Based on your rate, when you get your electric bill, you may notice that you have two sections broken out on the right-hand side. The first section indicates usage, which is the total kilowatt-hours used during the billing period. The other section indicates demand, which is the maximum rate at which you used the kilowatts during the billing period. (A kilowatt-hour is one kilowatt used for the period of one hour.) To understand your electric bill, you must first determine the difference between usage (measured in kilowatt-hours) and demand (measured in kilowatts).

Demand

Demand is the building block for usage. The demand is the rate at which you consume electrical energy, measured in kilowatts. There are many different ways to determine this demand rate, but on most rates Progress Energy monitors the energy consumption for 15 minutes and takes the average to determine the rate at which you are consuming energy. (Depending on the rate, Progress Energy reserves the right to alter the demand calculation method for highly fluctuating loads.) The following graph shows energy consumption during a 15-minute period and the demand reported during that period.

While the actual usage for each minute varied from 56 kilowatts to 92 kilowatts, the reported demand for this 15-minute interval is 76 kilowatts. Since Progress Energy uses this averaging method to determine demand, instantaneous demand spikes are smoothed out. The graphic illustrates why the common belief that starting equipment sends the demand charge through the roof is nothing more than a myth. Consider a motor operating on a normal motor starter running a circulation fan. This motor experiences an inrush current for only a few seconds (three to four seconds) during start up. So, you will have a higher demand for a few seconds. But when averaged out over the 15-minute demand interval, the effect of starting a motor is not that significant. For example, starting a 100-horsepower motor at time zero and running the motor at full load for the rest of the 15-minute demand interval will provide a demand of 82.6 kilowatts while just running the motor at full load for the demand interval would be 80 kilowatts. If your rate schedule is under Large General Service and the peak demand is 82.6 kilowatts, then the charge would be $929.25 instead of $900.00 for the 80 kilowatts of demand.

The peak demand that is reported on your bill is the highest of these 15-minute intervals measured during the billing period. If you are on a time-of-use rate, then you will have two peak demands -- one for on peak and one for off peak. On-peak demand refers to the times of peak demand on the Progress Energy electrical grid. The on-peak demand time varies by season. Electricity used outside of these time periods is considered off peak. In a given month, the maximum 15-minute demand peak during the on-peak period determines the on-peak demand. Similarly, the maximum 15-minute demand peak during the off-peak period determines the off-peak demand.

How you are billed for demand depends on the rate schedule you are on. You may be billed for your peak-demand only, or you may be billed for both your off-peak and on-peak demands. If you have questions on how you are billed for demand, times of peak demand, or demand calculation method, please contact your Progress Energy account executive or review your electric rate tariff online.

Usage

We have talked a lot about demand because understanding demand is essential for understanding usage. Demand is how fast you are consuming energy. Usage is the amount of electric energy you use. Utilizing the formula in the text box below, you can calculate the usage in each 15 minute period and sum them for the length of time of your bill you will get your electrical usage.

To get a better understanding of this, let's use the same example as above. If that 100-horsepower motor mentioned above ran constantly fully loaded, then the motor would be consuming 80 kilowatts. If the motor runs 24 hours a day every day in a 30-day billing cycle, then the motor would consume 57,600 kilowatt-hours (80 kilowatts x 24 hours per day x 30 days). To determine the amount of money to operate this motor, multiply 57,600 by the rate you are paying per kilowatt-hour. For example, the rate of Progress Energy's Large General Service schedule is 3.854¢, which totals to $2,219.90 for the 57,600 kilowatt-hours used. The total operation cost (demand and energy) of this motor comes to $3,119.90.

To keep these two concepts straight, use the analogy of driving a car. The speed at which you are traveling is the demand on the motor, but the miles that you have traveled determines the usage of the car. For example, if you average 10 mph for three hours, you will have traveled 30 miles. The same is true if you consume 10 kilowatts of demand for three hours. The total would be 30 kilowatt-hours. Getting a good understanding of demand and usage will provide you with a basic understanding of your electric energy consumption and how to make changes in the way you operate to maximize the energy you are consuming.

Remember if you have any question concerning you electric rate, usage, or demand please contact your Progress Energy account executive or review your electric rate tariff online.