Q. What do you mean by Load factor?

The two components of electric service are demand and energy. Demand is the maximum level of real power which the electric utility must supply to satisfy the load requirements of its customers. Energy is the cumulative use of electric power over a period of time. The demand component of the electric-rate structure represents the capital investment needed by the utility to provide the generation, transmission, and distribution facilities in order to meet the maximum customer demand. The energy component represents the operating costs, which include fuel and maintenance that must be provided to meet the demand requirements over a period of time. The load factor is the ratio of the actual energy usage to the ratedmaximumenergy usage over a given period. A low load factor is indicative of a substantial period during which the capacity of the system is underutilized. Utilities often define load periods in terms of on-peak and off-peak hours. In order to level the demand by diverting a portion of the energy usage from the on-peak to the off-peak periods, economic incentives (such as lower electric rates for the sale of off- peak energy) are generally offered.