Hope this isn't a dumb question, but I'm new to Xcel Energy territory. I have a client on their Large General Service rate and I'm seeing demand charges that seem to be based on different time periods. Some months it looks like they're using the current month's peak, other months it seems like they're using a previous month's number. Is there a seasonal ratchet or am I missing something obvious? The rate schedule isn't totally clear to me.
Quick Question - Xcel Energy Demand Billing Frequency
Carol - Xcel typically uses a 12-month ratchet on their commercial accounts. So they'll bill whichever is higher: the current month's demand or 80% of the highest demand in the previous 11 months. During summer months you might see current month demand being higher, but in winter they often fall back to the ratcheted amount. Which state are you in? Their tariffs vary slightly between Colorado, Minnesota, etc.
Thanks Craig - this is in Colorado. That explains what I'm seeing. The customer had a high demand in July (air conditioning) and now in September they're still paying 80% of that July number even though actual September demand was much lower. Is there any way to get Xcel to reset the ratchet or is it just something we have to ride out over the 12 months?
Generally you just have to ride it out unless there were meter errors or other billing mistakes. Xcel Colorado is pretty rigid about their ratchet provisions. The only exception I've seen is if there was a one-time event like equipment testing that they agreed to exclude, but that requires prior approval. Your best bet is helping the customer manage their demand going forward to avoid future high peaks.
What Tom said is right. Xcel Colorado doesn't negotiate much on ratchets unless there's a clear billing error. Focus on demand management strategies - load scheduling, power factor improvement, maybe some demand response participation if they qualify. The good news is that 12 months goes by faster than you think, and then you get a fresh start.