What is Demand

What is Demand

"Demand" is the total amount of electricity being used by a consumer at any one time. Demand varies from hour to hour, day to day and season to season. This usage, which is expressed in kilowatts (not kilowatt hours) is called the "demand" on the system. Mississippi County Electric monitors demand over a 15 minute period on rate 3, large commercial and 60 minute period on rate 11, industrial.

Consumers on rate 3, large commercial service, are charged for the highest 15 consecutive minutes during the month for which the bill is rendered, as indicated or recorded by a demand meter, but not less than the maximum demand established during the preceding months of May through September and adjusted for power factor.

Consumers on rate 11, industrial power service, are billed a monthly demand and a coincident demand. The monthly billing demand is the maximum 60 minute demand, as shown by or computed from, the reading of the cooperative’s demand meter during the month. The coincident demand is the average of the consumer’s four 60 minute demands established during the most recent usage months of June, July, August and September which are coincident with the cooperative’s wholesale power supplier’s peak.

After Mississippi County Electric reads the meter each month, demand is reset to zero and the meter starts over, recording the highest 15 minute or 60 minute demand for the next billing period.

What is demand charge?
Demand charge is based on each consumer's maximum 15 minute demand on the cooperative's distribution system each month on rate 3, large commercial and each consumer’s maximum 60 minute demand on rate 11, industrial. Demand is measured in kilowatts (kW). Consumers are billed according to kW of demand for their rate.

To illustrate how demand charge can affect an electric bill, let's look at two simple examples:

Running a 20 kW load for one hour would result in usage of 20 kilowatt hours (kWh) and accrue a demand charge of 20 kW.

  20 kW x I hour = 20 kWh. Demand = 20 kW

 

Running a 2 kW load for 10 hours would also result in usage of 20 kWh but would only accrue a demand of 2 kW.

  2 kW x 10 hours = 20 kWh. Demand = 2 kW

 

Both examples use the exact same amount of energy (20 kWh) and perform the same amount of work. However, the resulting bills will be very different.

Applying Mississippi County Electric's Rate 3 summer month demand charge of $5.42 per kW and an energy charge of .0357¢ per kWh to both examples produces the following results:

Bill number 1                  Bill number 2
  20 kW x $5.42 = $108.40        2 kW x $5.42 = $10.84
  20 kWh x .0357¢ = $0.71        20 kWh x.034¢ = $0.71
  Total = $109.11                Total = $11.55

Why so different?

The actual energy (kWh) used is the same, and the work done is the same. The difference between the bills is based entirely on the highest demand recorded during any given 15-minute period that month.

Why are demand charges used?
Demand charges are the way your co op pays for generation and distribution capacity it needs to meet peak demand that occurs from time to time. The demand charge your co-op pays to its wholesale power supplier is also calculated on the basis of the highest demand during the month. Mississippi County Electric uses the same method to bill demand to its demand rate customers.

Who incurs a demand charge?
All customers that require 3 phase service and exceed 50 kW are billed for demand.

Are demand charges unique to Mississippi County Electric?
No. Demand charge billing is used consistently in the electric utility industry.

How can demand charges be reduced?
To reduce demand charge, simply examine your operation.

  • What energy efficiency improvements can be made?
  • Does all of the equipment need to be running at the same time?
  • If not, what can be turned off while other equipment is running.

Often there is equipment that is operated infrequently. If this is the case, can some other equipment be turned off while this equipment is running? The result may be a significant savings in your monthly demand charge.

It is helpful to know when your meter is read by Mississippi County Electric. If possible, wait until after the meter has been read to run equipment that is operated infrequently.

For example, you want to test your air conditioner in April instead of waiting until you need it on a hot day in May, only to discover that it is not running properly. You know that your meter is read on the 25th of each month. It is best to wait until after April 25 to test the air conditioning instead of operating it for a short period of time before the 25th. If you operate the air conditioner before the meter is read in April, you will be billed for the energy used by the air conditioner plus a demand charge for the entire month. Waiting until May could save some money.