Low Load Factor Provision

The Low Load Factor Provision (LLFP) is an electric service provision available to commercial customers on rate schedules Cg-4Cg-2, or Cg-2A with an annual electric load factor less than 15 percent. Once a commercial customer qualifies for this provision, the customer's maximum monthly on-peak 15-minute demand rates will be reduced by 50 percent. Upon qualification, the rate reduction will automatically be applied and will show on the monthly bill following the qualification. For example, if a customer qualifies for LLFP based on January usage, the February bill will show the LLFP rate reduction. Customers will also be notified once the LLFP criteria is no longer being met – with a message on the following months' bill.

How does my business qualify for LLFP?

To qualify for LLFP, your business must meet the following criteria:

  • Be on a Cg-4, Cg-2, or Cg-2A Rate Schedule
  • Must have 12 consecutive months with an overall load factor of less than 15 percent. (Every month with a maximum monthly on-peak 15-minute demand of 20 kW or more must also have a monthly load factor less than 15 percent.)

Qualified businesses will remain on the LLFP until one or more of the following are true:

  • Annual load factor is 15 percent or more, or
  • Any 2 months within a rolling 12 month period have a maximum monthly on-peak 15-minute demand of 20 kW or greater AND a monthly load factor of 15 percent or more, or
  • Your business is no longer on a Cg-4, Cg-2, or Cg-2A rate schedule.

How can I sign up for LLFP?

The LLFP is not an optional electric service. A specific electric meter, or totalized collection of all meters, must qualify for the LLFP to receive the rate reduction.

What is load factor?

Load factor is the ratio of actual electricity used divided by the total amount of electricity that could have been used. Load factor is typically calculated during a monthly or annual billing period.

Load factor is derived by dividing the kilowatt-hours (kWh) in the period by the product of the maximum demand in kilowatts (kW) and the number of hours in the period. Load factor is presented as a percentage, so we must multiply the above by 100 to get our results.

Monthly Load Factor =
Monthly kWh
Monthly Maximum 15-Minute Demand x Monthly Hours
 

The following are a few more ways to think about load factor:

  1. Load factor is the ratio between how much energy a business used and how much energy that business could have used if it had constantly been consuming electricity at its highest observed rate of consumption.
  2. Load factor represents how efficiently a business utilizes the electric distribution assets (such as transformers) that are dedicated to it.
  3. Load factor is the ratio between a business's average demand and its maximum demand.

Please note: The determination of both annual and monthly load factors uses maximum 15-minute demands NOT maximum on-peak 15-minute demands. However, the credit applied under the LLFP is applied to the monthly maximum on-peak 15-minute demand.

Why does this provision exist?

Customers with low load factors are significantly less likely to contribute to periods of high constraint on the electric system. These periods of high constraint are what drive the utility's fixed production and transmission costs. Therefore, these customers receive the LLFP to better reflect their impact on infrastructure costs as it relates to electric demand.

Should I change my business operations to reduce my load factor?

Probably not. Utility bills include other fixed and demand-related charges other than the maximum monthly on-peak 15-minute demand charge. When a business uses less energy, these other fixed and demand-related charges are typically not reduced, which results in a larger bill relative to the amount of energy consumed. Intentionally changing your business's energy consumption for the sole purpose of reducing your load factor will typically not result in more value for your business.

What are some examples of low load factor situations?

Electric Vehicle (EV) Charging Stations – EV charging stations can be metered separately from other equipment in a building and often have periods of high demand followed by long periods of non-use.

Fire Pumps – Fire pumps are separately metered in a building and have high electric demand followed by long periods of non-use.

Arc Welders – Arc welders are sometimes separately metered and have periods of high electric demand followed by periods of non-use.

Gas Compressors – Compressors have short, sustained periods of high electric demand followed by periods of non-use.

How can I learn more about my business's electric consumption?

Customers can view and download their electric consumption history on My Account. If you have any additional questions, please contact us by phone at (608) 252-7007 or by email at mge@mge.com.