Just wrapped up a monster case with Duke Energy Carolinas that I had to share with you all. Manufacturing client in Charlotte was getting hammered on Schedule LGS demand charges for 18 months. Their contract demand was set at 2,500 kW but they were consistently hitting 3,200-3,400 kW peaks. The kicker? Their production schedule had changed in early 2012 but nobody updated the rate analysis. Spent three months digging through interval data and found Duke was applying the excess demand penalty incorrectly under tariff section 4.2.1. They were charging the full excess rate on the entire demand, not just the overage portion. Filed a formal complaint and just got the settlement - $47,200 refund plus going forward corrections. Sometimes it pays to read the fine print twice!
Duke Energy demand charge error - $47K recovery!
Derek, that's exactly the kind of error I see Georgia Power make all the time on their Schedule PL tariff. Congrats on the big win! Did Duke fight you on the interpretation or were they cooperative once you showed them the calculation error? I've got a similar case brewing with a textile plant in Dalton where they're misapplying the ratchet clause. The tariff language is pretty clear but getting them to admit the mistake is another story.
Rachel, they actually pushed back pretty hard initially. Had to escalate to their regulatory affairs group and cite several PSC precedents before they agreed to review. The breakthrough came when I showed them their own billing system was calculating it wrong - not just a manual error but a systematic programming issue affecting multiple customers. Once they realized the scope they became much more cooperative. Definitely document everything with these demand charge disputes!
Nice work Derek! I had something similar with Duquesne Light a few years back on their rider charges. Sometimes the utilities get so focused on the main rate schedules they mess up the ancillary calculations. Question - did you have to get an engineer involved to validate the load profiles or were you able to handle the technical analysis yourself? I'm always curious how deep into the weeds other auditors go.
Walt, I handled most of the analysis myself but did bring in a PE to review the load factor calculations and confirm the demand patterns made sense given their equipment. Cost about $2,800 for the engineering review but it was worth it for credibility. The utility takes you more seriously when you have a stamped report backing up your position. Plus my client was happy to pay it given the recovery amount.
This is why I always tell my clients to never just accept the utility's rate recommendation when they're setting up service. The account reps don't always understand the nuances of complex tariffs. Derek, did this affect their going-forward rate structure too or just the billing corrections? We see a lot of cases where fixing the past billing is only half the battle.
Jim, great point - yes, we got them moved to Schedule LGS-TOU which saves them about $3,200/month going forward. The demand charge structure is much better aligned with their actual usage pattern. The client is thrilled because the ongoing savings will pay for the audit fee many times over. This is exactly why proper rate analysis is so critical, especially for industrial accounts.
Love hearing success stories like this! Makes all the tedious tariff reading worthwhile. Derek, would you mind sharing what red flags initially made you suspect the demand billing was wrong? Always looking to sharpen my audit techniques for spotting these issues faster.