Demand (kW) is the average kilowatt load over a specified interval of time. Because electricity cannot be stored, the cost of serving a customer who runs a 100-hp motor for 1 hour a day is much greater than the cost to serve a customer who operates a 10-hp motor 10 hours a day, even though both consume the same amount of energy (kWh). The 100-hp motor creates a larger demand (kW) and requires larger generating capacity, heavier cables to carry the electrical energy, larger transformers, switches, fuses, and protective apparatus.

Demand charges are customer fees which the utility charges to large electricity users to recover the PUD costs of providing maximum electrical load. The PUD pays demand charges to its largest electricity supplier, the Bonneville Power Administration (BPA). The PUD also must build and maintain equipment and extra capacity to be able to satisfy the customers’ maximum load requirement. The PUD’s charge is $3.62 per kW for all kW over 100 kW per month for Schedule 20 customers. Please contact your Executive Account Manager for other rate schedules.

It is not equitable to raise the energy charge for all users because small customers with constant loads would be paying for equipment used only by large customers with varying loads.

Although all new three-phase services greater than 400 amps receive demand meters, not all customers will pay demand charges. Customers only have to pay when the highest average 15-minute demand is greater than 100 kW. For existing customers, the PUD has developed a Commercial Accounts Verification (CAV) program to verify metering accuracy and to identify customers who have the capability to exceed 100 kW demand — which will result in some customers receiving demand meters who haven’t had them previously.

They may. Their bill will include what their highest average 15-minute demand was for the billing cycle, and they will be charged for the kW load over 100 kW. If, however, the highest average 15-minute demand was under 100 kW, they will not be billed a demand charge.

The PUD demand meter registers in 15-minute blocks of time. The billed demand is based on the highest average (not instantaneous) demand for any 15-minute block of time in the billing cycle. The meter is reset each billing cycle once it has been read and recorded.

A demand meter can be thought of as a standard watt-hour meter which has the ability to measure average load over a specific interval of time. The new demand meters are microprocessor-based instead of electromechanical, and just as the cost of computers have dropped, so have the cost of demand meters while accuracy has increased.

Reducing demand charges or “demand leveling” can be as simple as rescheduling the time when equipment is started to avoid simultaneous use during any 15-minute cycle. More sophisticated energy management activities include demand controllers which typically shed discretionary loads (heating, air conditioning, ventilation fans, electric hot water tanks, refrigerators/freezers, and air compressors) for short periods of time. These loads have “flywheel” capacity so they can be interrupted for short periods without affecting people or business operations. One common problem that can occur is short-cycling, which can be destructive to loads like air conditioners and large motors. These types of loads should be assigned minimum on/off times or duty cycles to prevent problems.

Power factor is the ratio of working power or energy (kilowatts or kW) to apparent or total power (kilovolt-amperes or kVA) delivered by the PUD. It measures how effectively total delivered power is being used. A high power factor signals effective utilization of electrical power, while a low power factor indicates poor utilization of electrical power. However, this is not to be confused with energy efficiency or conservation which applies only to energy or kW. Improving the efficiency of electrical equipment reduces energy consumption but does not improve the power factor.

The main contributors to low power factor are motors operated at less than full load. This often occurs in cycle processes such as saws, conveyors, compressors, grinders, etc. – where a motor must be sized for the heaviest loads. HVAC fans often have a low power factor due to running at reduced load.

The power factor charge is an adjustment to the demand charge if the customer’s power factor is less than 0.97 or 97%. This fee is charged to large electricity users to recover the PUD costs for maintaining a good power factor on our distribution system. The PUD pays power factor charges to its largest electricity supplier, the Bonneville Power Administration (BPA), if the power it purchases from BPA is below 97% power factor.

The average “Power Factor” and “Adjusted Demand” for that billing period is shown on the customer’s bill. The Demand charge shown on the bill includes the adjustment due to low power factor.

Power factor is calculated from measured quantities using a meter capable of measuring both kilowatt-hours (kWh) and kilovolt-amperes-reactive-hours (kVARh).

Customers who consistently have a demand that is greater than 100KW and have a power factor that is less than 0.97 or 97% will have their demand adjusted based on power factor.

As stated in the PUD’s Rate Schedule 82, the power factor is calculated using the total monthly kWh and total monthly kVARh. The demand is increased by one percentage point for each one hundredth (.01) of a unit by which the average power factor is less than 0.97.

The formula is as follows:

Average Power Factor =

kWh divided by square root of (Kilowatt-hours² + Reactive Kilovolt Ampere Hours²)

     or

PF_avg = kWh / (kWh² + kVARh²)^1/2

Adjusted demand = kW Demand * ((.97 - PF)+1)

One method to improve your power factor is by adding power factor correction capacitors to your plant distribution system.

When apparent power (KVA) is greater than working power (kW), the utility must supply the excess reactive current plus the working current. Power capacitors act as reactive current generators. By providing the reactive current, they reduce the total amount of current your system must draw from the utility.

Another method is to install equipment with a good power factor versus a poor power factor - for example, adding an adjustable speed drive to a lightly or variably loaded induction motor. Whenever specifying new equipment, the power factor of the equipment should be considered. While initial costs might be higher, it is often more economical in the long run to purchase equipment with a higher power factor.

A thorough analysis of the distribution system is required to determine the optimal size and location of power factor correction capacitors. There are many factors to consider such as NEC & NESC requirements, harmonic interaction and voltage regulation, as well as economics.

PUD power quality engineers offer an initial no-charge power factor feasibility assessment focused on reducing customers’ power factor charges in their facility(ies). PUD staff also offer fee-based analysis, sizing and project management services to aid customers in installing capacitor systems that meet facility specific needs

These booklets can be obtained from the PUD's Energy Services Department (see contact information to the right):

• Power Quality and Power Factor Correction by Power Quality Service Center
• Saving Money with Power Factor Correction by Power Quality Service Center
• Power Factor Correction – A Guide for the Plant Engineer by Commonwealth Sprague Capacitor, Inc.