What is a contract or minimum demand?
A minimum or contract demand is included in some commercial and industrial electricity tariffs. It specifies the minimum billing demand that will be charged each month. This is important to understand because implementing energy efficiency projects that reduce the site’s monthly peak demand below the contract demand will have limited return, as no additional savings in demand charges will accrue once the actual monthly demand falls below the minimum contract value. If that is possible for your site, it is best to review this with your utility and negotiate a lower contract demand.