MLGW standby charge dispute - winning the Schedule E-3 emergency exemption

Randy Dawson here. Sharing a case that comes up constantly, so here is how I handle it. Hospital client installed a 2MW backup generator and MLGW immediately applied standby charges under Schedule E-3 - a monthly fee plus demand on the full 2MW capacity, used or not.

The key is the tariff language itself. Schedule E-3 standby provisions are written for parallel-operation and peak-shaving generation, not true emergency-only backup that operates solely during utility outages. If the generator is interlocked so it physically cannot parallel with the grid, it does not meet the standby trigger. I document the transfer-switch configuration, get the electrical one-line and the interlock specification, and put it in front of MLGW in writing citing the exact tariff subsection.

On this account that reclassification eliminated the standby demand component entirely and produced a credit going back to installation. The lesson for everyone: do not accept a standby designation at face value. Pull the interconnection drawings first - the equipment configuration usually decides the argument.

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.