Demand/Delivery and Power Factor Facts
There are over 3,000 Public, Investor Owned and Cooperative electric utilities in the United States and all have two things in common, delivering electrical power to your door and billing you for the electrical service.
The part of the service your local utility will always directly charge for is the “Demand” and/or the “Delivery”. There are as many ways of calculating and charging for the electrical product they deliver as there are utility companies. The majority of the local electrical utilities exist only to deliver the product (electricity) and do not manufacturer (generate) it. They are known as distribution only utilities. Organizations like UPS, FedEx and the US Postal Service have something in common with distribution only utilities in that they are delivering a product (kWh’s), you may have purchased elsewhere from a third party “supply” company.
To help understand the difference between the Demand/Delivery charges and the Energy/Supply charges (kWh) we'll compare them to the speedometer/odometer of your car. The speed odometer is relative to the demand/delivery and the odometer is relative to the kWh/supply.
Regardless of whether you travel 1 mile or 1000 miles, if the speed never goes above 10 MPH the demand will never go above 10. However, if there is a need to pass a slow moving truck and increase speed up to 60 MPH for a few minutes to do so, the demand will increase to 60 regardless of the distance traveled.
The same is true for electrical demand, or the speed in which electrical power is drawn from the Electrical Grid. The speed of the electrical draw is proportionate to how much electrical equipment is continuously running at one time resulting in the demand to be greater or smaller regardless of how many kWH’s are consumed. Typically, the Demand/Deliver is measured in kW or kVA and and sometime in kVAr.