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The demand charge on an industrial electricity bill is levied on the

  • A.highest demand recorded in the billing period
  • B.total energy consumed in the billing period
  • C.average demand over the billing period
  • D.connected load listed in the supply agreement

Answer: A

The utility must size its cables, transformers and generation for the peak whether it lasts a month or a quarter of an hour, and the charge recovers that capital. Reducing the peak therefore saves money without saving a single unit of energy.

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