Definition

What Is Contracted Power?

What is contracted power? Contracted power (kW) is the maximum instantaneous draw defined between the distribution company and the subscriber. Power charge, demand (peak demand), and power excess penalties on the invoice are calculated against this value. Subscribers below 9 kW are exempt from reactive penalties; contracted power also determines reactive limit percentages.

Why it matters

If contracted power is too low, frequent power excess and demand penalties occur; if too high, unnecessary fixed power charge is paid. Peak load appears in the OSOS profile at hourly or 15-minute resolution — shift changes, compressor start-ups, and GES commissioning moments create peaks. Contracted power revision requires distribution company application; at least 12 months of peak load analysis should be done before revision. Reactive limit percentages change at the 30 kW threshold; contracted power is both a cost and reactive penalty parameter.

Impact on the bill

On distribution invoices, power charge and system use components are calculated on contracted power (kW). Demand excess occurs when measured peak power in the period exceeds contracted power and generates additional charge. Power excess penalty may apply with different tariff components. Reactive penalty exemption applies for 9 kW and below. When contracted power is wrongly defined, reactive limit percentages are also wrongly applied — subscriber inventory should be checked in invoice reconciliation.

How ENOPTIMAL tracks it

The ENOPTIMAL OSOS module monitors peak load and demand risk with hourly profile; alerts are generated when approaching contracted power excess. In consumption management, contracted power (kW) is maintained centrally in subscriber inventory; reactive limit calculations are applied automatically from this value. The reactive penalty calculator selects exemption and limit percentages by contracted power. Our Contracted Power and Peak Load Management guide details operational intervention steps.

Related resources

Frequently asked questions

FAQ

Frequently asked questions about electricity invoices and consumption management.

Is contracted power the same as installed capacity?

No. Contracted power is the subscription limit in the distribution contract (kW). Installed capacity refers to total load or GES capacity within the facility; they are different concepts.

What is the advantage for subscribers below 9 kW?

Subscribers with contracted power of 9 kW and below are exempt from reactive penalties. This threshold is an important cost parameter for small businesses and retail branches.

How is demand (peak demand) measured?

The highest instantaneous draw power (kW) in the period is recorded as demand via OSOS and meter data. Demand exceeding contracted power can generate additional charge.

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