Every term that appears on a demand-billed commercial invoice in the province, defined in plain language, with a straight answer on whether peak shaving actually fixes it.
Full detail below.
Demand charge · Billing demand · Highest metered demand · Contracted demand · Ratchet clause / ratchet demand · Rate minimum · Demand meter · kVA demand charge · Power factor penalty · System usage charge · Transmission capacity charge · Local facilities charge · Interval data · Load factor
Every definition below is easier to understand with one picture in front of you. A demand meter does not produce a single monthly number. It produces a sawtooth: hundreds of readings, mostly unremarkable, with a handful of spikes that do all the financial damage.
A charge based on the highest rate of power your facility drew at any single moment during the billing period, measured in kilowatts, billed separately from the kilowatt-hours you consumed.
How peak shaving relates: This is the line item peak shaving targets. Discharging stored power during your highest intervals lowers the kW figure the charge is calculated from.
The kilowatt figure your distributor actually applies the demand rate to. It is not always the reading your meter captured. Tariffs commonly define billing demand as the highest of several competing values, including the metered peak, a contracted level, a rate minimum, and in some cases a ratcheted historical peak.
How peak shaving relates: Knowing which of those values is binding tells you whether shaving the meter peak will move your bill at all. If a contracted level or ratchet is setting billing demand, cutting this month's peak alone changes nothing until that constraint is addressed.
The largest interval reading recorded during the billing period, typically sampled in fifteen minute blocks. In FortisAlberta territory this is the basis of the system usage charge.
How peak shaving relates: This is the most directly shaveable determinant. A battery that covers the few intervals where load stacks up pulls this number down immediately, in the same billing period.
A capacity level agreed between the customer and the distribution company. In FortisAlberta territory the transmission capacity charge and the local facilities charge are billed against this figure rather than against what you actually drew.
How peak shaving relates: Peak shaving does not reduce a contracted demand charge on its own. Sustained lower peaks are what build the case to renegotiate the contracted level downward, and that renegotiation is where the saving is captured.
A tariff provision that holds your billing demand at a set percentage of an earlier peak for a defined period afterward. The Utilities Consumer Advocate illustrates the mechanism with an 85% ratchet: a 50 kW summer peak would establish a floor of 42.5 kW on subsequent bills even in months when actual demand was far lower.
How peak shaving relates: Ratchets are the strongest financial argument for peak shaving, because a single unshaved spike is not a one month mistake. It is a floor under many months of bills. Preventing the spike prevents the entire tail.
A floor written into the rate schedule below which billing demand will not fall, regardless of how little power you drew. The Utilities Consumer Advocate records a 3 kW minimum in FortisAlberta territory and a 5 kW minimum for ATCO Electric.
How peak shaving relates: It sets the point past which further shaving stops paying. Sizing a system to chase demand below the rate minimum spends capital for no return.
The meter type that records maximum power draw over short intervals, rather than only accumulating total consumption. Distributors install these on accounts where demand charges apply.
How peak shaving relates: Its interval data is the raw material for any credible peak shaving design. Without it, battery sizing is guesswork.
A demand charge billed on apparent power in kilovolt-amperes rather than on real power in kilowatts. Apparent power includes the reactive component that motors and other inductive loads draw but do not convert into useful work.
How peak shaving relates: On a kVA-billed account, correcting power factor can cut the charge without changing the real power profile at all, which makes it a cheaper first move than storage. Diagnose which unit you are billed in before sizing anything.
A surcharge applied when the ratio of real power to apparent power falls below a threshold set in the tariff, usually caused by a heavily inductive load mix.
How peak shaving relates: Not a peak shaving problem. This one is normally solved with capacitor banks or active correction. Treating it as a storage problem is an expensive misdiagnosis.
The FortisAlberta line item billed against the highest metered demand in the billing period.
How peak shaving relates: The most responsive line on a Fortis commercial invoice, because it follows the metered peak directly with no contract or ratchet in between.
A charge covering the high voltage system that moves power across the province before it reaches your distributor. In FortisAlberta territory it is billed against contracted demand.
How peak shaving relates: See contracted demand. Shaving the meter peak does not touch this line until the contracted level itself is revised.
A charge covering the distribution infrastructure serving your site specifically, also billed against contracted demand in FortisAlberta territory.
How peak shaving relates: Same mechanism as the transmission capacity charge. It is a capacity fee, not a usage fee.
The time stamped record of your facility's demand, usually at fifteen minute resolution, held by your distributor and available on request.
How peak shaving relates: This is the single most useful document in the entire process. It shows which intervals set your peak and what was running during them, which is what determines whether storage, rescheduling or correction is the right answer.
Average demand divided by peak demand over a period, expressed as a percentage. A facility running steadily has a high load factor; one with sharp bursts has a low one.
How peak shaving relates: A low load factor is the clearest signal that a site is a strong peak shaving candidate, because it means a large peak is being paid for on the strength of a small number of intervals.
Billing demand is the kilowatt figure your distributor applies the demand rate to. It is not always the peak your meter recorded. Tariffs commonly define it as the highest of several values, including the metered peak, a contracted demand level, a rate minimum, and in some cases a ratcheted percentage of an earlier peak.
Highest metered demand is what your facility actually drew at its worst interval in the billing period. Contracted demand is a capacity level agreed in advance with the distribution company. In FortisAlberta territory the system usage charge follows the metered figure, while the transmission capacity and local facilities charges follow the contracted figure, so the two can move independently.
A ratchet clause holds your billing demand at a percentage of an earlier peak for a set period afterward. The Utilities Consumer Advocate illustrates it with an 85% ratchet, where a 50 kW peak sets a 42.5 kW floor on later bills. It means one unmanaged spike can raise many subsequent invoices, not just the one it occurred in.
A kW demand charge bills real power, the portion converted into useful work. A kVA demand charge bills apparent power, which also includes the reactive component drawn by motors and other inductive equipment. On a kVA-billed account, improving power factor can lower the charge without changing your real power profile at all.
No. Demand reduction is the broad category covering any strategy that lowers peak kilowatt demand, including load shifting, efficiency upgrades and curtailment. Peak shaving is one specific tactic within that category, using stored energy discharged during the highest intervals. Treating the two as synonyms leads to the wrong solution being specified.
A demand meter records the maximum rate of power draw over short intervals, typically fifteen minutes, rather than only totalling consumption. Distributors install them on accounts where demand charges apply, and the interval data they produce is what any credible peak shaving design is built from.
If the three strategy words in this glossary still feel interchangeable, they are not, and the difference decides what equipment you end up buying. See peak shaving vs demand reduction vs arbitrage.
