Got a doozy of a case with Memphis Light Gas & Water that's driving me crazy. Hospital client installed a 2MW backup generator in 2022 and MLGW immediately slapped them with standby charges under Schedule E-3 even though the generator is only for emergency use during outages. The monthly standby fee is $1,847 plus demand charges on the full 2MW capacity whether they use it or not. I've read through the tariff about fifty times and the language seems to allow exemptions for true emergency backup but MLGW is interpreting it differently. They claim ANY on-site generation triggers standby regardless of use pattern. Has anyone successfully challenged standby charges with MLGW or other utilities? This could end up costing my client $35K+ annually for a generator they hope to never use.
MLGW standby charge nightmare - anyone dealt with this?
Randy, I fought a similar battle with National Grid in Syracuse about three years ago. Same situation - hospital with emergency backup getting hit with massive standby charges. The key was documenting that the generator literally cannot run in parallel with the grid due to the transfer switch configuration. We had to get an electrical engineer to certify that it was physically impossible for the generator to reduce their utility usage during normal operations. Took 8 months but we got the standby charges dropped and recovered about $28K in past billings. The utility finally agreed that true emergency-only backup shouldn't trigger standby penalties.
This is such a common issue with hospitals and data centers. Randy, have you looked into whether Tennessee has any regulatory precedents on standby charges for emergency generators? In Oregon we had some PUC decisions that established clearer guidelines about when standby is appropriate. Might be worth filing a complaint with the Tennessee Regulatory Authority if MLGW won't budge. These standby tariffs are often poorly written and utilities apply them way too broadly.