"Sanctioned load demand" means the load in kW/HP (kilo Watt/Horse Power) which the Licensee has agreed to supply from time to time subject to the governing terms and conditions.
Max Demand means maximum consumed load by consumers over a certain period of time...
You have to provide to the Utility / Electricity board exact details of all the connected load but for a large industry you have to broadly assess the diversity of your load and accordingly apply for that actual connection required load in KW (load demand) to be sanctioned, (there would be fixed monthly charges as your assessed load demand goes up and you need to keep that low).
The utility will assess the available generation capacity and if feasible will sanction that loading and will usually apply an over current relay to restrict you to the sanctioned demand.
Since the utility does not have unlimited generation capacity and it is in their interest that your draw down within the sanctioned demand is as less as possible so they can cater other consumers, a Maximum demand meter is installed.
While you can draw down to the maximum sanctioned demand the utility will levy charges (panelty) if your instant demand increases for more than 15 minutes from the regular maximum demand during the day.
SANCTIONED DEMAND refers to the Load in kVA needed for the CONSUMER based on the operating load, while operating the plant. Generally STAND-BY MOTOR LOAD will not be accounted for arriving at the sanctioned load demand.
MAXIMUM DEMAND refers tothe load/power drawn in kVA from the supplier at a given point of duration. In India it is limited to 30 Minutes and this figure will be taken for billing.