Have a paper mill in Alabama on Alabama Power that's been paying for 8.5MW contract demand but their actual peak demand hasn't exceeded 6.2MW in over three years. They're paying about $4,100/month for unused capacity. Alabama Power says they need to maintain the contract demand for reliability. Is this standard practice or can we get it reduced?
Contract demand vs actual demand on paper mill account
Wade, most utilities will allow contract demand reductions if you can show a sustained decrease in actual usage. Alabama Power typically requires 12 months of data showing the lower demand pattern isn't temporary. Paper mills often have seasonal variations so make sure you account for that.
Warren, the demand pattern has been consistently lower since they shut down one of their older paper machines in 2013. Peak demand used to hit 8.1-8.3MW but now rarely goes above 6.2MW even during peak production months.
That permanent equipment change should be sufficient justification for Alabama Power to reduce the contract demand. I'd request a reduction to 6.5MW to give them a small buffer. Should save them around $3,000/month in demand charges.