What is Maximum Demand and why do Utility companies all around the world charge this Maximum Electrical Demand?

 Maximum demand refers to the peak or highest electrical power required or demanded, by the Consumer.  It is measured over a fixed time period, usually in half an hour interval, for a complete month.

Utility companies all over the world charge this demand charge to encourage Consumers to use more power when it is cheaper for the Utility Companies to generate power.

This cheaper generation occurs during the off-peak periods.

Peak and Off-Peak hours as defined by TNB is as follows:

·       Off-peak means period between 2200hrs to 0800hrs (10 hours)
·        Peak means period between 0800hrs to 2200hrs (14 hours)


From the graph above, the highest demand for electricity generally occurs during the 1130am to 430pm period.  This tallies with the activities of the Commercial, and Industrial Sectors, as Commerce and Manufacturing peak during this time.

During peak hours (8.00 a.m. to 10.00 p.m.), TNB has to generate a higher amount of electricity to meet the demands of our usual workday.  As the day progresses, more electricity is required, so more power plants are fired up to generate more supply.

During off-peak hours when most of us are asleep, TNB generates less electricity, but most of the time, this supply is not used to its fullest.

All power generating companies prefer consumers, especially the largest users of electricity, to reschedule their operation. They should operate their large equipment during the off-peak hours to reduce the amount of electricity required during the peak period.

In this way, fewer power plants are needed to be turned on during the peak period, which is expensive for the utility companies. This move will also reduce the carbon emissions during the day and this will have a knock on positive effect for the environment.

How To Calculate Maximum Demand (MD)?

Many people do not know or understand how Maximum Demand is calculated. It is not that difficult to understand. Here is a simple explanation to explain this concept.

Step 1 – Know that units of electrical energy used is measured in kWh or kilo watt hours.

Step 2 – Electrical Power is measured in kW or kilo Watts.

Step 3 – Maximum Demand is measured in KW not kWh.

Formula for Maximum demand is as follows.

Choose a time interval, to measure the Max. Demand. TNB uses 30 mins blocks of time (half an hour intervals).

Max demand = The units of kWh used over a period of time, divided by the time period.


Time kWh meter reading Corresponding MD
8am 18200
830 18500 600kW
9am 19000 1000kW


So say at 8am, your kWh meter reads 18200kWh and say at 830am, your meter reads 18500kWh, it means that in this half an hour period, you have used (18500 minus 18200) kWh units of power, or 300kWh. This amount of electrical power was used in 30 mins

So the Maximum Demand from 8am to 830am, is 300kWh divide by 0.5 or 600kW

Now repeat this process to find out the Maximum Demand from 830am to 9am, if say the kWh reading at 9am is now 19,000kWh.

Method is the same.

Units of power is (19000-18500) = 500kW

Time taken is 0.5 hours

So the Maximum Demand from 830am to 9am, is 500kWh divide by 0.5 or 1000kW

Who pays the Maximum Demand Charge, in their monthly TNB bill in Malaysia?

Not all Consumers are billed this MD charge every month.

Residential consumers of electricity are exempt, as they take power supply from TNB via Low Voltage at 415Volts.

TNB only measures Maximum Demand for Commercial and Industrial Users of Power, who take supply at Medium Voltage. Medium voltage starts from 6600Volts or 6.6kV, 11kV, 33kV and higher.

Besides residential units, many small offices, and small factories are also operating at low voltage (415V) as well, thus they are exempt from this MD charge.

See below a typical TNB Utility Bill for a residence and one bill for a consumer who has to pay the MD charge every month.

Can you spot the MD charge as itemised in the TNB bill?

How does TNB measure this MD Charge every month?

TNB obtains the Maximum Demand amount from their Power Meters located at the Clients premises.

This meter measures the Maximum Demand either on a 24-hour basis, or a 14-hour basis depending on what Tariff the Client is on.

24 hours is measured if you are on the flat rate tariff.

14 hours is used to measure the MD if you are on the peak and off-peak tariff.

Peak and Off-Peak hours as defined by TNB is as follows:


·       Off-peak means period between 2200hrs to 0800hrs (10 hours)

·        Peak means period between 0800hrs to 2200hrs (14 hours)


For example, if you are on a flat rate tariff such as C1 or E1, TNB will measure your Maximum Demand in 30-minute intervals for the whole of the 24-hour period.

Then, they will select the highest Maximum Demand for that day and store this number.

TNB will then repeat this process every day for the whole month, and at the end of the month, TNB will select the highest value and bill this as your Maximum Demand for that month.


How much does TNB charge every month for the Max Demand?

It depends on the tariff that is selected. Factories operating at Medium Voltage are either on tariff E1 or E2. The difference is that E1 is a flat rate tariff and E2 is a peak and off peak tariff.

Commercial buildings such as malls are on the C1 flat rate tariff, whereas most hotels are on the C2 Peak and off-peak tariff.

Table 1.0 – TNB’s MD Charge for Different Medium Voltage Consumers


MD Charge in RM per kW

C1 (Commercial Flat Rate Tariff)


C2 (Commercial Peak and Off Peak Tariff)


E1 (Industrial Flat Rate Tariff)


E2 (Industrial Peak and Off Peak Tariff)



Consumers who are billed a Maximum Demand Charge by TNB, pay the Recorded Maximum demand multiplied by the MD rate.

Let us say your MD is 1000kW for the previous month as captured on your TNB Bill.

See the table below for the charges for 1000kW of MD for these different tariffs.

Existing Tariff

Amount billed for MD per month










Thus, it can be seen that the MD charge can be a significant part of the overall TNB bill. The Consumer who has to pay this charge every month, should find ways to reduce the MD so as to reduce this payment to TNB. One Alpha Group have the tools and the training to reduce the MD charge for different types of clients.


How to manage Maximum Demand

The first step is to find out when the greatest amount of electrical power is being consumed in any 30-minute period.

This is possible with the use of a Digital Power Meter. We recommend installing a meter with an internal memory so the data can be retrieved and analysed. Once the date and time with the highest MD is obtained, it should be easy to work backwards to check what activity was being carried out at the time.

Without the Digital Power Meter, we are ‘blind’ and will not know when we are using the most power. Instead, we must wait for TNB to send their monthly bill. Only then will we know the highest MD incurred for the previous month. But we will still not know when it occurred.

The Management must keep records of daily production activities, and a list of the largest machines in the case of a factory. For a Hotel, the management needs to track the occupancy each day as well as the other functions that operate daily such as functions and the use of the ballroom for example.

A few common-sense activities that can be carried out to reduce the Maximum Demand are:

  1. For consumers on a peak/off peak tariff from TNB, to organise their activities to utilise most power from 10pm to 8am, during the Off-Peak period. TNB does not measure the MD during this period.
  2. To determine when exactly their MD is the highest on a daily, weekly, and monthly basis, using smart digital power meters. To then reorganise their activity to reduce the load during these times.
  3. Apply to TNB for promotional discounts such as the Sunday Tariff Rider (STR) whereby TNB will not measure the MD during Sundays once they approve the application.
  4. To make a list of all the electrical loads or equipment especially the top 5 equipment that consume electrical power. To train the persons responsible for operating this equipment, not to turn on more than 2 large loads during any 30-minute period.
  5. To operate Chillers during the off-peak period say at 730am, not 8am, to avoid a spike in the MD once the Peak period starts (Peak period is from 8am to 10pm)