Electricity Billing

From measurements.

That's why the utility uses a "Maximum Demand Recording Meter" in addition to a kWhr meter, sometimes combined in a single housing. Google for more info.

"That's why the utility uses a "Maximum Demand Recording Meter" in addition to a kWhr meter, sometimes combined in a single housing. Google for more info."

Just to elaborate a little, older analog demand meters have a needle or other indicator that only ratchets up based on peak demand, so it must be manually reset by the meter reader. New "smart" meters just capture the peak demand in memory and can be reset remotely. They also can record EVERY demand, not just the highest one, and some utilities are already moving to bill you extra for EACH time you exceed the maximum allowable demand for your service. I live in California, it's already happening here.

In addition to what the others have said...

Many utilities will continue to charge you the monthly demand "penalty" for up to a year, even if you don't hit your demand peak again.

Yes, but to be fair, they built the infrastructure up front, and you're just paying to have it available when you need it. I saved a client a lot of money by telling him to run his monthly fire pump test on the weekend when nobody was in the factory rather than during the week on top of his regular load. Running that pump for 15 minutes a month was doubling his demand charges for the year.

Oh I totally agree. The power company has lots of expensive plant equipment sitting at idle so we get what we want when we "demand" it.

Knowing the demand charge rules for your area however, can save lots of dough.

It doesn't sound like the OP was in the know.

knowing that you can get charged for exceeding your MD is half the battle. As mentioned, in the US those penalties can last for the whole year, however I suspect you are not in the US, right?

So ask your power provider to outline penalties and extra charges, if they don't or won't, then as you know about them, go get more information and more importantly, how to avoid them before you start.

Likewise for power factor also having recording meter to collect penalty?

Normally Electricity billing for commercial uses is done through Time of day(TOD) meters or Availability Based Tariff(ABT) meters. In these meter we can have all parameters readings(eg KWH, KVAH, KVARH) will be logged continuously for every 15 minutes slot. So, if user is drawing more maximum demand than the contracted MD for morethan 15minutes it will recorded and you will be charged as per the penalty norms. For PF is calculated as follows (KWH reading Difference for start and end of month)/(KVAH reading difference for start and end of a month).