Maximum Demand Charge Analysed
Maximum Demand Charge TNB
What is Maximum Demand Charge TNB, and how does it work?
Maximum Demand Charge TNB Analysed…
In Malaysia, we find that many business owners are confused by or don’t really understand what the maximum demand charge TNB include on their monthly bill, is. In this article, I’ll try to expand on exactly what this mysterious maximum demand charge is and how it relates to the amount you’ll pay for your electricity each month. [one-alpha-electrical-maximum-demand]
Okay, some basics about electricity and the way that it is supplied to your business or commercial premises, before we go any further.
It goes without saying that in this day and age, no business can survive without a constant, reliable supply of electrical power to be available whenever it is needed. Quite naturally, your peak or maximum demand for power occurs at the times when your company is working, which for most businesses is during the hours of daylight.
Sure, some businesses operate at night and some run 24/7, but nevertheless, maximum demand for power occurs during daylight or ‘normal’ working hours.
Now, electricity is an unusual resource in that unlike other essentials such as water or gas, it is not something that can be easily (and cheaply) stored.
It therefore follows that when demand for electricity surges (as it invariably does at peak times of the business day), the need to create or generate power also skyrockets. TNB and other electricity generations companies around the world are acutely aware of this variance.
Unlike domestic power usage – which is reasonably consistent and therefore predictable to a degree – there will be periods when power demand increases dramatically during the working day, and every provider of electricity and power knows it.
Thus, they must be ready to satisfy this demand as and when it occurs. Imagine the consequences for your factory or office if they could not do so!
This is where we return to the idea of the maximum demand charge TNB itemise on your commercial electricity bill.
In essence, on every ‘demand billed’ customers (i.e. large commercial users) bill, the charges that appear on a domestic household bill as one are split into two separate elements.
Firstly, you are charged for the actual electrical power that you use.
The second ‘maximum demand charge’ relates to the peak levels of power that you used during a given period of time when you were actually consuming power as recorded by your maximum demand meter.
A simple way of explaining this would be to relate it to the odometer in your car. When you are on the move, the odometer measures the speed that you are moving at. When you stop, the odometer returns to zero, and when you pull away again, it shows your speed once more.
Your maximum demand meter does something similar, with one critical difference. Sure, it measures how much power you are consuming (or have consumed) but it also records what your maximum power usage was over a specific period of time as well.
The maximum demand charge is based on this latter recorded figure.
There are a couple of primary reasons why this maximum demand charge is levied on large commercial electricity customers like your business.
To begin with, you want to have an endless supply of as much electricity as you need at any given moment to be instantly accessible, right? It’s therefore only fair that you should pay for having the ability to multiply the demands on the system whenever you want to.
Remember, the power you draw down is not stored – it has to be created just when you want it, and making this limitless resource available to you on demand costs TNB money.
You also put far greater pressure on the system infrastructure too. Like other utility companies across the planet, TNB must have sufficient machinery in place, ready to go, when they need to meet periods of maximum demand.
The remainder of the time, some of these machines are idle but they still need to be kept running in readiness, tended, managed and (of course) paid for. Times of maximum power output put great strain on the machinery of generation too. This inevitably increases the requirement for expensive maintenance and once again, you bear your share of these costs through the maximum demand charge.
So, maximum demand charges are nothing more than an inevitable levy for making whatever power your business needs available to you anytime you want it, completely on demand.
Put like this, how could any business owner deny that the maximum demand charge – opaque as it might at times appear to be – makes perfect sense for your company?