Maximum demand meters: what they measure and why it matters

Two businesses can use exactly the same amount of electricity over a year and end up with very different bills, because one of them draws power steadily while the other pulls a huge amount for a short burst. A maximum demand meter is how a supplier and network operator capture that difference, and it is the reason larger sites see a capacity charge on their bill that has nothing to do with how many kWh they used.

What is a maximum demand meter?

A maximum demand meter records the highest average rate of electricity your premises drew during any half-hour period, alongside your normal consumption. One distribution network operator’s own glossary defines maximum demand as being expressed in kilowatts and, in relation to any month, as twice the maximum number of units (kWh) supplied in any half hour that month. Doubling the half-hour figure converts it into an hourly rate, which is why maximum demand is quoted in kW or kVA rather than kWh.

Historically, meters with this capability had a dedicated Maximum Demand Register (MDR). Elexon’s Balancing and Settlement Code glossary defines an MDR simply as the part of a meter that “records the Maximum Demand on a meter”, separate from the ordinary consumption dial. Many older commercial and industrial meters had a physical MDR that had to be reset by a meter reader after each billing visit, alongside taking the normal consumption reading.

How is maximum demand measured today?

Modern advanced and half-hourly meters do not need a separate mechanical register. They record consumption in every half-hour period automatically and send that data back to the supplier, so the highest half-hour figure in any period can simply be read off the data rather than a dedicated dial. Our guide to half-hourly meters covers how that data is collected and settled in detail.

That said, the underlying concept, your peak rate of draw in any half hour, is the same whether it comes from an old-style MDR or from modern half-hourly data. What has changed is how the figure gets from your meter to your bill.

Worked example: how a peak half hour becomes a maximum demand figure

This example shows the doubling method behind the kW figure, using the approach set out in one distribution network operator’s own charging glossary. Always check your own bill or supplier for the exact figure that applies to your site.

Inputs:

• Your meter’s highest single half-hour reading in the month: 60 kWh
• Doubling to convert to an hourly rate: 60 kWh x 2 = 120 kW

In this example, your maximum demand for the month would be recorded as 120 kW, even if every other half hour that month was much lower. If this pattern repeated for three of the last twelve months, the site would meet the Balancing and Settlement Code’s definition of a 100kW Metering System, since the average of those three peaks would be above the 100kW threshold.

Do all businesses have a maximum demand meter?

No. Smaller sites on a standard non-half-hourly meter are billed on total consumption and a standing charge, without a separate maximum demand or capacity figure. Maximum demand becomes relevant once a site is metered on a half-hourly or CT basis, which generally follows from having a larger three-phase connection, a demand over 100kW, or being placed in electricity profile classes 05 to 08. Our guide to half-hourly meters sets out exactly which sites this covers and how the market-wide move to half-hourly settlement is changing this for everyone else.

Why does maximum demand matter for my bill?

Your maximum demand is what your Maximum Import Capacity (MIC) is set against, and MIC is what your capacity charge is based on. National Grid Electricity Distribution’s charging guide defines MIC as the maximum import power in kVA that you have requested and that it has agreed to make available, and confirms that this is normally fixed for a 12-month period. Our guide to capacity charges and kVA covers how that charge is worked out in more detail.

The capacity charge, in p/kVA/day, is charged on your agreed MIC whether you actually use all of it or not. This is the trade-off with maximum demand: your network operator has to keep enough capacity available on the local network to cover your peak, even if that peak only happens for a few half-hour periods a year, so you pay for that headroom continuously.

Which sites are affected?

Maximum demand and capacity charges generally apply once a site is metered on an industrial or commercial (non-domestic) basis with a half-hourly or CT (current transformer) meter, rather than a simple domestic-style meter. The Balancing and Settlement Code defines a “100kW Metering System” as a site where the average of the highest monthly maximum demands across three of the previous twelve months exceeds 100kW. Elexon classes the half-hourly metering equipment at these sites as Measurement Class C.

Below the 100kW threshold, many smaller businesses will still see a capacity or MIC-related charge on their bill if they have a three-phase supply, since a higher agreed capacity is typically set up for a three-phase connection. Our guide to single-phase vs three-phase power explains why three-phase sites usually have a larger agreed capacity in the first place.

CT metering vs whole current metering

How your meter measures your demand depends on how much current it needs to handle. National Grid Electricity Distribution’s charging guide explains the two approaches:

• Whole current metering puts the full electrical current directly through the meter. This is standard for smaller sites.
• CT (current transformer) metering uses current transformers to induce a smaller reference current, which is then put through the meter. National Grid Electricity Distribution says this is usually required for larger industrial and commercial properties with a MIC of 70kVA or above.

If your capacity requirement is above 100kW, National Grid Electricity Distribution’s guide adds that you will generally need a separate agreement with an appointed Meter Operator for a set period, at an additional charge, and possibly an exit charge if you end that agreement early.

What happens if I exceed my agreed capacity?

Going over your MIC triggers an exceeded capacity charge. National Grid Electricity Distribution’s charging guide explains that where a customer takes additional, unauthorised capacity above their agreed MIC or Maximum Export Capacity (MEC), the excess is charged at the exceeded capacity charge rate, based on the difference between the MIC and the actual maximum capacity used that month. It says this rate is typically two to three times the base capacity charge rate, and that the exceeded capacity charge applies for the whole billing period in which the breach occurs, not just the day it happened.

This is why a single unexpected demand spike, for example running several large pieces of equipment at once during a busy period, can add a noticeable charge to an entire month’s bill rather than just a single day.

Can I change my agreed capacity?

You can ask your network operator to change your MIC, but the rules limit how often. National Grid Electricity Distribution’s guidance is clear on both directions:

• Increasing your MIC may need reinforcement work on the local network, which can bring a charge under the network’s connection charging methodology.
• Reducing your MIC is only allowed once every 12 months, and once agreed at a lower level it will normally stay fixed for the next 12 months. National Grid Electricity Distribution’s guide notes that any new, lower MIC is agreed with reference to your actual maximum demand, so a network operator will generally want evidence that your peak use has genuinely fallen before reducing it.

If you think your MIC no longer matches how your business operates, for example after installing more efficient equipment or reducing shift patterns, it is worth reviewing your last 12 months of maximum demand data before applying for a change, so you have evidence to support the new figure you are requesting.

Can I reduce the impact of maximum demand on my bill?

Because the capacity charge is based on your agreed MIC rather than your actual half-hourly use, the main lever available to most businesses is managing when equipment runs, rather than how much energy it uses overall. Spreading heavy loads, such as large motors, ovens or compressors, so they do not all start up in the same half hour can lower your recorded peak without necessarily changing your total consumption. Facilities that already monitor their half-hourly data can check which periods drive their peak and look at whether any of that load can be staggered.

This is different from simply using less energy: a site can cut its maximum demand significantly through better scheduling while its total kWh consumption, and the unit rate charge that goes with it, stays much the same.

How do I find my maximum demand on a bill?

Maximum demand or a capacity-related figure typically appears as a separate line from your unit rate charge, often labelled MIC, MEC, capacity or agreed capacity, alongside a rate in p/kVA/day. Our guide to reading a business energy bill explains where these figures usually sit and what the abbreviations mean. If you cannot see a demand figure at all, your site is most likely metered as a smaller non-half-hourly premises, where these charges do not generally apply in the same way.

Comparing a new quote against your existing maximum demand and capacity figures also helps you spot whether a prospective supplier has priced your capacity charge correctly, since a mismatch between your quoted MIC and your actual site data is one of the more common reasons a first bill looks different from the quote that led to it.

Once you know your maximum demand and agreed capacity, you are better placed to check whether a quote reflects your real usage pattern, and you can compare business energy quotes with us.

Frequently asked questions