Load Factor can be an important variable in determining electricity costs which many businesses may not be currently monitoring. It is essentially a measure of efficiency that can play a role in both supply and utility costs. It is calculated by taking your monthly ‘kWh Used’ divided by ‘Billing Demand’ in KW divided by number of days in the billing cycle divided by 24 hours in a day, then multiplied by 100 to yield a percentage between 0 and 100. The number can be increased by either increasing usage and keeping billing demand the same or lowering demand and keeping usage the same. The latter option would yield a better result, as an increase in usage would lead to higher costs.
The savings opportunity in a high load factor is twofold. First, load factors are used by suppliers when calculating electricity rates. Many suppliers tend to award better pricing to accounts with a better load factor, as these accounts generally prove less risky to service. Secondly, many utilities use billing demand or load factor when calculating the utility portion of a customer’s bill. The billing demand is captured by the utility in either 15 or 30 minute intervals. So, a simple way to lower billing demand would be turning on machines and equipment in stages, or as needed, rather than all at once. Subsequently, demand becomes more spread out, which leads to a lower monthly billing demand and a higher load factor.
If you would like to discuss other ways to lower your billing demand and consequently increase your load factor, please email us at email@example.com.