The demand charge is the amount paid for the highest power the factory draws at the same time during one short interval in the month, billed in THB per kilowatt. It is a different unit from the energy charge, which is billed per unit of electricity. Using less electricity therefore does not bring this line down if the large machines still have moments when they run together. Under the TOU tariff only the On Peak period counts; under the normal tariff the whole month counts. There is also a minimum charge rule that refers to the highest demand over several past months, so a month that once spiked keeps acting as the base for a while afterwards.
The tariff figures in this article are the demand charge rates of the Provincial Electricity Authority (PEA) at the low-voltage level, applying to monthly bills from September 2026 onwards.
| Line on the bill | What it asks | Unit billed | Reduced by |
|---|---|---|---|
| Energy charge | How much electricity was used over the whole month | THB per unit (kWh) | Using less electricity |
| Demand charge | How hard power was drawn at the single hardest moment | THB per kilowatt (kW) | Keeping large machines from running at the same time |
What is the demand charge, and how does it differ from the energy charge billed per unit?
This line is based on the “highest power” the factory draws at the same time during one short interval in the month, not on the total units for the month. It is a separate matter from whether you use a lot or a little electricity.
A factory electricity bill has two main lines that are billed in different ways. The energy charge line asks how many units were used over the whole month; the less you use, the less you pay. The demand charge line asks a different question: at which moment in that month did the factory draw power hardest, and how hard? The resulting figure is in kilowatts and is billed in THB per kilowatt, not THB per unit. Fewer units used therefore does not mean this line falls with them.
Suppose a factory has several large machines. Through the month they take turns running, so the power drawn from the supply rises and falls all day. But on one morning every machine happens to run at full load at the same time for a short while. The power during that interval is far higher than at any other time in the month. That morning's figure is what appears on the month's demand charge line. The other days, when the factory ran lighter, are not averaged in to bring the figure down.
The way the meter finds this figure is to average the power over short consecutive intervals throughout the month and then take the highest one. Stated precisely by the rule, the factory's single meter finds the highest average demand over 15 minutes in the billing month. The value is therefore not a momentary spike that jumps for an instant, but a value that stays high for the whole interval.
The consequence is that one short interval when the machines run together sets the value for the entire month. However lightly the factory runs for the rest of the month, this line does not fall with it. That is the answer to why units go down but the demand charge stays the same: the two lines measure different things from the start.
This same peak kilowatt figure is also the criterion the utility uses to classify the factory as a medium or large business, not the type of business or the size of the building. Details of each category are at How do tariff categories 3, 4 and 5 differ?
- Demand charge
- The amount billed on the highest power the factory draws in the highest short averaging interval of the counted period, charged per kilowatt.
- Energy charge
- The amount billed on the units of electricity used over the whole month, charged per unit; use less, pay less.
- On Peak / Off Peak
- The time periods the TOU tariff uses to bill electricity separately. On Peak is daytime to evening on Monday to Friday; all remaining time is Off Peak.
- Minimum charge
- The lowest amount the utility bills in a month of low usage, based on the highest demand over a defined look-back period.
Short-interval averages across the day — the single highest interval becomes the value for the whole month
Think of hiring a truck for deliveries. The energy charge is like the fuel bill, paid on the distance actually driven. The demand charge is like the rental for a truck large enough for the busiest delivery day of the month. Even if you drive very little that month, the rental is still charged on the size of truck you needed that day.
Energy charge (billed per unit)
- Asks how much electricity was used over the whole month
- Calculated from units (kWh) multiplied by the rate per unit
- Use less electricity and this line falls with it
Demand charge (billed per kilowatt)
- Asks how hard power was drawn at the hardest moment of the counted period
- Calculated from kilowatts (kW) multiplied by the rate per kilowatt
- Using less electricity does not help if the large machines still have moments when they run together
- The factory's single meter measures power as an average over 15 minutes, continuously for every interval in the billing month.
- The interval with the highest average is taken. The normal tariff takes it from the whole month; the TOU tariff takes it from the On Peak period only (explained in the next section).
- The kilowatts of that interval are multiplied by the THB-per-kilowatt rate of the category and voltage level the factory is in, giving the month's demand charge line.
- The utility also compares the total against the minimum charge rule, which refers to the highest demand over past months (explained in the minimum charge section).
✗ Starting a large motor once makes the demand charge jump.
✓ The inrush at start-up lasts a very short time and is averaged across the metering interval, so it has little effect. What reaches the bill is a high load that stays on continuously for minutes to hours.
When does heavy running get counted? This is where the normal tariff and the TOU tariff differ
The normal tariff counts the highest value of the whole month. The TOU tariff counts only the On Peak period, so heavy running during Off Peak does not affect this line for a factory on the TOU tariff.
The next question factory owners usually ask is: at what time does a surge get counted? The answer depends on which tariff the factory is on. On the normal tariff, the meter looks at the whole month without regard to time; the hardest draw counts the same whether it happens in the middle of the night or at midday. On the TOU tariff, the meter looks only at the On Peak period. Even if a higher draw occurs during Off Peak, it is not counted on this line. This rule is the same for both PEA and the Metropolitan Electricity Authority (MEA).
The hours counted as On Peak and Off Peak are at Which hours are TOU On-Peak and Off-Peak?. The normal tariff for medium businesses is reserved for existing customers; new customers go onto the TOU tariff. A factory that has only recently applied for supply should therefore read this line by the TOU rules.
| Tariff type | Period in which demand is counted | Heavy running during Off Peak |
|---|---|---|
| Normal tariff | Highest average of the whole month, whenever it occurs | Counted, because time is not separated |
| TOU tariff | Highest average during On Peak only | Does not affect this line |
The price per kilowatt is not the same under these two tariffs. A medium business at low voltage on the normal tariff pays a demand charge of 221.50 THB/kW per month on the highest value of the whole month, while a medium business at low voltage on the TOU tariff pays 210.00 THB/kW per month on the highest value during On Peak only.
A large business at low voltage on the TOU tariff is likewise charged on On Peak only, at 210.00 THB/kW per month. For an overview of the price per kilowatt in other categories and voltage levels, see How much does factory electricity cost per unit, and why does it differ between factories?
✗ A surge at any time of day is counted the same way.
✓ That is true only for the normal tariff, which counts the whole month. The TOU tariff counts On Peak only; a surge during Off Peak does not affect this line.
Why does the demand charge not fall in a month when less electricity was used?
Because of the minimum charge rule, which refers to the highest demand over past months. A month that once spiked keeps acting as the base until it drops out of the counted period.
At this point you may object: this month there were no moments when the machines ran together, the peak kilowatts on the bill really did fall, and yet the total did not fall as much as it should. The reason lies in another rule that comes with these tariffs — the minimum charge — which applies to medium and large businesses of both PEA and MEA.
The wording used is that the minimum charge is “not less than 70% of the highest demand over the past 12 months up to and including the current month”.
In plain terms, every month the utility looks back over the defined period, finds the month in which the factory drew the highest power, and uses that month's value as the base of the minimum charge for the current month. So a single month that spiked keeps serving as the base of the minimum charge in the following months until that month drops out of the counted period. Lowering this month's peak kilowatts therefore shows its full effect only once the month that spiked has left the period.
What should be understood clearly is that this is a rule in the utility's tariff, not a condition negotiated individually in a contract. Factories in the same category face the same rule. That is why controlling the moments when machines run together has to be done every month: miss one month and the effect follows for several more.
The month that spiked is still inside the period used to find the peak for the minimum charge
✗ The minimum charge clause depends on each customer's contract.
✓ It is a rule in the utility's tariff, applied to every customer in the same category. It is not negotiated case by case.
How can this line be reduced without buying any equipment?
Schedule the large machines so they do not run at the same time, especially during the period when the month's peak usually occurs — and do it every month.
Once you know this line comes from the moments when machines run together, the way to reduce it is not to save units but to manage timing. Start large machines in groups, wait for the first group to settle before starting the next, and avoid switching on one large load while another is still running at full output if it can be avoided. Staggering start-up like this is a method you can begin with before thinking about buying any equipment.
Our company has a real case in which scheduling machine start-up was used to reduce demand. What was done was to spread the start-up of machines that draw heavily when starting so that they came on in staggered sets instead of all at once. The method used only a timetable and agreement on the shop floor, with no additional equipment investment.
Two conditions make scheduling actually work. First, the reduction must land in the period when the month's peak would occur; staggering during periods when the factory is already running lightly does nothing, and for the TOU tariff the period to watch is mainly On Peak. Second, it must be done consistently every month, because as described in the minimum charge section, a single missed month follows you for several more.
If you want to know how large your factory's short surges are compared with its normal usage, there is a figure called the Load Factor that can be calculated from the bill. And when manual scheduling is no longer enough, there is equipment that automatically sheds or reduces selected loads when power approaches a ceiling. Soft starters or VFDs reduce inrush current when motors start; they are not the main way to reduce this line.
All of this reduces only the demand charge line. The energy charge line is still billed on the units used, as before. Scheduling machine start-up is therefore something done alongside saving units, not instead of it. Its advantage is that it can start immediately with next month's bill, before any investment decision is made.