A demand meter records how much power demand your business generated during either a 15- or 30-minute time window (Demand Interval) and stores the maximum value in your electricity distributor’s register. Your distributor then calculates your power demand based on the average power you used during that demand interval and include the demand charge in your utility statement.
Demand charges can be a significant part of your business utility bill. The more electricity used at one time, the higher the demand is, and the harder the grid has to work to provide your business site with sufficient power.
The demand meter at your small business site might look very much like the meter you have at home. Unlike your residential meter that just records your total electricity consumption in a billing month, the demand meter measures both the amount of electricity used in kilowatt-hour and the peak consumption of power in kilowatts or kilovolt-amperes
A kilowatt-hour (kWh) is a measure of how much energy supplied by electricity you use to run equipment over a specific period of time.
A kilowatt (kW) is a unit of power that shows the rate at which electricity is transmitted to your business site. 1 kW equals 1,000 watts.
A kilovolt-amperes (kVA) is a unit of power that shows the amount of electrical current a device can draw in. 1 kVA equals 1,000 volt-amperes.
How to read the demand meter
Your power demand meter will cycle through various displays every three to five seconds. The two most important display modes are:
- Usage, and
- Peak Demand
The Usage mode shows how many total kilowatt-hours you have consumed since the meter has been installed. This number can be used to calculate the total monthly consumption on your electricity bill. Just find last month’s reading on your bill and subtract it from the kilowatt-hour usage on your meter to get your current kilowatt-hour usage.
In this example, the demand meter screen indicates the consumption of 1,863 kWh.
The Peak Demand mode represents the highest 15 or 30 minutes of power used since your last 30-day billing period. Peak demand helps your electricity provider determine the size of equipment needed to supply energy to your business. The numbers in the example below indicate the maximum power load of 109 watts (0.109 kW) at some time since the last billing.
Some companies use kilovolt-amperes to measure peak demand, as in this example indicating the power load of 0.614 kVA.
How demand meters operate
To understand how your demand meter operates, let us use a car’s odometer and speedometer as an analogy.
- Like your car’s odometer that records accumulated mileage in kilometers, your meter records consumption in kilowatt-hours.
- It also functions as your speedometer to record demand. A demand meter’s needle advances as electricity consumption increases, just as your speedometer needle advances as your speed increases in a car. When you stop the car, the speedometer needle moves back to zero, and the demand value resets back to zero when your new billing period starts.
- Here is an important difference: unlike the speedometer needle, demand meters record the highest average demand reached and maintained in a demand interval within the billing period.
For example, if your demand reaches 5 kW and stays there for a demand interval of 15 minutes, the stored registered value remains at 5 kW unless or until your demand exceeds that level. If your demand later reaches 6 kW and stays there for 15 minutes, a new index point will be established.
How to lower your demand charges
Reading your demand meter is an excellent tool to control your electricity utility expenses. With a little effort, you can save power and money. These tips will help you use electricity efficiently and, potentially, lower your delivery charges.
- Always check how much power your new equipment, appliances, or tools will use. The manufacturer usually indicates power usage in the equipment description. The larger the wattage your new tool uses, the higher the demand and consumption will be.
- Avoid operating multiple pieces of equipment at the same time where possible.
- Track your daily peak demand and forecast the week ahead. If you avoid setting a new peak, you can save your business a lot of money.
- Install energy-saving, high-efficiency, and low-wattage lighting.
- Make sure you replace your aging equipment with energy-efficient products.