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One of the questions that I get most from commercial and industrial customers is, what is maximum demand, and what is a demand meter? They want to know what a demand meter is and why they have demand on their bill. Customers want to know what demand meters are and why they are on their buildings. They also want to know if the demand meter can be removed. I am going to attempt to break this down so that it is easy to understand. I want any commercial or industrial customer who comes across this website and has a demand meter to understand demand meters and how to calculate demand. In addition I hope they develop some tools on how to reduce their demand.
What is Demand?
The first question is, what is demand? When commercial and industrial customers, and even some residential customers now, get their bill they typically notice two types of charges. One is KWH, or kilowatt hours, and the other is their demand, which is measured in KW, kilowatts. The KWH portion of the bill is the total amount of energy that has been consumed for the billing cycle for which the bill was calculated. In most cases, this is somewhere around thirty days. So, think of KWH as the usage over time. Demand on the other hand is the rate at which the energy is consumed. Again, the unit of measurement is KW. To help understand this better, let’s look at an example.
The Light Bulb Method
Suppose that one customer has 10, 100 watt light bulbs and another has only one, 100 watt light bulb. Now, let’s suppose that the first customer has a warehouse and only comes in once a month for one hour just to check up on things. If these 10, 100 watt light bulbs run for one hour, they will consume 1,000 watthours or 1 KWH for the month (10 x 100 = 1000 watts / 1000 = 1 KW x 1 hour = 1 KWH). Suppose that the second customer, with his one, 100 watt light bulb has baby chickens and does not turn the light off all month because it is required to keep his baby chickens warm all month. This one bulb would consume 72,000 watthours or 72 KWH (100 x 24 x 30 = 72,000 watts / 1000 = 72 KWH)
That is all well and good but where does the demand come into play. The first customer in the example would require a larger transformer than the second customer. His demand would be 1 KW. The demand for the second customer would be 0.1 KW. If we convert this to amps, we can see that it takes more amps to run 10 bulbs for one hour than it does for 1 bulb. If the voltage is 240v then, W = VA and 1000 / 240 = 4.17 amps for customer one and 100 / 240 = .417 amps.
Why does this matter? This matters, and the reason that these demand charges are there is to help the utility offset its cost for the infrastructure that has been built to supply each customer. If the first customer, who requires larger equipment to serve his needs only comes in once per month as in the example, it will take the utility a very long time to recoup its investment.
Another reason the utility has demand charges is because the utility pays higher demand charges when it purchases electricity. It also causes them to run their generation plants more to keep up with the demand. When a blackout happens, this is what is going on. The demand of the customers exceeds the generation capacity of the utility.
Understanding Demand Implications
How can a customer get around these demand charges? The best way is to know the electric rates that are offered by the utility who serves you. There may be time of use rates, or coincident peak rates that may help out. There could also be Demand Response programs available. These could also hurt if they are not understood. Also, some companies base who goes on a demand rate based on their KWH consumption. A standard for many utilities is about 3,000 KWH.
Once a customer goes past this many KWH in one month or in a certain number of months in a twelve month period, they will get a demand meter and be placed on a demand rate. Some companies require any customer who has three phase power to be on a demand rate. Some rates are also based off of the demand. For instance, if you are already on a demand rate and you buy more equipment and your demand goes beyond a certain threshold, you could be placed on a higher rate.
How to Calculate Demand
Demand is calculated within the meter and there are typically two ways that this is done. It is either calculated on a block or rolling scale. There are different demand intervals that also come into play. 5, 10, 15 and 30 are probably the most common. Block demand breaks down each day into what ever interval is programmed into the meter, based on the rate schedule. If it is 30 minutes, that means that the meter begins to calculate the highest demand over a 30 minute interval and that at the end of that interval it starts over. It is also important to note that this is an average over 30 minutes. So, the block demand looks at each 30 minute interval and records the highest one over the course of the month on the display and that is what the customer is charged for.
Rolling Demand
Rolling demand is a little different. Block demand uses a fixed scale, rolling demand uses a sliding scale. Think of it as looking at a line graph that has peaks and valleys. On the left side of the graph is KW and on the bottom of the graph is a monthly timeline. Using a sliding window, the width of the demand interval, in our case 30 minutes. A meter programmed for rolling demand looks for the absolute highest 30 minute interval for the entire month.
Using Demand to Your Advantage
If you have block demand, one way to lower your demand is to start your machines towards the end of the interval and turn them off in the beginning of the interval. The other way to reduce demand is stagger the start times of equipment. Make sure that equipment does not come on at the same time. Try to space them apart and run only one at a time. For instance, two 20 KW A/C units running at the same time add up to 40 KW. Say you pay $8 per KW. If you could make sure that only one of the units ran at a time, you could save $160 per month in demand charges.
You can also change out lights and other equipment for more energy efficient models or consider Renewable Energy. The last example that I will give for demand is the classic speedometer versus odometer. Your demand is like your speedometer. Your KWH is like your odometer. If you go 100 mph, then in one hour your will have gone 100 miles. It will take more horsepower and more gas to accomplish this. However, if you go 10 mph and you travel that same 100 miles, you will not need nearly as much horsepower and it will take much less gas. Demand works the same way. I hope this has been helpful to someone learning about demand meters. Also, I hope you are able to reduce your electric bills.
Hi. I am a technical writer, recently hired on at a company that turns meters into smart meters (and goes on to build all the attendant infrastructure and communications networks).
Your article was super helpful as I struggle to wrap my head around new concepts and strive to keep up with our big-brained subject matter experts. (As Dr. “Bones” McCoy might say, ‘Damn it, Jim, I’m a writer, not an engineer!’)
Rest assured, you are not being plagiarized but I did want to extend my thanks.
Thanks!
Is there any way to figure out if your meter/utility uses block vs rolling demand metering? If its block is there a way to know when the interval starts/stops?
The best way to figure this out is to contact your utility rate schedule. If you cannot deduce or do not understand the rate then a quick call to your utility can clear this up for you. Typically if the utility bills on a block demand and uses digital meters the intervals will coincide with the clock hours. Meaning that the intervals will start and stop with every hour or smaller interval with a certain time period. Maybe that is not very clear. What I mean is the meter is programmed to start each interval based on a 24 hour clock that is normally synced with the computer that programs it. So, you could set your watch and know exactly when each interval begins and ends.
When electromechanical meters were still the norm they had a demand motor that would reset the demand interval based on the time period the meter was purchased with. Some were 15 minutes some 30 and so on. You could actually view where the meter was in its interval because there was a dial on the front of the meter that indicated this.
Some of the digital meters now are programmed to display when the meter reaches the end of its demand interval. On the display you will see EOI. This indicates that it is at the end of its interval.
There are many different rate schedules and many different ways to program the meter. So, it really is best to contact your utility service provider to find out how they do it and what they have their meters programmed to display.
You seem very knowledgeable!…on a commercial account(manufacturing) with a demand meter, when the utility estimates a read for a billing period, is it not likely that the peak demand for a previous billing period is carried over, resulting in over billed demand charge on the estimated bill?
I have a demand meter the has been estimated for several months. I’m trying to understand whether I have a valid concern for over billed demand.
First of all, thank you for stopping by the site! In regards to demand at a manufacturing facility, a good way to think about it is like this. Let’s say you have 10 machines that all make widgets. Each machine is rated at 10 kW. This means that if the machine runs for one hour it will use 10 kWh of energy. Now, if you add these 10 machines together your demand is 100 kW. If your business is typically the same month to month then your demand will typically be close each month.
The demand is more so based off of the installed equipment. Just like if you were to only have 10, 100 watt light bulbs in your facility. If you turned them all on for 1 hour your demand would be 1 kW. If you only used half of them your demand would be half that. I hope this helps!
This was very helpful, especially the examples. I will now be able to discuss this intelligently with the service company, which by the way does not really include this expanded detail in the their monthly statements.
Great! I am glad this information on demand meters helped you out!
I have a YouTube channel for several reasons but mostly to share information.
There are two videos showing Aclara meters and access to the alt screen.
There have nbeen questions about how to wire the socket. My linework career started in 1980 but I am not a meter tech.
I would like to add your pictures and your website URL to those videos.
I would appreciate that.