Your Basic Charge Is Billed on Billing Demand, Not Contract Power

The basic charge at the top of your bill prints at almost the same amount every month. That makes it easy to write off as "a fixed cost we cannot touch," but this line is a number the factory can move itself. The way it moves, though, is not what intuition suggests.

How is the basic charge calculated?

Basic charge = billing demand (kW) × the basic charge unit price (KRW/kW). The value being multiplied is not contract power but a separate value called billing demand.

Miss that distinction and you jump straight to the conclusion that "lowering contract power lowers the basic charge by the same proportion" — which is true at some plants and wrong at others.

What is the difference between contract power and billing demand?

Contract power is the equipment capacity you have agreed to use; billing demand is the kW figure actually multiplied into that month's charge. Contract power is set in advance on the basis of your equipment, while billing demand is recalculated every month.

KEPCO's Basic Terms of Supply (in force 1 July 2026) split the calculation into two branches.

An account that puts the two values side by side is in the difference between contract power and maximum demand.

Which basis is our plant calculated on?

The test is not the voltage but "under which provision the meter was installed." A plant supplied at high voltage or above falls under Article 68(1). A low-voltage plant, even with contract power of 20kW or more and a maximum demand meter fitted, falls in principle under Article 68(2), so its billing demand equals its contract power.

This is the point at which material circulating in the market most often gets it wrong.

When we checked the bills of the six low-voltage sites we manage, all six had billing demand equal to contract power, and at one of them the measured 15-minute maximum was 36kW yet it was billed at 50kW (its contract power). (Our own production data, as at 2026-07-25, n=6 — this is what we observe.)

Which month's peak sets the billing demand?

It is not all twelve months. Article 68(1) of the Terms takes only the maximum demand figures from the December, January, February, July, August and September bills plus the current month — seven candidates out of the twelve months up to and including the month of meter reading, and uses the largest of them.

So peaks in March, April, May, June, October and November are not captured in the basic charge (unless they fall in the current month), and a peak that spiked once last August holds your charge up until August of this year.

A worked example (an example assuming a plant with 500kW of contract power that falls under Article 68(1))

→ Billing demand is 420kW. The 460kW in March is larger, but it sits outside the window and is ignored. This is why you have to look at your summer and winter maximum demand first.

Do you still get a basic charge if you use almost no electricity?

You do. For customers under Article 68(1), if the maximum demand in the designated months falls short of 30% of contract power, 30% of contract power becomes the billing demand. For customers under Article 68(2), the full contract power is multiplied in as it stands.

Even if the in-window maximum demand at the example plant above drops to 120kW, its billing demand is the floor of 150kW (30% of 500kW). This is the structural reason why load factor keeps being a problem at plants with low utilisation.

Does a peak recorded in the small hours get captured in the basic charge?

Maximum demand in off-peak hours and on public holidays does not enter billing demand. The proviso to item 1 of Appendix 3 of the Basic Terms of Supply (in force 1 July 2026) provides that billing demand is calculated as the greater of the maximum demand figures in the mid-peak and peak hours, and that maximum demand on public holidays is metered as off-peak hours.

Saturday is different. What the Terms provide should be shifted and metered as mid-peak is the energy consumption in Saturday's peak hours, and maximum demand stays where it is. And since billing demand covers both mid-peak and peak, a Saturday peak enters the charge whichever way you read it.

That is why moving a daytime peak into the night brings down not only the energy charge but the basic charge along with it.

What should you look at first to reduce the basic charge?

First establish whether you fall under Article 68(1) or 68(2), and then pick what to work on. Reverse the order and you will spend your effort in the wrong place.

The procedure for actually changing contract power is covered in how to change (reduce) contract power.

Where on our bill do we find the basic charge?

The 'basic charge' line in the billing detail, and the kW value next to it. If that kW is the same number as your contract power, you are probably a customer under Article 68(2); if it is smaller than contract power and changes every month, you are under Article 68(1). How to read the bill line by line is set out in the structure of industrial electricity tariffs.