Susan from Nashville. Client runs a seasonal flower shop — open full time February through May, limited hours June through January. The utility bills a minimum demand charge even during months when almost nothing is running. Last January the shop was barely open and the demand charge was $190 on a total bill of $220. Is there a path to reducing minimum demand billing for seasonal accounts?
Demand charge on a client who is barely open — minimum billing problem
Dave from Charlotte. The minimum demand charge is usually tied to the metered service size, not actual usage. Reducing it typically requires either downgrading the service to a smaller transformer and meter or switching to a seasonal rate schedule if one exists.
Susan again. The shop uses a large commercial refrigeration unit during the off-season even when nothing else is running. So the service can not be fully disconnected. But a smaller transformer might work.
Dave again. A service downgrade is a capital project — the utility would need to do the work and there is usually a cost. You need to model the payback period. If the minimum demand overcharge is $150 per month for 7 off-season months that is $1,050 per year. If the downgrade costs $2,500 the payback is about 2.5 years.
Frank from Portland. Also check whether there is a seasonal service option that allows a formal reduction in service level during off-season months at a lower minimum charge. Some utilities have this specifically for seasonal retailers.
Frank, what would I search for in the tariff?
Frank again. Try seasonal service, reduced service, and limited use. Also look at the rate schedule's definition of billing demand — some schedules have a lower minimum billing demand for accounts with documented seasonal operations.
Tom from Seattle. One more option — check if the refrigeration circuit could be served from a separate smaller service. Isolate the off-season base load onto its own meter and downgrade the main service during off months.