Working on a rate analysis for a Memphis manufacturer currently on MLGW's GSM rate (secondary service). Load averages 1.8MW with pretty steady 0.94 power factor. MLGW is offering their GPM primary rate with 7% demand discount and 4% energy discount if they install customer-owned transformers. Problem is the math shows break-even at over 4 years due to transformer costs ($240k) and higher facility charges. Are these voltage discounts getting less attractive as transformer prices have increased?
Member Community
Enter your email to read this discussion
You're reading the AAUBA Member Forum — where Certified Utility Bill Auditors share case studies, tariff strategies, and industry insights.
Free to read. Enter your email to continue.
No spam. We'll send you one welcome email about CUBA certification. Unsubscribe any time.
MLGW Secondary vs Primary Rates - Math Not Adding Up
Bobby - transformer costs have definitely inflated faster than voltage discounts have improved. Back in 2015 that same equipment might have been $160k. Plus you've got the power factor issue - MLGW's GPM rate has stricter PF requirements than GSM. Below 0.95 PF reduces your voltage discount significantly. Factor in capacitor bank costs too.
Randy - good point about PF requirements. Capacitor bank would add another $35k to get them to 0.98. At that point we're looking at $275k total capital for maybe $45k annual savings. The client is better off staying on secondary service unless MLGW improves the discount structure or transformer costs come down.
Update - talked to MLGW about their discount methodology and learned something interesting. They're considering a tiered voltage discount based on load size. Customers over 2MW might get 10% discounts starting next year. That would change the economics significantly for this client.