Energy field notes / Load factor
Commercial electricity load factor: how to calculate it
Load factor tells you how steadily a business uses electricity: it compares the average rate at which you drew power over a billing period with your peak. Work it out as the kWh you used divided by your peak kW times the hours in the period. In Texas it sets Oncor's distribution price per kW for sites above 20 kW, decides whether Oncor's 80% ratchet applies, and shapes the load profile suppliers price on. CenterPoint's delivery charges don't use it.
By Wire & Watt Published
What load factor means.
Both Oncor’s and CenterPoint’s tariffs use the same definition: the ratio, usually as a percentage, of the kWh used in a period to the maximum kW of demand times the hours in that period.
load factor = kWh used ÷ (peak kW × days × 24)
A site that ran at its peak every hour of the month would have a load factor of 100%. Real businesses sit well below that, because the peak lasts minutes and the rest of the day draws less. Take a month of 15,000 kWh with a 50 kW peak over 30 days: 15,000 ÷ (50 × 30 × 24) = 41.7%. The site drew an average of 20.8 kW against a 50 kW peak.
Calculator
What is this bill’s load factor?
Three numbers from one business electricity bill. Nothing you enter leaves this page.
The usage for the billing period.
The kW on the bill (kVA on a CenterPoint bill).
Count from the service period dates.
Enter all three numbers to see the result.
The numbers on your bill.
- kWh used: the usage for the billing period, often under “usage” or “energy”.
- Peak demand: the kW figure, sometimes labelled demand, metered demand or NCP kW. Use the metered figure; a billed demand higher than the metered one usually means a ratchet was applied. CenterPoint bills demand in kVA.
- Days: count them from the service period dates, not the calendar month.
If your bill shows kWh but no kW at all, the meter is not billed for demand, and load factor doesn’t enter your delivery charges. Our guide to reading a business electricity bill shows where each line sits.
Where load factor changes what you pay.
Oncor: the distribution price band and the ratchet
For sites on Oncor’s Secondary Service Greater Than 10 kW rate whose peak is above 20 kW, the Distribution System Charge per kW depends on an annual load factor: the year’s kWh against the single highest monthly peak, over the 12 billing months ending in December. The price is highest at 0% to 10% and lowest at 26% and above. A site at 25% or below is also exempt from the 80% ratchet on that charge, which matches the Public Utility Commission of Texas rule for nonresidential secondary customers (Substantive Rule 25.244(c)); the rider charges keep the ratchet either way. Our Oncor guide lists each band’s price, and the ratchet calculator works out the annual figure from 12 bills.
CenterPoint: not used
CenterPoint’s tariff uses load factor for no business price, ratchet or rate class. A site on its Secondary Service Greater Than 10 kVA rate pays one distribution price per kVA, on the current month’s peak (our CenterPoint guide has the amounts).
Suppliers and ERCOT load profiles
ERCOT assigns each demand-billed business meter a load profile type from its load factor, recalculated once a year from the previous calendar year, with any change taking effect from the meter read on or after April 15. Supplier pricing tools ask for that profile, or the site’s load factor, alongside its annual kWh.
| Profile type | Meaning | When ERCOT assigns it |
|---|---|---|
| BUSLOLF | Low load factor | Below 40% |
| BUSMEDLF | Medium load factor | 40% to 60% |
| BUSHILF | High load factor | Above 60% |
| BUSNODEM | No demand billed | Meters billed on kWh only |
| BUSIDRRQ, BUSLRG | Large sites | Above 700 kW (700 kVA at CenterPoint), or billed on 4CP |
ERCOT’s figure is a demand-weighted average across the 12 calendar months, so it will not match one month’s bill exactly. One more reference point: on the Electricity Facts Label for a small business, the average prices for demand-billed plans are calculated at an assumed 30% load factor (25.475(g)(2)(C)(ii)), so a site well above or below that should expect its own average to differ.
What a good load factor is.
No rule or tariff sets a target. Higher means steadier use: a site whose refrigeration or equipment runs around the clock sits higher, and a business that is busy for a few hours a day sits lower. ERCOT’s own bands put the line for a high load factor above 60% and a low one below 40%.
The useful comparison is your own site from month to month. A load factor that drops while kWh stays level means the peak rose: something started drawing more power at the same time.
How to raise it.
Load factor rises when the peak falls, so work on the peak, not the total. Stagger the start-up of large equipment such as HVAC units, ovens, compressors and vehicle chargers so they don’t all draw power in the same 15 minutes. Check what switches on together at opening or in the busiest hour. Our guide to demand charges covers how the peak is measured.
A new supply contract doesn’t change your load factor, but your load factor is part of what a supplier prices. Start with your business ZIP and email, and add every page of a recent bill when you have it.
Common questions
- What is load factor on an electric bill?
- The ratio of the electricity you used in a period to what you would have used running at your peak demand the whole time. Oncor's and CenterPoint's tariffs define it as kWh used divided by the maximum kW times the hours in the period, usually stated as a percentage.
- How do I calculate load factor from my bill?
- Divide the kWh used by the peak demand in kW times the days in the billing period times 24. A bill showing 15,000 kWh and a 50 kW peak over 30 days has a load factor of 15,000 / (50 x 30 x 24) = 41.7%.
- What does a 50% load factor mean?
- That your average demand over the period was half your peak. A site with a 60 kW peak and a 50% load factor drew an average of 30 kW.
- What is a good load factor for a business?
- There is no official target; higher means steadier use. ERCOT classes a business meter's profile as high load factor above 60% and low below 40%. Compare your own load factor from month to month rather than against another type of business.
- Does load factor change my electricity price?
- It can. At Oncor, sites above 20 kW pay a higher distribution price per kW at lower annual load factors, and sites at 25% or below are exempt from the 80% ratchet on that charge. Supplier quotes take the load profile into account. CenterPoint's delivery charges do not use load factor.
- Is a low load factor bad?
- Not in itself: it means short peaks relative to your average use, which is normal for a business that is busy for a few hours. It matters because demand charges are billed on the peak, so the same kWh can cost more when it comes in sharp bursts.
- How can a business improve its load factor?
- Lower the peak rather than the usage: stagger the start-up of large equipment such as HVAC, ovens, compressors and chargers so they don't all draw power in the same 15 minutes.
Sources and scope
Supplier explanations support the general contract and billing points in this guide. Your own agreement and service location determine the terms that apply to you.
Wire & Watt wrote this guide from the sources below. No supplier or utility paid for it or reviewed it. The supplier a business chooses pays us, never the business: how we’re paid.
- Oncor Tariff for Retail Delivery Service, 6.1.1.1.2 and 6.1.1.1.3 (revision 12, effective June 1, 2026) (opens in a new tab)
- CenterPoint Energy Houston Electric Tariff for Retail Delivery Service, 6.1.1.1.3 (revision 23, effective Feb. 26, 2026) (opens in a new tab)
- ERCOT Load Profiling Guide, Appendix D: Profile Decision Tree (May 1, 2024) (opens in a new tab)
- Texas PUC Substantive Rule 25.244: billing demand for certain utility customers (opens in a new tab)
- Texas PUC Substantive Rule 25.475: retail electric provider requirements and disclosures to residential and small commercial customers (effective Jan. 6, 2022) (opens in a new tab)