Mitchell S from Amarillo, TX. Xcel Energy (SPS) territory. Client runs a beef processing plant — three shifts, 24/7 operation. Load is almost perfectly flat around the clock because the refrigeration, processing lines, and sanitation systems run continuously. Their energy consultant put them on a TOU rate 6 years ago. The theory was they could shift some discretionary loads to off-peak. But a meat processing plant cannot shift refrigeration or production without spoilage and regulatory issues. The load profile is flat. A flat load on a TOU rate gets zero benefit from the energy rate differential because on-peak and off-peak consumption are proportional to hours in each period. But the TOU demand charge is higher than the standard rate demand charge. So the plant is paying a premium demand charge for absolutely no TOU benefit.
Three-shift manufacturer paying TOU premium for no reason
Mitchell, the flat load on TOU problem is one of the most common rate optimization errors. TOU rates only save money when the customer can demonstrably shift load away from peak periods. A continuous process operation with a load factor above 80-85% almost never benefits from TOU. The math just does not work because the demand charge premium exceeds the marginal energy savings from the small amount of shiftable load.
I see this constantly in Oklahoma with OG&E industrial clients. Oil refineries, food processing plants, chemical facilities — anything that runs 24/7. Energy brokers and consultants love to recommend TOU because it sounds sophisticated. But if the client cannot actually shift load, TOU is just a more expensive rate with the same consumption pattern.
Steve, exactly. I ran the comparison and this client would save $14,200 per year on the standard industrial rate vs TOU. Over 6 years that is $85,200 in excess charges. SPS lookback is 4 years in Texas so maximum recovery is about $56,800.
Mitchell, was it the utility or a third-party consultant who recommended TOU? That matters for the dispute. If SPS recommended it, you have a stronger case for rebilling. If it was an outside consultant, SPS will say the customer chose the rate and they just applied it.
Jim, it was an outside energy consultant. But here is the thing — SPS has a provision in their tariff that says the company may recommend a change in rate schedule when the customer load characteristics indicate a more economical rate is available. They had the interval data showing a flat load profile and never flagged that TOU was suboptimal. I am arguing they had a duty to advise.
That is a creative argument Mitchell but it might be hard to win. Most utilities will say they do not have an affirmative obligation to optimize customer rates. But some state commissions have ruled that utilities should inform customers when a clearly more economical rate is available. Check Texas PUC precedents.
Filed the dispute. SPS initially rejected it citing customer choice. I escalated to the Texas PUC with the argument that the utility had interval data clearly showing TOU was suboptimal and never informed the customer. After 3 months, the PUC issued an informal recommendation that SPS rebill 2 years — a compromise. Credit: $28,400. Not the full 4 years I wanted but still a significant win. And the client is now on the standard rate saving $14,200/year going forward.
$28,400 rebate plus $14,200 annual savings. Total first-year value: $42,600. The meat processing plant owner said he had always suspected the energy consultant''s recommendation was wrong but did not have the expertise to challenge it. That is what we are here for.