Commercial & Industrial FAQ


What is the demand charge on my business account electric bill? What is demand?
Demand is the rate at which electric energy is used at any instant or averaged over any designated period of time and is measured in kilowatts (kW). The demand kW is measured by the electric meter as the highest average demand in any 15-minute period during the month. This is the amount of electric load required by the customer’s electric equipment operating at any given time. Transmission and distribution utilities must have sufficient electric capacity such as properly sized transformers, service wires and conductors to meet customers kW demand. The demand kW is recorded for billing the demand charge each month and then reset on the bill cycle date.

The demand charge is a billing mechanism used to recover the cost of providing transmission and distribution service to non-residential customers. Since PWC transmission and distribution systems are sized for the maximum load of the customers using the systems, the cost driver for providing transmission and distribution service is demand. In order to better align the costs of building and operating those systems with a customer’s use of the system, a demand charge is applied to the maximum demand (kW) that is recorded on a customer’s meter during the month.

Here’s an example of how demand works. Say you have two large motors, each rated at 150 kilowatts (kW). Operating one motor creates 150 kW of demand. Operating both motors at the same time creates 300 kW of demand. If your operation allows for it, you could stagger motor use so only one motor runs at a time thus creating only 150 kW of demand.

What can I do to reduce Demand Charges?
In general, there are two strategies for reducing demand:
Change what equipment is run.
Change when the equipment is run.

  • Reducing the number of devices operating simultaneously will help by reducing the cumulative effect of multiple electrical draws.
  • Upgrading to high efficiency equipment will also assist in demand reduction. Additionally, demand can be lowered by running devices at different points in the day – effectively balancing out the electrical spikes over time.

I have multiple accounts. Why is one multiplier higher than the other?
For some customers, their monthly use may be more than the installed meter can register without being damaged. Installing a meter that could read the larger current or voltage that the building requires would be rather costly. A more cost effective solution is to use a smaller meter that uses a meter multiplier. With these meters, the current and/or voltage is stepped down to a reasonable level so that it can be properly metered.
The multiplier is subject to the meter type and the size of load at each service. Using meters with multipliers enables us to use smaller equipment to read your electric usage. Having different multipliers does not mean you are getting charged more or less for each kilowatt-hour of energy used, it simply helps us to read the usage using smaller equipment. The multiplier does not relate to higher charges for electricity used but is simply a measuring tool to ensure accuracy of meter reads and associated billings

What is power factor?
Power factor is the ratio of working power to total power. Low power factor is caused by inductive loads (such as transformers, electric motors, and high-intensity lighting), which are a major portion of the power consumed by industrial complexes. Unlike resistive loads that create heat by consuming kilowatts, inductive loads require the current to create a magnetic field, and the magnetic field produces the desire work.

The total power required by an inductive device is composed of:

  • Working power, measured in kilowatts
  • Non-working power caused by the magnetizing current required to operate the device, measured by kilovars

The nonworking power required by inductive loads increases the amount of total power in your distribution system, resulting in a lower power factor.

How does a facility improve its power factor?
There are a number of ways to improve power factor, including

  • Minimizing operation of idling or lightly loaded motors
  • Avoiding operation of equipment above its rated voltage
  • Replacing standard motors as they burn out with energy-efficient motors
  • Installing capacitors