Just completed an audit for a manufacturing tenant in an industrial park here in Memphis. Landlord was passing through MLGW charges based on General Service rate GSA-3 but the facility actually qualifies for Industrial rate schedule IND-2. The difference in demand charges alone saves $2,847 per month. Landlord had never requested a rate analysis from MLGW despite the tenant's 850 kW average demand. Anyone else finding rate classification errors in pass-through billing? This seems to be a blind spot for many property managers.
MLGW Industrial Rate Reclassification - Major Savings Opportunity
Randy, great catch! I see this all the time in Knoxville with TVA industrial customers. Property managers often don't understand the qualification requirements for industrial rates. Did MLGW require any special applications or load studies for the reclassification? TVA usually wants 12 months of billing history before approving industrial rates.
This is huge, Randy. In West Virginia, AEP has similar industrial rate schedules that many landlords miss. The key is proving consistent industrial load patterns. Did your client have any seasonal variations that might affect their qualification? Some utilities are picky about load factor requirements for industrial classification.
Roy, MLGW was actually pretty straightforward. They just needed 6 months of billing data showing consistent demand over 500 kW and a signed industrial rate application. No load study required. Wanda, the load factor was solid - this tenant runs 24/7 manufacturing so very consistent usage patterns. The seasonal variation is minimal, maybe 15% between summer and winter months.
Randy, what was the landlord's reaction when you presented the findings? In Pennsylvania, I've had property managers push back on rate reclassification requests because they're worried about losing the savings to lower lease rates. Did you structure this as a shared savings opportunity?
Donna raises a good point about landlord incentives. Here in Louisville with LG&E, I always recommend splitting the first year savings 50/50 between landlord and tenant to get buy-in. After that, full savings go to tenant through reduced pass-through charges. Has anyone tried different savings-sharing arrangements?
Donna, the landlord was actually very cooperative once they understood the savings potential. They get to keep 25% of the first year savings as a 'management fee' and the tenant gets immediate relief on their monthly charges. Pete, I like your 50/50 approach for year one. Creates the right incentives for landlords to be proactive about rate optimization.
This thread is gold! I'm working on a similar situation in Salem with Pacific Power. Manufacturing tenant has been on Schedule 38 (large general service) but probably qualifies for Schedule 48 (industrial). The demand charge difference is $3.12/kW. Randy, did you check if there were any retroactive billing adjustments available from MLGW?
Beatrice, MLGW doesn't allow retroactive rate changes but they did waive the application fee as a goodwill gesture. The new rate took effect the next billing cycle. Your Pacific Power situation sounds very similar - Schedule 48 industrial rates typically have much lower demand charges. Make sure to check their minimum billing requirements too.
For anyone pursuing industrial rate reclassifications, document everything about the tenant's operations. Utilities want to see consistent industrial processes, not just high usage. Manufacturing, processing, and similar operations usually qualify easily. Office buildings with high HVAC loads typically don't qualify even with high demand.
One more thing - check if the utility offers any economic development incentives for industrial customers. TVA has several programs that can provide additional savings beyond just rate reclassification. Might be worth exploring with MLGW as well.