Faye from Lynchburg here - dealing with a complex Dominion Energy Virginia pass-through situation in a mixed-use building with retail, office, and light industrial tenants. The landlord is allocating the building's peak demand charges ($23,000/month) based purely on square footage, but our manufacturing tenant obviously drives most of the actual demand. They're paying 31% of demand costs for 38% of space but probably causing 70% of the actual demand. Dominion's Schedule GS-3 has specific provisions for demand allocation but the lease just says "proportionate share of utility costs." Anyone dealt with Virginia demand charge disputes where the allocation method doesn't reflect actual usage patterns? This is costing our client an extra $8,500/month.
Dominion Energy Virginia triple net lease - demand charge allocation nightmare
Faye - Gary from Richmond and I see this constantly with Dominion Energy pass-throughs. Square footage allocation for demand charges is fundamentally flawed when you have mixed-use tenants with different load profiles. Manufacturing, especially with motor loads, drives demand spikes that office and retail never approach. The fair method is coincident demand metering or at minimum using connected load data rather than floor space. Virginia law generally supports "reasonable allocation" standards, but proving what's reasonable requires load profile analysis. Have you been able to get interval data from Dominion for the master meter? That would show exactly when demand peaks occur and which tenants are likely causing them.
Vince from Hartford chiming in - we had an almost identical situation with Eversource in Connecticut. Mixed-use building, manufacturing tenant getting hammered with demand charges they weren't causing. The solution was installing individual demand meters for each tenant and using actual coincident demand data for allocation. Yes, it costs money upfront ($2,500 per meter) but with $8,500/month at stake, payback is under a year. Connecticut courts have ruled that square footage allocation is "unreasonable" when tenants have substantially different electrical characteristics. Virginia law might have similar precedents.
Faye - Randy from Memphis here. This is a classic example of why demand allocation methodology needs to be specified in lease agreements before problems arise. Dominion Energy Virginia's GS-3 tariff actually has guidance on coincident vs non-coincident demand billing that could support your position. The key is proving that square footage allocation creates an inequitable result. Document the manufacturing tenant's operating schedule, connected equipment loads, and power factor characteristics. If they're running heavy machinery during peak hours while office tenants are using minimal power, you have a strong case for revised allocation. Consider proposing a compromise using connected load ratios as an interim solution while working toward individual metering.
Jeff from Nashville here - dealt with similar TVA pass-through issues. One thing to check with Dominion is whether the building qualifies for interruptible rates or demand response programs that could reduce everyone's costs. Sometimes the demand charge problem is exacerbated by the building being on a higher-cost firm service schedule when they could qualify for economic development rates. Also verify that power factor penalties aren't being inappropriately allocated. Manufacturing loads often have poor power factor which drives additional charges that shouldn't be shared across all tenants.
Thanks everyone - got the interval data from Dominion and you were absolutely right. The manufacturing tenant's peak demand coincides with the building peak 87% of the time, while retail and office tenants peak during completely different hours. Armed with this data, we negotiated a revised allocation based on coincident demand contribution. Manufacturing tenant's share dropped from 31% to 68% of demand charges (sounds worse but it's actually fair), while their monthly costs went down $4,200 because they're no longer subsidizing everyone else's non-coincident peaks. Landlord agreed to install individual demand meters within 6 months to automate future allocations.
Faye that's an excellent outcome! Kevin from Dayton here - the coincident demand analysis approach is exactly right for these situations. It's counterintuitive that the manufacturing tenant's percentage went up but their costs went down, but that's how proper allocation should work. They pay more percentage-wise because they're actually causing more of the demand, but the total demand charges are allocated fairly so everyone pays less than under the broken square footage method. This case study should be required reading for commercial lease negotiations.
Perfect resolution Faye - this is exactly how demand charge allocation should work in mixed-use buildings. Gary here again - the key lesson is that "fair" doesn't always mean "equal percentage." Each tenant should pay based on their actual contribution to building costs, not just their floor space. The individual meter solution will prevent future disputes and provide transparency for all parties. Dominion Energy's interval data was crucial for proving the case. Great work documenting everything and negotiating a win-win outcome rather than just fighting over the existing broken system.