I'm dealing with a 50,000 sq ft office building in Buckhead where the landlord is passing through Georgia Power charges under Schedule PL-1. The lease says "actual utility costs" but they're including demand ratchet charges from summer 2010 that I think should be allocated differently. Tenant is getting hit with $847/month extra because of this interpretation. Has anyone dealt with similar language in Georgia Power territory? The tariff is pretty clear that ratchet billing is tied to the highest 15-minute interval, but landlord claims it's a legitimate operational cost.
Georgia Power pass-through clause interpretation nightmare
Rachel, I've seen this exact scenario with Georgia Power PL-1 schedules. The ratchet provision is legitimate BUT it should be allocated based on each tenant's proportional contribution to that peak demand period. If your client wasn's even occupying space during that summer 2010 peak, they shouldn't bear any of that ratchet cost. I'd request the 15-minute interval data from Georgia Power directly - landlord has to provide it under Georgia PSC rules.
Same issue down here in Savannah with a Georgia Power Schedule PL-2 account. Landlord was passing through ratchet charges from a peak that occurred during construction before tenant even moved in. We saved the client $1,200/month by getting that allocation corrected. The key is proving occupancy timeline versus when those demand peaks actually occurred.
Derek and Lee - thanks for the input. I pulled the interval data and you're absolutely right. The August 2010 peak of 847 kW happened during tenant buildout when only construction lighting was running. Current tenant didn't take occupancy until November 2010. This is going to be an easy $10,000+ recovery just on the ratchet allocation error alone.
Rachel, make sure you also check if Georgia Power applied any power factor penalties during those construction months. I had a similar case in Atlanta where construction equipment was creating terrible power factor and the landlord was passing through those penalty charges to tenants who had nothing to do with it. Recovered $3,400 on that issue alone.
This thread is gold. I'm seeing similar problems with FirstEnergy commercial accounts here in Ohio. Construction-period costs getting passed through to operational tenants is becoming a real pattern. Always worth checking the timeline between lease commencement and when those peak charges actually occurred.
Update: Presented our findings to the landlord's property manager yesterday. They agreed to adjust the pass-through calculation retroactive to lease commencement. Client is getting a $12,847 credit and corrected billing going forward. Sometimes having the actual data makes all the difference.
Great outcome Rachel! This is exactly why we need to dig into the interval data on these commercial pass-through audits. The devil is always in the details of when those peaks actually occurred versus tenant occupancy periods.