Contract Demand: the number you pay for, used or not.

What Contract Demand is

Contract Demand (CD) is the load, in kVA or kW, sanctioned in your supply agreement with the DISCOM — the capacity it keeps ready for you. Maximum Demand (MD) is what you actually draw: the highest 15- or 30-minute average in the billing month.

Contract Demand shapes your bill in two ways. It sets a minimum for your fixed charges, and it is the line above which excess-demand charges start. Getting it wrong costs money in both directions.

Too high: paying for capacity you never use

Many tariffs bill the fixed (demand) charge on the higher of your actual MD or a percentage of Contract Demand. In Uttar Pradesh, for example, it is the higher of MD or 75% of Contract Demand. If your MD stays below that floor, you pay for demand you never drew, every month.

Take an illustrative plant that took 600 kVA of Contract Demand years ago, for an expansion that never came. Its highest MD in the last 12 months was 430 kVA, and its MD averages 395 kVA a month. The demand rate is ₹300 per kVA a month.

Illustrative figures. Demand rates, the billing floor and the demand unit differ by state, DISCOM and consumer category — check your tariff order and bill.

That is ₹1,98,000 a year for capacity the plant never drew. A Contract Demand of 455 kVA still leaves about 5% headroom above the year’s highest MD.

Too low: excess demand and forced revisions

Set Contract Demand too close to your real peaks and MD will cross it. Every kVA above Contract Demand attracts an excess-demand charge, in many tariffs at twice the normal demand rate. The MD penalty guide works through an example.

Repeated crossings carry a second cost. Many supply codes let the DISCOM raise your Contract Demand after repeated excess months. Gujarat’s Supply Code, for example, lets the DISCOM enhance Contract Demand if MD exceeds it by 5% or more at least four times in a financial year. The higher Contract Demand then raises your fixed charges every month after.

How to choose the right Contract Demand

• Start from 12 months of MD, not one bill. Seasonal loads, such as summer cooling or a winter process, can set the year’s peak in one or two months.
• Add some headroom. About 5% above the year’s highest MD leaves room for normal variation without paying for idle capacity.
• Count only growth that is actually planned: a new line, a new building, a large machine on order.
• Fix avoidable peaks first. If one restart after a power cut set the year’s MD, staggering starts may let you contract less.
• On a kVA tariff, fix power factor first. Every point of power factor lowers kVA demand for the same kW.

How KONDUKTOR® EMS helps

KONDUKTOR® EMS reads the multifunction meters already on your panels and tracks demand against the Contract Demand you set for each meter.

• Running MD shows against Contract Demand live, and your team is warned as it approaches.
• Month-by-month MD history turns amber and then red as MD nears Contract Demand.
• A Contract Demand optimizer reads 12 months of MD and suggests a Contract Demand with headroom, with the yearly saving in rupees — or confirms yours is already right-sized.
• It records when each meter peaked, so you know which panel set the month’s MD.