Energy, Demand and Load Factor It is essential to have a basic understanding of “Energy” and “Demand” to evaluate the electric bill and any strategies related to energy cost reduction. The water analogy below is provided to illustrate the general principles required to understand “Energy” and “Demand”. Energy Energy is the amount of electricity consumed. It is measured in kilowatt hours (abbreviated kWh) and the monthly charge includes every kWh used during the month. Some rate plans charge different rates for different times of the day, or months of the year (called Time of Use or TOU rate schedules). The Energy (kWh) charge is not affected by how fast you use the electricity, only the total amount used. Demand Demand is the speed or rate at which you “demand” energy from the utility. In this analogy, how wide open you turn the faucet. Demand is measured in kilowatts (abbreviated kW) during each of the 15 minute “interval” periods per month (i.e. approximately 3,000 intervals which are 96 per day, 30/31 days per month). It is often called a “ratchet” effect because the billing mechanism uses the highest 15 minute period each month (called “Peak Demand”). The bottom line is that demand charges often represent more than half of many commercial customers’ monthly charges. As a result, it is often possible to dramatically reduce the monthly energy bill without reducing the amount of “Energy” used through implementation of demand management strategies. Load Factor Figure 1 Load Factor is a comparison of Peak Demand and Energy used. In the water analogy, the Load Factor calculates a percentage comparing the amount of Energy that would have been used if the facet were opened at the Peak Demand level all month, versus the Energy actually used. As shown in the Figure 1, a low load factor percentage indicates that there is high demand (and related high demand charges) but relatively little energy is being used. Low load factor percentages generally indicate a high potential for a successful demand control strategy. Antara Energy Antara Ltd. 452 Silverado Ranch Blvd. #444 Las Vegas, NV 89183 www.AntaraEnergy.com (702-430-1949) Antatra Ltd. 2015. All rights reserved. Additional Information Contact: Jerry Sprecher 619-618-0448 Jerry@AntaraEnergy.com