Demand charges and load factor for Canadian businesses

Energy and demand answer different questions

Kilowatt-hours measure energy consumed over a period. Kilowatts describe a rate of use. A restaurant can use much of its energy in a few busy hours while a warehouse spreads a comparable amount over a longer operating window. When a demand charge applies, this difference can matter even when the monthly kWh figures are the same. The actual tariff determines how the billed demand is established.

Measured peak is not always billed demand

Read the definition used by the serving utility. A schedule can involve a meter interval, kVA, contract demand, a seasonal minimum or previous peak history. Enter the resulting billed demand into a simple component calculator rather than pretending an instantaneous equipment reading reproduces the utility’s method. Where the required history is missing, preserve that uncertainty instead of substituting a convenient guess.

Calculate load factor on a consistent period

A basic load-factor ratio is energy divided by peak kW multiplied by the hours in that same period. For example, 30,000 kWh divided by 100 kW times 720 hours is approximately 41.7 percent. Both figures are illustrative. Use matching meter coverage and dates, and distinguish an engineering load factor based on measured peak from a ratio using tariff-adjusted billed demand. Neither ratio alone decides the correct utility rate.

Evaluate changes at the meter

Avoid assuming that staggering a few devices guarantees a lower invoice. Establish when the existing peak occurs, which equipment overlaps and how the tariff measures demand. A change outside the interval setting the peak might reduce energy while leaving the demand charge unchanged. Have operational and electrical constraints assessed by the appropriate people before changing equipment controls or delaying essential processes.

Check an upgrade before committing to it

Fleet charging, refrigeration, electric heat and production equipment can add energy and affect peaks. Keep the expected operating schedule, existing headroom and connection conditions together. A scenario should show both additional energy and any demand assumption. It is a planning tool rather than a capacity assessment, electrical design, connection approval or guaranteed operating-cost forecast.

Use source-specific terms

Our province guides point to serving-utility publications. Compare the published definition with the billed statement and obtain an explanation of unfamiliar demand adjustments. For a portfolio, retain separate periods and demand histories per meter rather than averaging them into an apparently precise national number. A clear source trail is more valuable than a lower-looking unit price stripped of its conditions.

Find the applicable official publication

Open the province and territory source directory, then follow the serving utility’s business schedule. Keep its version and effective dates with the account.