Working on a Duke Energy commercial account and I'm confused about their ratchet calculation. The tariff says demand charge is the higher of actual demand or 80% of highest demand in past 11 months. Customer had 285 kW peak in March 2011, now running 180 kW. Should current billing be 285 x 0.80 = 228 kW for demand charges? Rate schedule SGS seems different from what I've seen before.
Ratchet clause calculation - Duke Energy Commercial
Mike, yes that's correct for Duke's standard ratchet. 228 kW would be your billing demand if actual is only 180 kW. But check if there's a seasonal provision - some Duke schedules have different ratchet percentages for summer vs winter months.
Also verify the measurement period. Duke sometimes uses 15-minute intervals vs 30-minute. Had a case where they were applying ratchet to wrong interval data and overcharging by $800/month.
Good point Linda. This is 15-minute interval data. The March 2011 peak was 285.4 kW at 2:45 PM on March 15th during a heat wave. Current bills show billing demand of 228 kW even when actual is lower. Math checks out but customer is questioning why they're paying for demand they're not using.
Elmer's right about grandfathering. Also Mike, have you verified the CT ratio? Sometimes the high demand reading that established the ratchet was based on incorrect CT multiplier. Worth checking the metering records from March 2011.
That's the whole point of ratchet clauses Mike - utility wants to recover infrastructure costs even when demand drops. Explain to customer that the electrical system had to be sized for their peak usage. They benefited from that capacity, now they pay for it.
Check the tariff effective date too. Duke revised their ratchet provisions in 2010. If service started before revision, customer might be grandfathered under old terms which had 70% ratchet instead of 80%.