Frank from Chicago. Client has a large manufacturing facility. Their summer demand is driven by cooling their production process. They are considering expanding winter operations significantly which would increase winter demand. Currently their summer peak sets the ratchet. If they grow winter demand above the summer peak they will pay even more year-round. How do I help them model this before they commit to the expansion?
Ratchet based on summer demand — client wants to expand winter operations
Derek from Charlotte. You need to model the ratchet impact explicitly before recommending anything. Build a spreadsheet: current summer peak, proposed winter peak, ratchet percentage, demand rate. Show them what happens to annual demand charges under both scenarios.
Frank again. The expansion would likely push winter peak from 280 kW to about 410 kW. Their summer peak is currently 460 kW. So they would still be below the summer ratchet trigger.
Derek again. If the ratchet is based on the highest demand in the last 11 months at 80 percent, and summer is still higher, the ratchet level does not change. The winter months would still be billed at 80 percent of the summer peak. The expansion economics are unchanged on the demand side.
Mark from Houston. Frank, also check whether the tariff has a separate winter ratchet provision. Some tariffs have summer-only ratchets and others have year-round ratchets. A winter ratchet based on winter peak separately would change your analysis significantly.
Mark I had not considered a separate seasonal ratchet. The tariff is long. Searching now.
Mark again. Look for words like winter billing demand, summer billing demand, and on-peak demand separately defined. If the tariff defines them independently they may have separate ratchet provisions.