Beth from Portland. Client runs a small printing shop. He looked at his bill and said the demand charge does not make sense to him — he pays the same high demand charge even in slow months. He is thinking of switching utilities if possible in a deregulated market. How do I explain ratchets and demand charges in a way that does not lose him?
Explaining demand charges to a skeptical small business owner
Dave from Charlotte. I use an analogy. Imagine you hire a moving company to always have a 26-foot truck available for you, even if you only need it twice a year. You pay for having that truck on call — not just for the days you use it. The utility built infrastructure to deliver your peak load and they charge you for having it available.
Beth again. He understands that but his objection is that his peak was a one-time event during a rush order a year ago. He thinks the equipment has never spiked that high since.
Dave again. That is the ratchet problem. One anomalous event sets the minimum billing demand for up to 12 months. If the event was truly one-time you may have grounds for a demand reset request. Pull the interval data and show him the spike in context of 12 months of normal data.
Sandra from Austin. The visual is very effective. I print a simple chart — 12 months of peak demands as a bar chart. The anomalous month sticks out like a spike. Clients understand it immediately when they see it visually. The chart also becomes your exhibit in the dispute.
Sandra I will make that chart for the next client meeting. He is a visual person and I think it will click for him better than my verbal explanation.