there is to it - in principal at least. There are often problems in deciding what

simultaneity factor to use and here experience can be really useful.


14/52

Tip: estimating power demand this is normally carried out using either apparent or real power. I prefer

real power as it gives me the actual kW required and is an algebraic sum. Many people will use apparent

power, which strictly speaking is a vector sum. As we are dealing with estimates (ball park figures

even), using either real or apparent power will yield usable results.

Typical Utilisation & Simultaneity Factors

Ideally utilisation and simultaneity factors should be developed specifically for each application and

based on a knowledge of how that particular system will operate. For certain situations it may be

necessary to use factors given by supply authorities or some other industry adopted factors.

The factors below are based on those given in the Schneider Electrical Installation Guide and can be

used in the absence of other sources or to provide reality checks on figures being used.

Utilization Factor (ku)

Actual power used in equipment is often less than the rated power. A utilization factor (ku) is used to

give a more realistic estimation of maximum power.

Typical values of Utilization Factor ku:

Type of load ku

Motors (Typical 0.75

Lighting Circuits 1

Socket Outlets 0.1 to 0.2

Simultaneity Factor (ks)

If is rare in practice that all loads operate simultaneously. The simultaneity factor ks is applied to each

group of loads (e.g. being supplied from a distribution or sub-distribution board). Simultaneity factor is

sometimes called diversity factor.

Typical values of Simultaneity Factor ks by circuit function:

Type of load ks

Lighting 1

General Heating 1

Space Heating 0.8

Building Installations ks

Escalator 0.5

Elevator 0.3

Sanitary systems 0.5

Apartment Blocks ks

2 to 4 1

5 to 9 0.78

10 to 14 0.63


15/52

Air Conditioning 1

Socket Outlets 0.1 to 0.2

Lifts/Hoists Most powerful

motor

1

Second most

powerful motor

0.75

For all motors 0.6

Assemblies -Number of Circuits ks

2 and 3 0.9

4 and 5 0.8

6 to 9 0.7

10 and more 0.6

Sprinklers 0.1

Heating 0.8

Air conditioning 0.8

Cooling water system 0.7

Refrigeration 0.7

15 to 19 0.53

20 to 24 0.49

25 to 29 0.46

30 to 34 0.44

35 to 39 0.42

40 to 49 0.41

50 and more 0.40

We've produced an Excel spreadsheet for estimating building total connected load and maximum

demand.

If your interested in obtaining a copy,you can get it here.

Basic Demand Data and Preliminary Planning
http://myelectrical.com/home/myelectrical-store/categoryid/3/productid/6http://myelectrical.com/home/myelectrical-store/categoryid/3/productid/6http://myelectrical.com/home/myelectrical-store/categoryid/3/productid/6http://myelectrical.com/home/myelectrical-store/categoryid/3/productid/6http://myelectrical.com/home/myelectrical-store/categoryid/3/productid/6


16/52

Siemens produce a series of publications providing typical demand figures for various building functions

[seeSteven's Technical List,Buildings Technology for a list of these]. The following tables are based on

values given in these publications:

Buildings according to their type of use:

Building Use Average

Power

Demand

Simultaneity

Factor

Bank 40-70 w/m2 0.6

Library 20-40 w/m2 0.6

Office 30-50 w/m2 0.6

Shopping centre 30-60 w/m2 0.6

Hotel 30-60 w/m2 0.6

Department store 30-60 w/m2 0.6

Small hospital

(40-80 beds)

250-400

w/m2

0.6

Hospital(200-500 beds)

50-80 w/m2 0.6

Warehouse (no

cooling)

2-20 w/m2 0.6

Cold store 500- 1,500

w/m2

0.6

Apartment complex

(withoutnight storage or

continuous-flow

water heater)

10-30 w/m2 0.6

Museum 60-80 w/m2 0.6

Different functional and building areas

Functional Area/

Building Area

Average

Power

Demand

Simultaneity

Factor

Hallway, anteroom or

lobby

5-15 w/m2 0.3

Staircase 5-15 w/m2 0.3

General utilities 5-15 w/m2 0.3

Foyer 10-30

w/m2

1.0

Access ways

(e.g. tunnel)

10-20

w/m2

1 .0

Recreation

room/kitchenette

20-50

w/m2

0.3

Toilet areas 5-15 w/m2 1 .0

Travel centre 60-80

w/m2

0.8

Office areas 20-40

w/m2

0.8

Bookstore 80-120

w/m2

0.8

Flower shop 80-120

w/m2

0.8

Bakery/butcher 250-350 0.8
http://myelectrical.com/tools/stevens-technical-listhttp://myelectrical.com/tools/stevens-technical-list


17/52

Parking garage 3-10 w/m2 0.6

Production plant 30-80 w/m2 0.6

Data centre 500-2,000

w/m2

1 .0

School 10-30 w/m2 0.6

Gym hall 15-30 w/m2 0.6

Stadium (40,000-

80,000 seats)

70-120

w/seat

0.6

Ol peoples home 15-30 w/m2 0.6

Greenhouse (artificial

lighting)

250-500

w/m2

w/m2

Groceries 80-120

w/m2

0.8

Bistro/ice cream

parlour

150-250

w/m2

0.8

Cafe 180-220

w/m2

0.8

Diner/restaurant 180-400

w/m2

0.8

Tobacco shop 80-120

w/m2

0.8

Hairdresser 220-280

w/m2

0.8

Dry-cleaners or

laundry

700-950

w/m2

0.7

Storage area 5-15

w1/m2

0.3

Office Equipment Demand Recommendations

Equipment Average

Power

Demand

Data

Source

All in one Printer/

Fax/Scanner

75 w CIBSE

Ceiling Projector Lift 50 w Estimated

Ceiling Projector

Screen

80 w Estimated

Other areas:

Area Average power

demand

Electric floor heating

bedrooms

65-1 00 w/m2

Electric floor heating

bathroom

130-150 w/m2

Night storage heating:

Low-energy house

60-70 w/m2


18/52

Colour Printer/Copier 200 w CIBSE

Colour Scanner 50 w CIBSE

Computer Peripherals 400 w Estimated

Convenience Sockets 200

w/socket

DEWA

Cost Recovery Devices 3,000 w Estimated

Desktop 100 w CIBSE

DVD Player 70 w Estimated

Fixed Camera 30 w Estimated

Laptop 100 w CIBSE

Large Smart Board 300 w Estimated

Monitor 200 to 400

W

CIBSE

Paper Shredder 50 w CIBSE

Personal Printer/Fax 50 w CIBSE

Portable Wireless

Controller

20 w Estimated

Projector 300 w CIBSE

Rack Equipment in

Credenza

400 W Estimated

Shredder 190 w Estimated

Technology Wells in Table

Top

200 w Estimated

Night storage heating:

house with stanar

insulation

100-110 w/m2

Small air conditioning unit 60 w/m2

Photovoltaic (maximum

output of the modules)

100-130 w/m2


19/52

Teleconference Module 50 w Estimated

Wall Mounted Controller 20 w Estimated

Wall Mounted LCD 200 w Estimated

Related Links

Maximum Demand for Buildings - Post

Power Demand,Buildings,Energy

More interesting Notes:

Possibly related posts:

Power Factor

What is Aircraft Ground Power

9 power supply issues solved by using a UPS

Three Phase Current - Simple Calculation

UPS - Uninterruptible Power Supply

Steven McFadyen

Steven has over twenty five years experience working on some of the largest construction projects. He

has a deep technical understanding of electrical engineering and is keen to share this knowledge. About

the author
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View 15 Comments (old system)

aymenomer says:

9/1/2011 9:11 AM

Hi,

How can I pick the values for Ku and Ks

Steven says:

9/1/2011 9:11 AM

We have some typical values in the Wiki

- see/wiki/maximum-demand-estimation.aspx for example

Ku depends on situation and often I tend to leave it at 1. If I know the mechanical/process guys are over

sizing I may use a lower figure. Ks is the same as diversity - besides the typical given in the Wiki, people

have their own they like to use or sometime supply Authorities require certain values. A good starting

point for finding values are the Siemens building applications manuals, which I think you can download

from their site.

ahmed01451 says:

9/1/2011 9:11 AM

If you could give me calculation step giving with one example if i have 6 motors each 15kw , out of which

5 duty and 1 standby , how i can apply ks and ku .one example so that i can implement

Steven says:

9/1/2011 9:11 AM
http://myelectrical.com/notes/entryid/74/estimating-power-demand-using-iec-methods#collapseOnehttp://myelectrical.com/users/stevenhttp://myelectrical.com/wiki/maximum-demand-estimation.aspxhttp://myelectrical.com/users/stevenhttp://myelectrical.com/users/stevenhttp://myelectrical.com/wiki/maximum-demand-estimation.aspxhttp://myelectrical.com/users/stevenhttp://myelectrical.com/notes/entryid/74/estimating-power-demand-using-iec-methods#collapseOne


21/52

With the given information I think it would be unlikely that the motors would be critically sized and I

would be tempted to use ku=0.8. You may even consider lower if you have some background as to how

the motor duties have been selected. On diversity you could use ks = 0.83 (5/6). This would give a

diversified load of 60 kW (6x15x0.8x0.83). I would size the individual supplies to each motor for 15 kW.

If these are being supplied by an MCB or DB it would be sized for the connected load 72 kW (15x6x0.8).

For any upstream switchboards I would assume they need to supply an average of 60 kW for these

motors.

real_brute says:

9/11/2011 9:16 AM

gents.... be careful in using the IEC guide.... make sure you read all paragraphs in there....

there is no straight forward guide and rule when estimating maximum demand...

the manual says that, the values are based in extensive research.... i agree... i also agree on theparagraph that says "experienced electrical engineer"... which defies all values stated in the reference

tables...

this means that the manual is trying to save it's own ass.... and i also agreed with it....

i just want to let everyone know that those values can never be accurate... tho accuracy is not

required...it will just give the engineer an indication of the derived values if within acceptable limits....

but then again, there is no easy substitute to extensive load studies and analysis... which should include

load profiling and energy studies....

i have used the manual and i have known that the straight forward values are easy to use but quite

misleading....

my suggestions is to categorize the loads effectively, get benchmark from existing projects, make

accurate load profiles including HVAC which has at least 60% effect on the outcome of the analysis...

Yuri Fernandez says:

11/18/2011 5:37 PM

What refers to IEC standard?

Thanks for the response

Steven says:

11/22/2011 7:27 AM
http://myelectrical.com/users/real_brutehttp://myelectrical.com/users/stevenhttp://myelectrical.com/users/stevenhttp://myelectrical.com/users/real_brute


22/52

The article is not in reference to a particular stanar. The IEC Metho in the title refers more to the

terminology and procedures that you will find if you read guides/books published in a context of using

IEC standards (as opposed to say NEC or IEEE)

Wael Roustom says:

5/14/2012 2:18 AM

Thanks a lot for your information and your efforts.

I think it is better to draw an general example like a twin tower one residential and the other offices

including mall in the ground and first floor. Think we can share our knowledge to estimate the maximum

demand load.

Thanks again.

Steven says:

5/14/2012 2:19 AM

Thanks for the comment Wael.

Towards the end of last year I was busy writing a detailed guide explaining how to calculate demand for

buildings, including an example of a mixed use development. Currently it is about 80% complete. At the

beginning of the year, I took the decision to stop for a few months before returning for final editinga

think taking this break will make it a better guide. I hope to return to the project soon and get it finishedwithin the next few months.

If you want to keep an eye out Ill be posting etails on the site an in our newsletter as soon as its

finished

Carlos says:

3/11/2013 10:13 AM

Hi Steven,

Thanks for the useful information on this page. Did you by any chance finish the guide you were working

on. I would like to get hold of a copy if you are willing to share it?

Steven says:
http://myelectrical.com/users/stevenhttp://myelectrical.com/users/stevenhttp://myelectrical.com/users/stevenhttp://myelectrical.com/users/steven


23/52

3/13/2013 12:23 AM

I ha a change in personal situation which put things on the back burner. Its about 70% complete an I

hope to get back to it soon.

SYAM says:

3/13/2013 4:05 AM

Dear sir,

I came across another method of calculation like

MD= 1x Continous load+ 0.6x Intermittent load + .2 x Standby load

Is the mentioned method right or is it applicable for industries...?

Thanks in advance.

Steven says:

3/19/2013 3:24 AM

Personally Ive never seen a metho as escribe. It seems a bit arbitrary to myself an I woul have

some doubts about any results from the method.

Akira says:

3/19/2013 2:39 AM

IEC rules is difficult for me to understand Japanese . However, I would like to have a clear answer so that

we esign in the Mile East.I have always reference to Electrical installation guie 2010 when oing

working. I under stand that this guide book iseferring IEC Standards.. Please lets me know What IEC

reference numberwith Chapter that escribe page A16 Factor of simultaneity for an

apartment block Regars. I woul like to know the grouns liste in theIEC stanar .

Steven says:

3/19/2013 3:22 AM
http://myelectrical.com/users/songsaahhttp://myelectrical.com/users/stevenhttp://myelectrical.com/users/stevenhttp://myelectrical.com/users/stevenhttp://myelectrical.com/users/stevenhttp://myelectrical.com/users/songsaah


24/52

Akira, I use the installation guide as well. Unfortunately it does not refer to any direct IEC standard for

the typical Simultaneity values given, so it may be these are Schneiers own or from some other

standard. I think the important thing is that any figures are just a guide and not fixed.

Each application is different and more detailed understanding of the energy use or better historical data

can help you employ more appropriate Simultaneity values. Estimating power is something that worries

a lot of engineers (myself inclue). Its almost impossible to get correct an has consequences for both

over and under estimating.

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methods#sthash.eoeFt69i.dpuf

Understanding Demand and Consumption

Demand = KW

Consumption = KWH

The difference between demand (KW) and consumption (KWH) is vital to your choices

inreducing your energy costs. A simple way to see the difference between demand andconsumption is by considering two examples.

LIGHTING EXAMPLE: One 100-watt light bulb burning for 10 hours consumes 1,000watt-hoursor 1 kWh. The entire time it is on, it requires or "demands" 100 watts or 0.1 kW fromthe utility.
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30/52

That means the utility must have that 0.1 kW ready whenever the customer turns thelamp on.

Similarly, ten 100-watt light bulbs burning for 1 hour consume 1,000 watt-hours or 1kWh. Note that in bothexamples, the consumption is 1 kWh, however, look how differently the secondsituation impacts the utilityfrom a demand perspective. The serving utility must now be prepared to provide tentimes as much 'capacity'

in response to the "demand" of the 10 light bulbs operating all at once.

If both of these customers are billed for their consumption only, both will get thesame bill for 1 kWh of energy.And that is the way most residential customers are billed. But the requirement for theutility to meet this energyrequirement is very different. In the second case, the utility has to have 10 timesmore generating 'capacity' toprovide the second customer's brief high demand for power compared to the firstcase.

Commercial and industrial customers are often billed for their hourly consumptionpatterns andtheir peak demandfor energy. These customers often have special meters that measure both, unlike

residential meters that justrecord total consumption in a time period, usually one month.
http://www.think-energy.net/KW_KWH_explanation.jpg


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So, you might ask, "why doesn't the utility bill all customers for demand andconsumption?" Seems like that is only fair.And it would be, but the fact is that most homes have a pretty similar demand profileand the meters capable of measuringboth demand and consumption are much more expensive. Far too expensive to justify

having one on every home. So allmost residential customers need to be concerned with now is consumption billing. Asthe cost of metering drops, and asautomatic metering advances, we may see increased use of demand billing for homes.

Analogies for Understanding Demand and Consumption

WATER EXAMPLE:

Another way of understanding demand and consumption is with a "filling the bucket"analogy.Suppose you want to fill a 5 gallon bucket with water. You can use an inexpensivehose connectionto your sink providing 1 gallon per minute to do it, and it will take 5 minutes.

Or you can get to a more expensive large faucet that provides 5 gallons per minute, itwill fill in just one minute.

The flow rate is the equivalent to demand, and the 5 gallons of water are equivalentto consumption.In this example, filling both buckets has the same "consumption" but very different

"demands."
http://www.think-energy.net/KW_KWH_meter1.jpg


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The same is true of electricity. While you may be able to accomplish the same thingby operating a small

wattage appliance for many hours as operating something of higher wattage for just afew, the higherwattage piece of equipment will create a higher demand on the utility. Using our

analogy, you are askingfor a larger pipe, and that costs more. If time is of the essence, it might be worth

having the more expensivehigh flow rate or wattage. This is why utilities often charge some customers for bothdemand and consumption.A customer that sets a high demand requires more services from the utility--additional generating plant capacity,and more expense in lines, transformers and substation equipment.

Some people like to use a automobile analogy to explain and understand how demandand consumption relate.The car's speedometeris like the demandmeter and the odometeris like aconsumptionmeter.Two cars could travel the same 100 mile road, one at 10 miles per hour for 10 hoursand the other at100 miles per hour for 1 hour. It takes a much more capable and expensive engine topower the carat 100 miles per hour than it does to power the one going only 10 miles per hour.
http://www.think-energy.net/KW_KWH_water_example.jpg


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How Demand Changes Are Computed and Billed

As you have just learned, electric power use is metered in two ways: on maximumkilowatt use during agiven time period (i.e., kW demandtypically measured in 15-minute or 30-minuteintervals) and on totalcumulative consumptionin kilowatt hours (kWh). A customer's electric rate is setusing a complex process
http://www.think-energy.net/KW_KWH_time%20clock_example.jpghttp://www.think-energy.net/KW_KWH_auto_example.jpghttp://www.think-energy.net/KW_KWH_time%20clock_example.jpghttp://www.think-energy.net/KW_KWH_auto_example.jpg


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of tracking cost of services and often seeking regulatory approvals.

The general theory is that demand charges reflect the utilities' fixed costs ofproviding a given level ofpower availability to the customer, and energy charges reflect the variable portion of

those costs as thecustomer actually uses that power availability.

Power companies often use a meter that records the power use during either a 15- or30-minute time window.The average power used during that window is used to calculate the kW demand. Thepeak demand used forbilling purposes in any month can be:

1. Time of Day:Dependent on the time of day (i.e., on-peak {usually during the day}and off-peak

{usually at night time periods) and/or the day of the week (e.g., Monday throughFriday and separately for weekends):The metering system tracks the highest usage anytime during the month under theappropriate time windows.These pricing schedules are generally referred to as Time of Use (TOU) rates.

2. Seasonally Differentiated:For example, the demand charge might be higherduring the summer than duringthe winter, or vice versa.

3. Declining Blocks:This is where the demand charge up to a given level is at one

price with the price decliningabove that level. For example, the demand charge might be $10 per kW up to 10,000

kW demand, and drop to$6 per kW for demands in excess of 10,000 kW.

4. Interruptible Blocks: The demand charge depends upon whether the customer canreduce electrical demand toa given level if it is notified in advance by the utility. The price reduction often varieswith the time of notice(i.e., the discount is higher if shorter notice is given). Some utilities also offer directload control for air conditioning

and water heating equipment, the utility itself can cycle this equipment on and offfor brief periods.

5. Ratchet: Certain rate designs incorporate minimum billing demands based uponhistorical peak demands.For example, if the peak demand last summer was 500 kW and the rate design has a50% ratchet, the minimumbilling demand would be 250kW (500 kW times 50%) for the following eleven months,


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regardless of whether theactual demands were lower.

The meter recording kWh power use during either a 15- or 30-minute time windowalso tallies total kWh use.

This meter is read at roughly monthly intervals and total power use is billed accordingto applicable pricing schedules.The type of energy charge pricing in common use includes:

1. Time of day: For example, on-peak and off-peak time periods and/or the day ofthe week (e.g., Monday through Friday):

These pricing schedules are generally referred to as Time of Use (TOU) rates.

2. Seasonally Differentiated:For example, the energy charge might be higher duringthe summer than during the winter, or vice versa.

3. Declining Blocks:This is typically where the energy charge to a given level is atone price and that price declines

above that level. For example the energy charge might be $0.05 per kWh for thefirst 100,000 kWhrs used in a month

and drop to $0.04 per kWh for the next 100,000 kWhrs.

Explanation of KW and KWH provided by Duke Energy.

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