Right-sizing demand needs a 12-month view, not one peak month and not one quiet month.
By the numbers
Load factor is monthly units divided by maximum demand times hours in the month, using kWh with kW MD or kVAh with kVA MD.
Source: Energy = demand x time
For a 30-day billing month, every 1 kW of recorded maximum demand represents 720 kWh of full-time use.
Source: Energy = demand x time
A 100 kVA maximum demand over a 30-day month has a 72,000 kVAh full-load denominator.
Source: Energy = demand x time
Billing demand should be read from the tariff order because many Indian tariffs use actual MD, a percentage of contract demand, or a sanctioned-load floor.
Source: MERC/MSEDCL tariff order
BillTrends separates standing charges from variable charges before computing a per-unit rate.
Source: BillTrends default model
Know the three demand numbers
Sanctioned load, contract demand, and maximum demand are related but not always the same. Bills may show them in kW, kVA, HP, or category-specific terms. The tariff order decides how they affect charges.
Maximum demand is usually the measured peak draw for the billing period. Contract demand or sanctioned demand determines the capacity basis for billing and penalties; in a 30-day month, 100 kVA MD has a 72,000 kVAh full-load denominator.
- Record contract demand or sanctioned demand from every bill.
- Record maximum demand for each month.
- Check whether billing demand is the contract demand, maximum demand, or a tariff-defined minimum.
When demand is too high
If maximum demand stays far below contract demand for most of the year, the consumer may be paying for unused capacity. In a 30-day month, every 1 kW of recorded maximum demand represents 720 kWh of full-time use.
Do not reduce demand only from one quiet period. Check seasonality, production plans, machinery additions, EV charging, solar, and BESS plans.
- Use percentile demand, not only the minimum month.
- Separate temporary shutdowns from normal operations.
- Check procedural cost and approval time before recommending a reduction.
When demand is too low
Repeated maximum demand above contract demand can create excess-demand penalties, reliability issues, or operational constraints. Many Indian tariffs define billing demand from actual MD, a percentage of contract demand, or a sanctioned-load floor, so check the order in force.
The right answer is not always higher contract demand. Load scheduling, soft starters, process sequencing, solar plus BESS, or equipment changes may reduce peaks without changing the connection.
- List every month with maximum demand above the limit.
- Compare annual penalty with the cost of higher demand.
- Check whether peak events are avoidable operational spikes.
Related BillTrends pages
FAQ
Is sanctioned demand the same as maximum demand?
No. Sanctioned or contract demand is the approved capacity basis. Maximum demand is the measured peak during a billing period.
Can lowering contract demand save money?
It can if fixed or demand charges are high and the 12-month maximum demand history supports a lower level. Approval rules and future load plans matter.
Can BESS reduce maximum demand?
Yes, in some cases. A battery can discharge during short peaks, but the economics depend on peak duration, battery cost, tariff, and operational reliability.