Working on a natural gas audit for a manufacturing client here in Charleston. SCE&G is hitting them with a $2,850/month capacity charge on top of their normal commodity costs. Client uses about 45,000 therms/month but only during peak winter months - basically zero usage May through September. The capacity charge seems excessive given their seasonal usage pattern. Has anyone successfully challenged these charges or gotten them reduced? The contract language is pretty vague about when capacity charges apply.
Gas capacity charges - when do they actually make sense?
Margaret, capacity charges are tricky but you might have a case. Here in Knoxville we see similar issues with KUB gas service. The key is proving that your client's peak demand doesn't justify the capacity reservation. If they're only hitting peak usage 3-4 months per year, you should be able to negotiate a seasonal rate structure or demand ratchet modification. What's their actual peak day usage vs what SCE&G is billing capacity for?
Gary, their actual peak day last winter was 2,100 therms but SCE&G is billing capacity based on 2,800 therms/day. That 700 therm difference is costing them about $1,200/month in unnecessary capacity charges. The frustrating part is SCE&G won't provide clear documentation of how they calculated the 2,800 figure. I'm thinking it might be based on some historical peak from years ago that's no longer relevant to their current operations.
Margaret, that's a classic utility trick. Here in Richmond, Dominion Energy does the same thing - they lock in historical peaks and never adjust downward. You need to demand a capacity study or engineering analysis. Most utilities will negotiate if you can prove sustained lower usage patterns. Document everything for the past 2-3 years and show the clear seasonal variance. A good rate analyst can usually get those charges reduced by 20-30% minimum.
I deal with this constantly in Savannah with Georgia Natural Gas. The secret is getting them to switch to an interruptible rate schedule if the client can handle gas curtailments during peak demand periods. Your manufacturing client might be perfect for this - they could save 40-60% on capacity charges in exchange for agreeing to shut down during emergency peak periods that rarely happen anyway.
Also Margaret, make sure you're checking if SCE&G is applying any "ratchet" provisions where they base capacity charges on the highest usage month in the past 12 months. That could explain the inflated 2,800 therm figure - might be from an unusual spike months ago that's still driving their billing calculation.