Working on a complex TOU rate with separate demand charges for on-peak and off-peak periods. Customer hit their annual peak of 1,200 kW during off-peak hours (11 PM) but their on-peak demand maxed out at 890 kW. The utility is charging demand based on 1,200 kW for both on-peak AND off-peak periods. This doesn't seem right to me - shouldn't they have separate ratchets for each time period?
Time-of-Use Demand Charges - Peak vs Off-Peak
Ken, which utility and rate schedule? TOU demand billing varies widely. Some utilities do maintain separate ratchets for on-peak vs off-peak, while others use the highest demand regardless of when it occurred and apply it to both periods.
Randy, it's Duke Energy Schedule TOU-GSD. I've been reading through the tariff and the language is ambiguous. It mentions "billing demand shall be the highest 15-minute integrated demand" but doesn't specify whether that's applied separately to on-peak and off-peak charges.
Ken, I've seen Duke's TOU-GSD and they do use a single demand for both time periods. The logic is that the customer's peak demand capability affects the utility's system costs regardless of when that peak occurs. Not all utilities work this way, but Duke does.
Thanks Karl. That's disappointing for the customer since their on-peak usage is actually pretty well controlled. Is there any benefit to switching to a standard non-TOU rate if their peak happens to fall during off-peak hours anyway?
Ken, you'd need to run a full rate comparison looking at both energy and demand charges over a 12-month period. TOU rates often have lower off-peak energy rates that can offset the demand charge disadvantage, but every situation is different.
Karl makes a good point about regional differences. Here in California, most of our TOU rates do separate on-peak and off-peak demand charges. Ken, if your client ever expands to other states, definitely worth looking into those rate structures.
This is a great example of why you need to read TOU tariffs very carefully. Some utilities like PG&E do maintain separate on-peak and off-peak demand ratchets, which can be much more favorable for customers with load profiles like Ken's client.