Contract Demand
Contract demand is the maximum demand, in kVA, that a high-tension consumer contracts with its DISCOM. Fixed or demand charges and over-drawal penalties are billed against it, while LT consumers are defined by sanctioned load in kW instead.
Why it matters on an MEPF project
On an HT bill the DISCOM meter records the highest average demand over each 15- or 30-minute block of the month — the recorded maximum demand (MD). Most state tariff orders bill the fixed or demand charge on the higher of that recorded MD and a notified share of contract demand, and levy a penal rate on any demand recorded above the contract. Time-of-day (ToD) tariffs then price the energy itself by hour. The exact percentages and penalty multipliers sit in your DISCOM's current tariff order, not in a national rule.
The number therefore has to be chosen, not copied from the connected load. Set contract demand too low and a single shift start or compressor restart books a penalty; set it too high and every month pays fixed charges for capacity never used. It also governs what else the connection can carry: DISCOM net-metering and captive-solar caps are expressed against sanctioned load or contract demand, the transformer and incomer are sized to it, and a change of contract demand is an application to the DISCOM with its own lock-in and fee.
How it's specified in practice
| Parameter | Typical / working position | Governing reference |
|---|---|---|
| Who it applies to | HT consumers (11 kV and above) | State electricity supply code |
| Unit | kVA (apparent power) | DISCOM tariff order |
| How demand is recorded | Highest 15- or 30-minute average in the billing month | CEA metering regulations; DISCOM meter |
| Fixed / demand charge basis | Higher of recorded MD and a notified share of contract demand | State tariff order |
| Over-drawal | Penal rate on demand recorded above the contract | State tariff order |
| LT consumers | Sanctioned load in kW instead of contract demand | DISCOM supply code |
Common mistakes
- Contracting the connected load: the sum of nameplates is never the demand the meter will see, and the fixed charge is paid on the contract.
- Ignoring the 15- or 30-minute window: a short simultaneous start of large motors books the penalty even if the monthly average is low.
- Sizing a solar plant against connected load when the DISCOM caps it against sanctioned load or contract demand.
- Treating a demand reduction as free: most DISCOMs apply a lock-in period and a fee, so the change has to be planned with the shift pattern.
Related on this site
Frequently asked
What is the difference between contract demand and sanctioned load?
Contract demand is the kVA an HT consumer contracts with the DISCOM and is billed against; sanctioned load is the kW an LT consumer is sanctioned for. Connected load — the sum of equipment ratings — is a third, larger number that is neither.
What happens if the recorded demand exceeds contract demand?
The excess demand is billed at a penal rate set in the state tariff order, usually a multiple of the normal demand charge, and repeated over-drawal can trigger a notice to enhance the contract. The rule and the multiplier are in your DISCOM tariff order.
Is contract demand in kW or kVA?
kVA. Demand charges are billed on apparent power, so a poor power factor raises the kVA for the same kW — which is why APFC panels pay for themselves on HT connections.
What is a ToD tariff?
A time-of-day tariff prices energy differently by hour — a surcharge in peak hours and a rebate at night or, in some states, in solar hours. It changes which shifts cost most and how much daytime solar is worth.
Standards referenced: State electricity supply codes · DISCOM tariff orders (state regulatory commissions) · CEA (Installation and Operation of Meters) Regulations