Understanding Demand and Demand Charges
For Three-Phase Customers
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.
United Cooperative Services monitors demand on a continuous basis over 15 minute periods. The customer is charged for the highest 15 minute average recorded on the demand meter. After we read the meter each month, demand is reset to zero and the meter starts over, recording the highest 15 minute average for the next billing period.
What is Demand Charge?
Demand charge is based on each customer’s maximum 15 minute demand on the cooperative’s distribution system each month. Demand is measured in kilowatts (kW). Customers 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 examples:
Both examples below 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 United Cooperative Services’ rate demand charge of $6.80 per kW and an energy charge of 5.00 cents per kWh to both examples produces the following results:
Why So Different?
The actual energy (kWh) used is the same and the actual 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 Use Demand Charges?
Demand charges are the way United pays for the generation and distribution capacity it needs to meet peak demand that occurs from time to time. The demand charge your co-op pays to Brazos Electric Cooperative, our wholesale power supplier, is also calculated on the basis of the highest demand during the month. United uses the same method to bill demand to its demand-rate customers.
Who Incurs Demand Charge?
All customers who require three-phase electric service and are on United’s three-phase rate.
Are Demand Charges Unique to United Cooperative Services?
No. Demand charge billing is used consistently in the electric utility industry.
How Can Demand Charges Be Reduced?
To reduce demand charges, simply examine your facility’s operation:
What energy-efficiency improvements can be made?
Does all equipment need to be running at the same time? If not, what equipment can be turned off while other equipment is running?
For more information on lessening your monthly demand charge, consult the energy experts at United Cooperative Services.
Is There an Alternative to Three-Phase Service and Demand Charges?
Many small motors can be operated using a
phase converter which allows a three-phase
motor to be run with single phase power. Also,
there are companies that make motors up to 100
hp that can be run off single phase power.
To find the solution that is best for you, consult an electrician or an electric supply company.
When is Three-Phase Service Not in Your Best Interest?
If you operate your three-phase equipment
infrequently (maybe only a couple hours a
month, it is most likely not in your best interest
to have three-phase electric service. The
demand charge incurred will be much higher
than your usage charges.
If you are unsure of what your options may be, contact United Cooperative Services and their energy experts will answer your questions.
For more information, please contact United Cooperative Services
