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A kilowatt-hour (kWh) and a kilowatt (kW) may sound like the same thing, but they’re not quite tomato-tomahto. While both are interrelated units of measurement, the important difference between kWh and kW is that a kWh reflects the total amount of electricity used, whereas a kW reflects the rate of electricity usage.
Every user of electricity consumes power at irregular intervals. From residential buildings to large industrial facilities, power usage will fluctuate depending on numerous conditions. Is the building occupied? Are the lights on? Is the building being heated or cooled? For facilities billed on demand, (kW or kVA), the more consistent a building consumes energy, the lower their costs will be.
Many customers know that they are billed separately for on-peak and off-peak energy consumption, but many do not know the impact these periods have on their monthly energy costs. Depending on the host utility and distribution rate assigned, certain demand and consumption charges apply to on-peak consumption but do not apply to off-peak consumption.
Utilities indicate on their bill whether a meter reading is actual or estimated. Readings can be estimated if the interval meter installed had difficulty transmitting the usage to the host utility, or if the meter was not read on a scheduled basis.
When looking at your utility bill, if you notice that all your demand charges are based on kW, then skip this post does not apply to you. However, if you notice that your demand charges are based on kVA or kVAR, then keep on reading! Power Factor is the difference between kW and kVA.
Distribution rates are typically updated on a quarterly to annual basis and are subject to approval from the appropriate regulatory authority. Depending on the host utility and their breakout of distribution rates, customers can be assigned to one or more rates based on their historical energy usage characteristics. These rates usually incorporate various fixed, consumption, and demand charges which allow the utility to recoup costs associated with delivering power to consumers and secure a regulated profit margin.