Duke Energy Carolinas demand charge discrepancy - the ratchet that wasn't obvious

Randy Dawson here with a case worth teaching from. Manufacturing facility on Duke Energy Carolinas Rate Schedule LGS, and the demand charge did not match my calculation - bill showed $2,847 for a 247kW peak, but the tariff rate of $11.86/kW works out to $2,929. Clean 247kW peak in July, no power factor issue, customer had not changed rate schedules.

The discrepancy was a billing-demand ratchet operating beneath the obvious tariff line. Duke was not billing on the current-month actual peak - it was applying a percentage of a prior peak under the ratchet provision, and the effective billed demand came out lower than the raw July number. The standard rate sheet shows the per-kW rate but the ratchet mechanics live in the general service rules, which is why the math does not reconcile if you only read the rate schedule.

The lesson for newer auditors: when billed demand does not match metered peak times the rate, do not assume an error in your favor before checking the ratchet. Sometimes the utility is billing you less than the headline number - and you need to understand why before you build a finding on it. Always read the demand-determination rules, not just the rate block.

Ed C. from Nashville. I don't work Duke territory but that math definitely doesn't add up. Are you sure you're looking at the right effective date for the tariff? Sometimes utilities file rate changes that don't take effect for months.

Ida W. in Chattanooga here. I deal with Duke Energy Tennessee which uses similar rate structures. Check if there's a ratchet provision - sometimes the demand charge is based on either current month demand OR a percentage of the highest demand in the previous 11 months, whichever is higher.

Ed, good catch on the effective dates. I pulled what I thought was current but let me double-check the Duke PSC filings. Ida, interesting point on the ratchet - I don't see obvious language in the LGS schedule but maybe it's buried in the general terms. Will dig deeper.

Wesley F. from Greenville - I'm right in Duke Carolinas territory. The LGS schedule does have a ratchet but it's in Section 7, not with the demand charge rates. It's 80% of the highest demand in the previous 11 months. That might explain your discrepancy if they had higher usage last summer.

Wesley, you nailed it! Went back through 12 months of bills and they hit 308kW last August. 308 x 0.80 = 246.4kW, and 246.4 x $11.86 = $2,922. The small difference is probably taxes or fees. Can't believe I missed the ratchet provision - it was right there in Section 7. Thanks for saving my sanity!

Eddie F. from Orlando. This thread is a great reminder to always check the full tariff document, not just the rate tables. I've made this same mistake with ratchet provisions before. The important stuff is never where you expect it to be.

Irene D. from Dayton. Just wanted to say thanks for working through this publicly. I'm dealing with a similar demand charge mystery with AEP Ohio and this gave me some good ideas on where to look.