Contract Demand Penalty
The contract demand is “the demand in Kilowatt (KW) or Kilo-voltAmpere (KVA) mutually agreed between the electricity company and the consumer as entered into the agreement or agreed through other written communication.
The maximum demand value is the average from the instantaneous power (in kW or kVA) during a defined time interval, usually every 15 minutes (this average time may vary depending on the company). Once the value is higher than the contracted power, the customer will pay a penalty on the electricity bill. Even if you cross this limit once in a month, you will have to pay penalty for the month.