Bob from Akron. Client's energy charges have increased about 15 percent over five years roughly in line with rate increases. But their demand charges have increased 38 percent over the same period on the same rate schedule. Their operations have not changed significantly. How does demand go up 38 percent without a rate increase of that magnitude?
Demand charges increasing faster than energy charges — why?
Mike D from Raleigh. A few possibilities. First, their actual peak demand may have increased due to equipment additions or operational changes they consider minor. Even a modest new piece of equipment can set a new higher peak.
Walt. Second, some tariffs have demand charge components that step up based on consumption tiers or time of year. A gradual increase in consumption could have pushed them into a higher demand charge tier incrementally.
I pulled 60 months of interval data. The average monthly peak demand increased from 182 kW to 241 kW over that period. That is a 32 percent increase in actual demand. So most of the charge increase is real, not a billing error.
Derek. But that 32 percent demand increase against a reported no significant change in operations is worth investigating further. Someone added equipment or changed operating patterns. Finding what changed and whether it can be adjusted is your value to the client.
Found it. A new walk-in refrigeration unit added three years ago was set to defrost all four coils simultaneously at 6 AM every morning. That defrost cycle added 28 kW to the morning peak. Staggering the defrost cycles eliminated most of the demand increase. No capital investment required.