Connected Load vs Maximum Demand: What TNB Bills

Connected load is the total of your equipment's nameplate ratings. Maximum demand is the highest 30-minute average power your meter records in the billing month. For Medium and High Voltage customers, Tenaga Nasional Berhad (TNB) bases the demand charge on maximum demand, not on connected load.

The gap between connected load vs maximum demand is usually large. A factory with 2,000 kW of connected load may record only 800 kW as its highest half-hour in a month. That 800 kW is the figure on the TNB bill, and under RP4 (the tariff structure in force since July 2025) it makes up a large part of the monthly cost.

In short

• Connected load adds up equipment nameplate ratings; maximum demand is the highest 30-minute average power the meter actually records.
• TNB bills on maximum demand, not connected load, because a demand factor, typically well under 1.0, means equipment rarely all runs together.
• A factory with 2,000 kW of connected load might record only around 800 kW of actual maximum demand.
• Adding equipment does not raise your bill in a straight line; only what actually runs at the same time does.

Connected load vs maximum demand at a glance

The first is a design figure from your drawings. The second is a measurement from your meter.

What is connected load?

Connected load is the sum of the nameplate ratings of all equipment fed by a supply, in kW or kVA. It includes every motor, chiller compressor, air handling unit, oven, lift, lighting circuit and socket outlet allowance.

It is a calculated figure, not a measured one. It assumes that all equipment runs at full rated output at the same time, which does not happen in practice. Consultants use connected load for the supply application, for sizing transformers and cables, and for submissions to Suruhanjaya Tenaga (the Energy Commission). It only changes when equipment is physically added or removed.

What is maximum demand?

Maximum demand (MD) is the highest average power a site draws over any single 30-minute interval in the billing month. The meter divides the month into half-hour blocks, calculates the average kW in each block, and keeps the highest one. That single value sets the demand charge for the whole month.

MD depends on which loads run together and for how long. Because it is a 30-minute average, short spikes have very little effect. A two-second motor starting current barely moves a half-hour average and will not set your MD. A chiller, an air compressor and a production line all running together for 40 minutes will. The calculation is explained step by step in our guide on how to calculate maximum demand.

Timing also matters on a Time-of-Use (ToU) tariff. Under RP4, the peak window is 2:00pm to 10:00pm on weekdays. Demand recorded outside this window (10pm to 2pm on weekdays, all weekends and selected public holidays) is not charged. A high demand at night therefore adds nothing to the demand charge.

Connected load vs maximum demand: what the demand factor tells you

The demand factor is the ratio between maximum demand and connected load:

$$\text{Demand factor} = \frac{\text{Maximum demand (kW)}}{\text{Connected load (kW)}}$$

In any working facility, the demand factor is well below 1. There are three main reasons:

• Equipment cycles on and off. Chillers and compressors unload or stop according to their own controls.
• Some equipment is on standby. In a duty and standby pump pair, only one pump runs.
• Equipment runs at part load. A 75 kW fan motor running at 60% speed draws much less than 75 kW.

Across a few hundred pieces of equipment, these effects add up. The combined peak ends up far below the nameplate total. Engineers call this effect diversity.

Demand factor should not be confused with load factor. Load factor is average demand divided by peak demand, and it shows how flat the consumption profile is. Demand factor shows how much of the installed capacity is used at the same time. A site can have a low demand factor and a poor load factor at once. This usually means the installation is oversized and demand varies sharply.

Worked example: 2,000 kW connected, 800 kW recorded

Take the same factory. Connected load is 2,000 kW and the recorded MD is 800 kW, so the demand factor is 800 ÷ 2,000 = 0.4. (These figures are illustrative and chosen to keep the arithmetic simple.)

On the Medium Voltage General tariff, the demand charge is RM29.43/kW for capacity plus RM59.84/kW for network, which is RM89.27/kW per month in total. The monthly demand charge is therefore:

$$800 \text{ kW} \times \text{RM}89.27 = \textbf{RM}\mathbf{71{,}416}$$

That is about RM857,000 a year, before any energy charge, retail charge or Automatic Fuel Adjustment (AFA). On the Medium Voltage ToU tariff, the combined rate is RM97.06/kW, which puts the same 800 kW peak at RM77,648 a month.

At the General rate of RM89.27/kW, the monthly charges compare as follows:

Reducing the peak by 80 kW (10%) saves RM7,142 a month, or about RM85,700 a year. Practical ways to do this are covered in our article on cutting TNB maximum demand charges, and you can test your own figures in the maximum demand calculator.

What about Low Voltage customers?

This per-kW billing applies to Medium and High Voltage supplies. For Low Voltage non-domestic accounts under RP4, capacity and network are charged per kWh instead of per kW, so there is no separate MD charge on the bill. Connected load still determines supply and transformer sizing at Low Voltage, but it does not appear as a demand charge. Current rates for every category are published in the myTNB tariff schedule and on the TNB commercial and industrial pricing page.

Why does TNB bill maximum demand instead of connected load?

TNB bills maximum demand because the grid must be sized for what customers actually draw at the same time, not for what they could draw in theory. Transformers, feeders and generation capacity are reserved to meet your peak. The capacity and network charges recover the cost of keeping that capacity available for you.

Under RP4, Medium Voltage energy rates came down to around 29 to 31 sen/kWh, which moved a larger share of the bill onto the per-kW charges. As a result, a site that reduces its kWh but not its peak now saves less than it would have under the old tariff categories. Energy efficiency work that does not change the shape of the load profile leaves the largest fixed cost in place.

Where connected load still matters

Connected load remains essential for designing the electrical installation. It is used to size transformers, generators, incoming cables and switchgear, and to coordinate protection devices.

These should not be sized on today's measured MD. After a power outage, chillers, pumps and compressors restart together, and for a short time the demand factor can approach 1. Standby generators in particular must handle motor starting kVA and the restart sequence, not the monthly average.

Size the infrastructure on connected load with a sensible diversity allowance, and manage the electricity bill on maximum demand.

Why adding equipment does not raise the bill in a straight line

Adding a 100 kW chiller raises connected load by exactly 100 kW. The effect on MD depends on when the chiller runs:

• If it runs at 3am, it adds kWh only. On a ToU tariff it runs in the off-peak window, where demand is not charged.
• If it runs during the half hour that already sets the monthly peak, the full 100 kW is added to the demand charge. That is about RM8,927 a month at the General rate.

The opposite situation is more common. Consider three 50 kW compressors that were set up to start one after another. After a control change, they start together. The combined demand rises by 150 kW and the bill rises by about RM13,390 a month. No equipment was added. The higher bill comes entirely from a change in how the compressors start.

Power factor is a separate issue. MD is billed in kW, so correcting power factor does not directly reduce the demand charge. It does avoid the surcharge that applies when power factor falls below 0.85 (for supplies under 132 kV), and it reduces the load on transformers and cables.

How to work out your own demand factor

1. Add up the nameplate ratings from your single line diagram and asset register. This is your connected load.
2. Take the recorded MD in kW from your latest TNB bill.
3. Divide the MD by the connected load.

As a rough guide:

• Below about 0.3: the installation has spare capacity that you are paying to maintain, and it may be available for new loads.
• Above about 0.7: there is little headroom, and new equipment is likely to add directly to the demand charge.

The next step is to find out which loads are running during the peak half hour. This needs interval data, not monthly totals. CobiNeural tracks maximum demand as a live figure against the current 30-minute window and shows which circuits are contributing. It can send a WhatsApp or email alert before the interval closes, so an operator still has time to reduce or delay a load. CobiNeural can run on its own or work with an existing building management system (BMS), programmable logic controller (PLC) or supervisory control and data acquisition (SCADA) system. The same data supports reporting under the Energy Efficiency and Conservation Act (EECA) and ISO 50001.

For the full mechanics of a TNB bill, see our free course Understanding Your Electricity Bill.

Send us a recent TNB bill and, if available, a month of interval data. We will work out your demand factor, show where your monthly peak is being set, and estimate what it is worth to reduce it. Start at request a demo.