A kilowatt-hour is a unit of measurement for the quantity of power equal to true power multiplied by the length of time over which it was used.  For example, a 100 watt light bulb used for ten hours uses one thousand watt-hours of power.  One kilowatt-hour equals one thousand watt-hours.

Demand is generally defined as the kilowatt load averaged over a specific interval of time.  It is the energy consumed during a specific interval of time.  Utility companies measure commercial and industrial customers' demands because the highest average rate at which electricity is consumed determines the size of the equipment which the utility company must provide to serve the customer.

Most utilities measure demands in 15 or 30 minute intervals.   If demands measured during 30 minute periods are multiplied by two, the result is kilowatt-hours per hour or kilowatts, based on 30 minute intervals.  Similarly, when demands measured during 15 minute intervals are multiplied by four, the result is kilowatts, based on 15 minute intervals.  Typically, the highest reading obtained during the billing period, converted to kilowatts (by multiplying by two for 30 minute intervals, four for 15 minute intervals, etc.) is referred to as the monthly maximum metered demand.  Utilities may also measure demand on an average or rolling basis.  In these situations, the readings obtained may be averaged or summed with preceding or following readings.   The monthly maximum demand is then calculated by determining the maximum value of the transformed readings.

In cases of large loads, transformers are sometimes used to reduce the amount of voltage and/or current that is sent to the meter.  The amperage may be directed through a current transformer resulting in a transformation of a quantity that was difficult to measure into a smaller quantity which can be measured.  A potential transformer is used in a similar manner to reduce the amount of voltage to the meter.

The meter constant is a value that is determined by the current transformer and potential transformer ratios.  The meter constant may also be called the meter index or meter multiplier.  In cases where the meter index differs from 1.0, the difference between the current meter reading and the previous meter index must be multiplied by the meter constant to obtain the kilowatt-hour usage.

Although demand is generally measured in kilowatts, utility companies provide power in units of volt-amperes.  Volt-amperes, or total power, is the vector sum of watts and reactive volt-amperes.  Reactive volt-amperes are a measurement of the wattless, non-useful power.

Certain devices (motors, capacitors) cause current to shift in time with respect to the voltage creating reactive demand.  The shift causes a force that is perpendicular to the kilowatt force.  The shift which causes the reactive load may cause the current to lead or lag the voltage.  Power factor is defined as the ratio of the power which does productive work (kilowatt) to the total power (kilovolt-amperes).  

Another useful ratio of electrical measurements is load factor.  Load factor is usually expressed as a percentage and is calculated by dividing the average demand by the maximum demand.   A customer who operates the same equipment 24 hours a day, 7 days a week, will have a high load factor while a customer who operates only one piece of equipment for a few hours a day will have a low load factor.