Demand charge and sanctioned load: the fixed cost most people ignore

Most people study their bill's energy charge line closely and skip straight past "demand charge" without a second thought. That is a mistake, because demand charge is billed on sanctioned load — a fixed capacity you reserve from the grid — not on units actually consumed. You pay it every month even in a month where you travel and use almost no electricity. Understanding how load gets sanctioned, and how to right-size it, is one of the few ways to permanently cut a bill without changing any consumption habit at all. For the full rate card, see our tariff tables.

What "sanctioned load" actually means

When you apply for a new connection, the distributor does not wait to see how much power you actually draw. You declare an expected maximum load — the sum of the wattage of everything you might run at once, converted to kW — and the utility "sanctions" that figure on your meter. That sanctioned load becomes the basis for two things: the size of cable and meter installed, and the monthly demand charge you are billed, regardless of whether you ever draw that much.

For residential LT-A connections this is often set generously by installers who would rather over-declare than face a service call for tripped breakers later. A family that genuinely needs 3 kW might end up sanctioned for 5 kW or more, quietly paying demand charge on 2 kW of capacity it never uses.

Demand charge rates by category

Demand charge is quoted per kW (or kVA for larger connections) of sanctioned load, added on top of the energy charge regardless of usage. Rates vary sharply by category:

The real cost of over-sanctioning

Consider a residential LT-A customer with a genuine need of 3 kW but a sanctioned load of 5 kW, on the standard ৳ 42/kW residential demand rate. The unnecessary 2 kW costs ৳ 84 extra every single month before VAT — about ৳ 1,008 a year, for capacity that sits idle. Multiply that across years and a single oversized sanction at installation time can silently add up to several thousand taka in charges for nothing.

Commercial and small-industry connections feel this even more sharply because their demand rates run several times the residential figure. A shop sanctioned for 10 kW but only ever drawing 6 kW on LT-E tariff is paying demand charge on 4 kW of pure waste every month. Run your own numbers through the bill calculator with different load figures to see the effect directly.

How to apply for a load change

If you suspect your sanctioned load is higher than you need — or, less commonly, that it is now too low for genuine new appliances — you can apply to your distributor (DESCO, DPDC, NESCO, WZPDCL, or the relevant Palli Bidyut Samity) for a load revision:

1. Collect your latest bill and connection details, and fill the standard load-change application form available at the local office or online customer portal.
2. Pay the prescribed application fee, which varies by connection type — typically a modest flat fee for single-phase LT connections.
3. An inspection team visits to verify your actual running load against the declared figure before approving a reduction or increase.
4. Once approved, the meter's sanctioned-load record is updated and the new demand charge applies from the next billing cycle.

Takeaways

• Demand charge is billed on sanctioned load in kW, not on units consumed.
• Installers often over-declare load, and that excess quietly adds to every bill.
• Demand rates vary sharply by category — commercial and industrial rates run far above residential.
• A load-change application with your distributor can correct an over-sanctioned connection.

For a deeper look at how usage habits interact with tariff slabs, see our guides on cutting your summer AC bill and how the six distributors differ.