Understanding Electric Demand

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Understanding Electric Demand

At National Grid, were committed tobringing you consistent, reliable energyat the lowest possible cost. Part of that

commitment involves providing youwith information and expertise to helpyou use electricity more efficiently. Afterall, the more you know about using elec-tricity, the more you can save on energy-related costs.Of course, using electr icitywisely and economically is really up toyou. Understanding demandnot onlywhat it is but why it existsis a goodplace to start.

Defining Our Terms

kWRate of using electr icity (Demand).Example: Ten 100-watt lamps consumeelectr icity at the rate of 1,000 watts, or 1kilowatt, or 1 kilowatt-hour per hour.

kWhElectrical energy actually used(Energy). Example: Ten 100-watt lamps,when on for one hour, consume 1 kilo-

watt-hour (kWh).

1 HorsepowerUnder full load, con-sumes power at the rate of approximate-ly 1 kilowatt (kW) hour per hour.

What Is This Thing CalledDemand

The price we pay for anything we buycontains the cost of the product plusprofit, plus the cost of making the prod-uct available for sale, or overhead. Inseeking to understand demand, we

might equate it to this type of overheadexpense. This is in contrast to chargesNational Grid customers pay for the

electricity itself, or the cost of product,largely made up of fuel costs incurred inthe actual generation of energy.

Both consumption and demand chargesare part of every electr icity consumersservice bill. Residential customers payone rate of charges for electr icity serv-ice, covering both consumption of elec-tr icity and demand. This simple, com-bined charge is possible because there isrelatively l it tle variation in electricity usefrom home to home.

This is not the case among commercialand industrial energy users, whose elec-tricity useboth consumption and

demandvary greatly.Some need largeamounts of electr icity once in a whileothers, almost constantly. Complicatingthis is the fact that electricity cannot bestored. It must be generated and sup-plied to each customer as it is calledforinstantly, day or night, in extremelyvariable quanti ties. Meeting these cus-tomers needs requires keeping a vastarray of expensive equipment trans-formers, wires, substations and evengenerating stationson constant standby.The amount and size of this equipmentmust be large enough to meet peak con-sumption periods, i.e., when the needfor electricity is highest.

For National Grids Commercial Customers in New York

nt ioon lgr d

What you need to know to make cost-saving energy-use decisions.


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Utili ties and public service commissionsaround the country have determinedthat the most equitable way to cover thecost of this equipment is to have thosecustomers who create this demand andthe need for power during these peakspay for its availabil it y. For this reason,util it ies spread the costs of this extra

equipment among all commercial andindustrial customers as a separatecharge for demand.

Defining Demand Customers

National Grid installs a demand meterwhenever a customers energy con-sumption has exceeded 2,000 kilowatt-hours (kWh) per month for four con-secutive months. Once demand bil lingbegins, it does not end until after themonthly energy consumption has been

less than 2,000 kWh for 12 consecutivemonths. This requirement may not beavoided by temporarily terminatingservice. New or existing customerswhose connected load indicates that theenergy consumption will exceed 2,000kWh per month will have a demandmeter installed. The demand charge willbe the highest average kW measured ina 15-minute interval during the billingperiod, but not less than one kW andnot less than the demand contractedfor.

Customers who do not create peaks butmaintain a relatively level demand areknown to have a high load factor.Utility pricing policies are designed topass savings on to these customers.

Comparing Demand andConsumptionOn every demand-billed customersenergy service bill, charges for con-sumption and demand are separate.This exaggerated example illustrateshow the two work: Suppose you have acommercial building with lighting,cooling, machinery, and miscellaneouselectric equipment. Its fully installedload totals 15 kW. You are not using thebuilding and have no employees. On thefirst day of each month, you come intothe building and turn on all electricalequipment and leave it on for 15 min-utes. Then you shut everything off againand lock up the building unti l the fol-lowing month. What would your elec-tric bill look like?It would show veryli tt le consumption; in fact,only 4 kWh,at

a cost of about 28 cents. (Added toNational Grids basic service charge of$47.25 per 30-day period, which includesmaintenance of gas or electric lines,metering and other costs such as meterreading and bill ing, the total is $47.53.)

But what about your demand charge?Atan average cost of $8.32 per kW and themeter reading at 15 kW, the demandcharge would be $124.80* (for cus-tomers in Service Classification No. 2,Small General Service-Demand).

National Grid customers billed on thedemand price who provide the trans-formers required to take service, as des-ignated by National Grid, have theircharges reduced by $ .90 per kW billed.

Understanding DemandMetering

Much like your cars odometer recordsaccumulated mileage, electr ic metersrecord consumption (kWh). Electr icdemand meters function like yourspeedometerwith an importantdifference.

Servicefrom

March 3to

April 3

Basic servicecharge and electricalconsumption 4 kWh

Electrical demand15 kWh

AMOUNT NOW DUE

$ 47.53

$ 124.80

$ 172.33

10 kW

15 kW

= $208.

2025

3015

1050

Simultaneous Use

A demand meters needle advances aselectricity consumption increases, just asyour speedometer needle advances asyour speed increases in a car. When youstop the car, the needle moves back tozero, regardless of the highest miles perhour reached on the trip.

Unlike a speedometer needle, demand

meters record the highest average kilo-watts reached and maintained in a 15-minute interval within the billing period.

If your demand reaches 50 kW, forexample,and stays there for 15 minutes,the meter needle remains at 50 kWunless or until your demand exceedsthat level. If your demand later reaches55 kW and stays there for 15 minutes,the needle will then stay at 55. The newindex point is maintained, even whenyou are using electricity at below 55

kW, until the meter reader comes torecord the demand and resets the meterback to zero.

For example, suppose you have a 10 kWmotor in one part of the building and a

15 kW motor in another. If you operateboth units simultaneously, the demandmeter will record 25 kW.

However, if you can use the motorsalternately, operating the 10 kW uni tonly when the 15 kW unit is off, themaximum demand reading will be only


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10 kW

15 kW

= $125.

2025

3015

1050

Alternate Use

OR

15 kW. The 10 kW saved would saveabout $83 per month, or $996 per year.

Some intermittently used equipmentcan be operated using various interlocksand automatic controlling devices. Sinceeach kW demand saved is worth $8.32per month (at early 2002 demandprices*) , looking into these types ofdevices makes good sense.

*For current National Grid electricityprices, see www.nationalgrid.com andclick on Bill ing & Ratesor call 1-800-642-4272.

Saving Energy with DemandControl

There are many ways to manage demand,ranging from manual controls and time-clocks to sophisticated automatic unitsthat program buildings and processes.

For the average commercial building,the best control over electrical demandmay not be in the electr ic system, but inthe building itself. Good thermaldesigntight construction, good win-

dow design, and appropriately sizedventilation systemsis the key tolimiting demand and avoiding demandcharges. It creates less need for heat andcooling, allowing you to select smaller,more cost effective equipment.

National Grid300 Erie Boulevard WestSyracuse, NY 132021-800-642-4272www.nationalgrid.com

National Grid, through the transmis-

sion and distribution of electricity

and natural gas, serves close to 4

million customers across 29,000

square miles of Massachusetts,

New Hampshire, New York and

Rhode Island. Its parent company,

National Grid plc, is an international

energy delivery business located in

the U.K.with principal activities in

the regulated electr icity and naturalgas industries.

NY0620 12/05

Demand Ratchet ClauseThe demand ratchet clause appliesonly to National Grid customers onLarge General Service Classificationsreceiving service under 15,000 voltswhose monthly measured demandequals or exceeds 100 kW.At times, therewill be a difference between these cus-

tomers recorded demand as taken fromthe meter by our meter reader and thebilling demand that the customer pays.

For example,suppose a building withheating reaches a peak of 300 kW dur-ing one winter month. For the next 11months, the minimum demand will be150 kW per month for billing purposes,even though the recorded demand mayhave been less than 150 kW. This isbecause our pricing structures ratchetclause stipulates that the minimum

billed demand will be not less than one-half of the maximum demand recordedduring the previous 11 months.

When the ratchet clause is applied toyour electric service account, both themeter-recorded demand and the billingdemand are indicated on your bi ll .

For Customer Informationand Support

With extensive training and wide-rang-ing, business-related backgrounds, ourCommercial and Industrial Team mem-bers are knowledgeable about the con-cerns of business owners. They knowthat businesses need quick, expertanswers. Whenever you have a need,question or concern, contact ourCommercial and Industrial Team at1-800-664-6729, Monday-Friday,8 a.m.-5 p.m., or via email fromwww.nationalgrid.com (click onContact Us).

For information on other energy-related topics, including current prices

for electric service and supply,seewww.nationalgrid.com or call 1-800-642-4272.


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nt ioon lgr dNational Grid300 Erie Boulevard WestSyracuse, NY 132021-800-642-4272www.nationalgrid.com

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Understanding Electric Demand