What is measured by billing demand?

Billing demand is defined as the highest level of demand recorded during a specific period, usually within the previous 12 months. This measurement is especially important for utility companies as it helps in determining the capacity necessary for meeting customer needs and calculating costs associated with energy provision. By using the highest peak demand, utilities can reflect the maximum load that may occur, ensuring they have adequate resources in place to handle customer consumption during peak times.

This peak demand metric is critical because it can influence billing structures, capacity planning, and operational decisions. It is distinctly different from average demand or forecasts, focusing specifically on the highest point of consumption rather than an average or projected figure. As such, the choice that identifies billing demand as the highest demand of the previous year accurately captures the essence of what this measure signifies.