The load factor is an indicator of how efficiently energy is being utilized. It’s the actual amount of energy (kilowatt-hours – kWh) delivered in a designated period of time, as opposed to the total possible energy (kWh) that could be delivered in that same designated period of time.
A high load factor indicates that the load (energy being used) is using the electric system more efficiently, whereas consumers that underutilize the electric power distribution system will have a low load factor.
Electric utilities must provide power to everyone within their service area and they have to be prepared to supply it even if everyone used the maximum amount needed (peak demand) at any given time. In other words, the utility might not have to actually supply that maximum power amount, but they have to have the capacity to do so. If they do have to provide electricity at those peak times, it can be expensive. It’s simple supply and demand.
Power is expensive during peak periods. Customers who use electricity in a way that reduces or smoothes out those peaks help put less strain on the power infrastructure. That translates to the possibility for lower rates for those customers.
How to Improve Load Factor
One way you can do this is by shifting some of your energy usage away from peak times.
For example, you may want to shift your washing and drying of clothing to the late evening. A programable thermostat could also help by increasing your thermostat setting throughout the day when peak demand is high and then reducing it in the early evening. You’ll be relieving the electric grid and your wallet at the same time.