Client has Xcel Energy service with 500 kW contract demand but actual usage never exceeds 280 kW. Paying $8.75/kW on full 500 kW = $4,375/month demand charges. Customer wants to reduce contract demand. Anyone dealt with Xcel contract modifications?
Contract demand vs actual demand - Xcel Energy
Good points. Looking at original service application from 2019, customer did request 500 kW for planned expansion that never happened. Current operations stable at 250-280 kW for past 2 years.
That's a good case for reduction Vernon. Document the stable usage pattern and show expansion was cancelled. Xcel typically allows reductions to 110% of highest actual demand in past 12 months. So 280 kW x 1.1 = 308 kW contract demand.
Jeff's formula sounds right. Reduction from 500 to 308 kW would save 192 kW x $8.75 = $1,680/month. Definitely worth pursuing even with application fees. Process usually takes 30-60 days with Xcel.
Vernon, Xcel allows contract demand reductions but there's usually a waiting period and fees involved. Check if customer is in a multi-year service agreement - those often lock in contract demand.
Lisa's right about service agreements. Also verify if the 500 kW was customer-requested or utility-imposed based on connected load. If customer originally needed 500 kW but downsized operations, stronger case for reduction.