How demand charge (load × rate) works in Bangladesh

Most Bangladesh electricity bills split into a few big numbers: energy cost, demand charge, and VAT. Energy cost gets all the attention because it goes up with usage and is easy to explain. Demand charge is quiet — it stays the same every month regardless of consumption. That's exactly why it's so often overlooked. For many small commercial connections, demand charge is 15–25% of the total bill. Understanding it is the easiest place to find permanent savings.

The formula is simple

Demand charge is calculated as sanctioned load (kW) × the per-kW demand rate for your category. The per-kW rate is in BERC's published tariff schedule and varies by tension level and category. Under the current schedule:

LT-A residential: roughly ৳42 per kW per month
LT-C1 small industry: ৳48 per kW per month
LT-E commercial and office: ৳90 per kW per month
LT-T temporary: ৳120 per kW per month
MT-2 (medium-tension commercial and office): about ৳90 per kW, with energy in a separate block

A 5 kW LT-A residential connection therefore pays about ৳210 a month in demand charge. Whatever the meter records — even if it records zero kWh.

What sanctioned load actually is

Sanctioned load is the maximum continuous draw the distribution company has agreed to deliver to your meter. When the connection was first installed, an application form added up the wattages of appliances you'd run at the same time, with a safety margin, and that became your sanctioned load.

Two terms can be confusing:

Sanctioned (or contract) load: the agreed maximum, used for demand-charge billing.
Sensed load: the highest 15-minute average the meter actually saw during the billing month. Printed as S. Load on the bill.

Demand charge is calculated only on sanctioned load. Whether you ever come close to it doesn't matter. Think of it this way: you're paying for the size of the pipe, not the water flowing through it.

Why a small load cut beats unit savings

Energy savings recur with usage. Demand charge savings recur every month, period. Reduce sanctioned load on an LT-E connection by 1 kW and you save ৳90 a month — shop open or closed, summer or winter. Over a year that's ৳1,080. Over five years it's more than ৳5,000, pure savings.

Compare with energy savings: cutting unit consumption by 10% might save another ৳1,500 a year on a typical bill, but it demands sustained behaviour change. Reducing sanctioned load is a one-time application that pays a small dividend forever.

How to tell if your sanctioned load is too high

Find your sanctioned load on the bill (usually labelled “C. Load”). Now look at the sensed load (“S. Load”) for the last six months. If the maximum sensed load in this window is consistently below 70–80% of your sanctioned load, you're paying for unused headroom. Common pattern: a family takes a connection planning for two ACs, never installs the second one, and keeps paying demand charge for a 7 kW load when 5 kW would have been enough.

Applying for a load reduction

A load reduction application is filed at your zonal DESCO, DPDC, NESCO, BPDB, or BREB office. You'll need:

A written application stating the new load amount
The latest electricity bill
A copy of the connection holder's national ID
The processing fee in your utility's current schedule

The utility may inspect the premises to confirm the new load matches your installation. Approval usually takes 7–15 working days, and the new load reflects from the next billing cycle. There's no penalty for reducing load; the utility is happy to have an accurate contract.

When you should increase load instead

The opposite case matters too. If your main breaker trips repeatedly, the answer isn't running smaller appliances — it's applying for a load increase. Repeatedly drawing above sanctioned load invites penalties. Some distribution companies impose unauthorised-use surcharges that can equal a whole extra month's demand charge.

Use the calculator to model your bill at a higher load. The demand charge increase is usually small enough that paying for headroom you actually use is much cheaper than paying penalties.

Special case: shared meters and load aggregation

In multi-storey buildings with sub-meters, the building association sometimes negotiates one large high-load connection and bills tenants only on consumption. This works well when tenants' peak demands don't coincide; the association captures the benefit of the diversity factor. Households in sub-metered arrangements don't pay demand charge directly; it's folded into the management fee. If you're renting in such a building, examine the bylaws — well-run associations pass the savings to the tenant, badly-run ones don't.

Worked example

A small shop on LT-E declares 8 kW of sanctioned load, paying 8 × 90 = ৳720 a month in demand charge. It uses 400 kWh a month, so its energy cost is 400 × 15.36 = ৳6,144 at the flat rate. Demand charge is roughly 10% of the bill before VAT.

If actual sensed load over the last year never crosses 5.5 kW, the owner can apply to reduce sanctioned load to 6 kW. Demand charge drops to ৳540 — a permanent monthly saving of ৳180. Over five years, that's ৳10,800 before the one-time application fee.

Sanctioned load is the lever almost no one pulls, because it doesn't show up loudly on a bill. Read the C. Load and S. Load lines on the last six months of bills. If S. Load has been consistently well below C. Load, you're paying for capacity you've never used. The application takes an afternoon. The savings continue as long as the connection exists.