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What Is Load Factor And Why Is It Important?

  • Posted: 10.06.2020

Load factor is a measurement of the efficiency of your household's electrical energy usage. It is calculated by taking the total electricity (kWh) used in the month, divided by your peak demand (kW) multiplied by the number of days in the billing cycle and the total hours in a day. The result is a ratio between zero and one, and the higher the ratio or percentage, the more efficient your household is using electricity.


Now that we are printing your monthly maximum demand on your electric bill, you can easily calculate your monthly load factor. Look for these items on your electric bill:

  • The number of kWh Used
  • Your highest Actual kW Demand
  • The number of Days in the billing period

In the billing example below, these are the numbers used for our load factor calculation example:

  • Monthly Energy Use - 1,531 kWh
  • Monthly Peak Electric Demand - 9.245 kW
  • Days in the Month - 30 days
  • Hours in a Day - 24 hours

Load Factor Calculation = 

In this example, the load factor is 23 percent showing that, on average, the peak demand was fully used for an average of only 5-1/2 hours a day for 30 days, meaning this household is using electricity inefficiently.

Example #1 - This member-owner used 1,531 kWh and had a peak demand of 9.245 kW, for a total bill of $228.           

Example #2 - If this member-owner used the same amount of electricity 1,531 kWh, and by staggering their usage, a peak demand of 3.52 kW, would result in a 60 percent load factor and a total bill of $222.

WHY LOAD FACTOR IS IMPORTANT A demand rate structure automatically rewards member-owners for improving their load factor. In the past you have been able to save money by turning off the lights or taking advantage of your Cooperative's energy efficiency programs. In the future, you can also lower your bill by coordinating the number of appliances you operate at once. Staggering the use of major appliances will have the biggest impact on your future electric bills along with what time of day you use energy in your home.

Your Cooperative's wholesale power bill contains demand charges that accounts for nearly half of our costs incurred on our monthly wholesale power bill. Our current wholesale demand rate is more than $20/kW, which is one of the highest demand rates in the nation. Below, a $20 demand charge is used to illustrate the significant difference this makes to your Cooperative's cost of power.


Lower your peak demand by delaying or staggering usage instead of running all your appliances at once during peak periods. To review your usage history, and track it going forward, go online to our website, and sign up for SmartHub and review your daily usage to identify the hours your household is using the most energy. Then compare your household to the 24-hour time clock above (winter months) that identifies the off-peak hours and the on-peak hours of the day to stagger or delay usage.

You can count on us, your local electric Cooperative. We are continuously planning for the future to maintain our historical high levels of safety and reliability. We will build the system you need to power your homes, farms and businesses, regardless of how you choose to use it.