Cutting a closing mill's NMD from 1,500 kVA to 250 kVA.

As Pioneer Foods' Estcourt Mill shut down, Augos asked the Inkosi Langalibalele Local Municipality to reduce the site's notified maximum demand (NMD) from 1,500 kVA to 250 kVA. The municipality noted the reduction by email on 23 May 2025, effective 1 July 2025. Augos's calculation on the site's June 2025 consumption puts the saving at R213,700.00 a month, all of it in the demand charge.

What was the situation?

The mill, in Estcourt, KwaZulu-Natal, is part of Pioneer Foods, now PepsiCo South Africa. It was closing, with the plant shutting at the end of May 2025.

The site was on the municipality's Scale 7 tariff, an industrial time-of-use tariff, with a notified maximum demand of 1,500 kVA. The demand rate on its bills was R170.96 per kVA. That NMD was sized for a working mill. Once production stopped, the site would still be billed on capacity it no longer needed, unless someone asked the municipality to change it.

What did Augos do?

Augos requested the reduction on the client's behalf, as its appointed representative, before the plant closed. The request in the thread with the municipality was a downgrade to 250 kVA.

There was one complication. An earlier letter from another party had asked for 100 kVA. The municipality took Augos's letter as the most recent request and worked from that.

Augos also prepared a savings schedule for PepsiCo, setting out the effect of the new NMD on the site's charges.

What did the municipality confirm?

In its email of 23 May 2025, the municipality confirmed receipt of the request and noted the reduction. It said its new tariffs take effect from 1 July, so the change would be effective from 01 July 2025.

That is the confirmed part of this case: the request was received and the reduction to take effect from 1 July 2025 was noted. A bill at the new NMD was not on file when this page was written.

The result and how it was calculated

The saving is an Augos calculation, based on the site's June 2025 consumption:

• Charges at an NMD of 1,500 kVA: R445,309.23
• Charges at an NMD of 250 kVA: R231,609.23
• Monthly saving: R213,700.00

All figures are ex VAT. The whole difference is the demand charge: 1,250 kVA fewer, at R170.96 per kVA. Energy charges do not change in this comparison, because the consumption is the same in both columns.

Why does NMD matter so much?

Because demand-based tariffs bill capacity as well as energy. Where the demand charge is set by the notified maximum demand, or held up by a minimum based on it, an oversized NMD keeps billing for capacity the site does not use. For a site that is closing, downsizing or running a much smaller load, the NMD is often the largest single item that can be changed with one letter.

The same thinking applied at another Pioneer Foods site, Continental Beverages in Bloemfontein, where production stopped and the site moved to a tariff with no demand or network access charge.

What to check on your own site

• What is the site's notified maximum demand, and when was it last reviewed?
• How does the NMD compare with the highest demand the site has actually measured over the last 12 months?
• Is a plant closure, downsizing or shift change coming up? Apply before it happens, not after.
• When does the utility apply changes? Some apply them from the start of the new tariff year.
• Has anyone else written to the utility about the same account? Make sure the request on file is the one you want.
• Once the change is in place, check the first bill at the new NMD line by line.

Tariff analysis and bill verification are core to what Augos does. See how tariff optimisation works, or read how electricity tariffs work. To review your own sites, book a demo or call 087 093 6174.