What is a maximum demand charge and how do you reduce it?
A maximum demand charge prices the highest measured average power over the relevant billing interval, rather than total energy used.
Under TNB's medium-voltage Time-of-Use schedule effective 1 July 2025, capacity and network charges together are RM97.06 per kW of peak-period monthly maximum demand.
How is maximum demand different from electricity consumption?
Electricity consumption is energy accumulated over time, measured in kWh. Demand is the rate of using that energy, measured in kW.
The bill can therefore charge for both how much electricity a site uses and the capacity needed to serve its highest relevant load.
Two sites with similar monthly kWh can have very different maximum-demand costs because their operations overlap differently.
For half-hourly analysis, the relevant point is the average load in each meter interval, not a brief instantaneous spike seen on a machine display.
If the export gives energy in kWh per half-hour, divide it by half an hour to obtain average kW.
Confirm the meter's interval convention, units and multiplier before treating an exported value as billable demand.
What does TNB charge for medium-voltage maximum demand?
Under the published General schedule, capacity of RM29.43 plus network of RM59.84 gives RM89.27 per kW of monthly maximum demand.
The comparable Time-of-Use components are RM30.19 plus RM66.87, or RM97.06 per kW of peak-period maximum demand.
These figures are base demand charges, not an effective price per kWh.
Time-of-Use's demand measurement is restricted to its peak periods, while the General comparison uses the relevant all-hours monthly maximum.
A higher per-kW Time-of-Use rate can still produce a lower charge if the peak-period maximum is sufficiently below the all-hours maximum.
This is why both the highest interval and its calendar classification are essential to tariff fit.
Which interval sets the monthly demand charge?
Identify the applicable billing period, then locate the largest valid demand reading in the tariff's measurement window.
Under Time-of-Use, check the 2pm–10pm Monday-to-Friday peak periods and the specified public-holiday exclusions.
The interval that sets the demand charge may be an ordinary operating day, a restart after downtime, or an unusual overlap between several processes.
Trace that interval back to the original export and the billed maximum-demand figure. Check missing records, duplicates, estimated readings and timestamp conventions.
A bill mismatch is a reason to investigate, not automatic proof of an incorrect charge.
Keep an audit trail that shows the source record, its time, the units and the resulting monthly demand.
How can a site lower its maximum demand without less production?
Begin by finding which loads operated together during the charge-setting interval. Where safe and operationally practical, stagger processes instead of starting them concurrently.
Refrigeration, pumping, compressed air, cleaning or battery charging may have some scheduling flexibility, but the interval trace alone does not identify which machine caused the
peak. Confirm the cause with operating records or submetering.
Assess the wider result before changing a timetable. Moving one load may create another peak later in the same month or increase energy use.
Product temperature, food safety, staff availability, maintenance limits and customer delivery requirements remain constraints, not optional costs.
A demand opportunity is actionable only when the revised schedule is credible and compliant.
How do I estimate a demand reduction in ringgit?
Multiply a verified reduction in the relevant monthly maximum demand by the applicable per-kW demand components.
Under the published medium-voltage Time-of-Use rates, an illustrative 50 kW reduction in every month's peak-period maximum would reduce base demand charges by RM58,236 across a
year. This is arithmetic from a hypothetical assumption, not a customer result or guaranteed saving.
A reduction in only one billing month produces only that month's demand-charge difference.
Do not multiply a single incident by a full year unless the same avoidable load is present in each period and can actually be removed
each time. Also model any increase in energy charges, operating costs or equipment expenditure before describing the change as a net saving.
Does power-factor correction always reduce maximum demand?
Power factor and real-power demand describe different aspects of electrical load.
Correcting reactive power can address a power-factor surcharge and improve current conditions, but it should not automatically be booked as a reduction in billed kW
demand. First determine what quantity the tariff and meter are actually using, and separate avoided surcharges from any independently demonstrated change in real-power demand.
Capacitor-bank design, harmonics, protection and switching require qualified electrical assessment.
The safest first step is a bill and measurement review, not an equipment order based on one low reading.
Rukan is independent of selling equipment; operational findings, maintenance findings and capital-investment options should each carry their own evidence and assumptions.
What data do I need for a maximum-demand review?
Prepare the original TNB bills, the matching half-hourly load profile and any available operating notes around the highest intervals.
Include shutdowns, unusual production runs and equipment changes. A representative year helps distinguish recurring overlaps from isolated events.
If you only have bills, the demand line still shows whether further interval investigation is worthwhile, although it cannot reveal the exact operational cause.
Rukan's review checks demand alongside tariff fit, power factor and billing accuracy.
We reconcile findings to your own records and separate no-capex operational options from equipment proposals. You decide whether to proceed.
Use the coverage enquiry form to contact us, or reach out if the interval export is not yet available.
Official sources and related guides
TNB: tariff schedule effective 1 July 2025 and AFA updates · TNB: power factor requirements · Official myTNB portal
- TNB's July 2025 tariff (RP4) explained for businesses
- Time-of-Use vs General tariff: which is cheaper for your site?
- TNB power factor surcharge: what triggers it and how to stop paying it
- How to download your half-hourly load profile from myTNB
- Cutting electricity costs in cold storage under the 2025 tariff
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