Charlottesville client's Dominion bill showed 120 kW demand but they were being billed for 150 kW. Thought I found a huge error until I read the fine print. Billing demand is the higher of actual demand or 80% of contract demand. Contract was 200 kW so 80% is 160 kW.
Dominion peak demand billing determinant mistake
Contract demand provisions trip up a lot of new auditors. The minimum billing demand protects the utility's revenue even when customers don't hit their contract level.
Had same issue with Appalachian Power. Client wanted to reduce contract demand but the savings weren't as much as expected because of the minimum billing provision.
Georgia Power has similar language. Always check if there's a contract demand and what percentage becomes the minimum billing demand.
Live and learn. Now I always look for contract demand provisions in the tariff before analyzing demand billing.
Contract demand minimums are common in commercial tariffs. They ensure utility revenue stability while giving large customers predictable capacity costs. Always factor them into savings calculations.