The load factor is a measure of how effectively distribution facilities are being utilized. If Customer A has a peak load of 3 kW, the distribution system, including the local customer distribution transformer, must be sized to handle a peak of 3 kW. However from the load factor, we see that on that average on 35% of the peak capacity of the system is being utilized. Low load factors would be indicative of distribution system capacity which is being underutilized.
Customer A has a number of electrical appliances, which if the total demand were added up, would be greater than the peak demand observed on the system. The total of all of the electrical appliance demands is referred to as the total connected demand. The ratio of the peak demand to the total connected demand is referred to as the demand factor, where if the connected demand was 5 kW, would be calculated as follows.