Just finished auditing a bunch of E-19 customers for PG&E and the 2025 rate increases are brutal. The summer peak demand charge jumped from $17.12/kW to $22.85/kW and they're expanding the peak window from 12-6pm to 2-9pm. Worse yet, they're adding a new "wildfire mitigation charge" that's $0.03/kWh on all usage during peak hours. I've got one manufacturing client in Sacramento whose monthly bills are going to increase by $35,000 just from these changes. The scary part is most customers don't even know this is coming because PG&E buried it in their bankruptcy settlement paperwork.
PG&E rate shock in Sacramento - Schedule E-19 customers getting hammered
Jennifer, we're seeing the same sticker shock down here in Phoenix with APS. Their Schedule E-32 large general service rate went through similar changes - peak demand charges up 40% and they added a "resource adequacy charge" during summer months. The good news is there are some serious opportunities for load shifting and demand response. APS is offering $50/kW for customers who can curtail during emergency events, and they'll pay $25/kW just for being on standby. I've got several data centers signing up for these programs to offset the higher base rates.
Sarah makes a good point about the demand response opportunities. PSE up here in Seattle is launching a new "FlexAlert" program in 2025 that pays commercial customers $75/kW for 4-hour curtailments during peak events. The trick is they're basing payments on your average usage during the same hours over the previous 10 business days, so you need to be strategic about establishing your baseline. I've been working with clients to artificially inflate their usage during non-event days to maximize the curtailment payments. Perfectly legal and very profitable.
David, that baseline manipulation strategy is brilliant. We're doing something similar with SCE customers here in Glendale. Their Critical Peak Pricing events pay $1.50/kWh for load reductions, but the baseline is your average usage during the same hours over the previous 10 non-holiday weekdays. I've got one cold storage facility that runs extra compressors during baseline periods specifically to increase their curtailment potential. They made $28,000 in demand response payments last summer while actually reducing their overall energy costs. Sometimes you have to spend money to make money.
Great strategies everyone. What I'm seeing is utilities are raising base rates so high that demand response and energy efficiency programs become financially attractive for the first time. MLGW just announced they're doubling their commercial efficiency rebates for 2025 - $0.15/kWh saved for the first year, $0.08/kWh for years 2-3. Combined with the federal tax credits and state incentives, some customers can achieve 2-year paybacks on LED retrofits and HVAC upgrades. The rate increases are painful but they're creating arbitrage opportunities if you know how to work the system.
Randy's absolutely right about the efficiency programs. TVA just increased their rebates across the board for 2025. They're now paying $200/kW for peak demand reductions through equipment upgrades, plus $0.10/kWh for the first 100,000 kWh saved annually. I just helped a hotel in Knoxville upgrade their chiller system - between the utility rebates, federal tax credits, and avoided costs from the rate increases, they're looking at an 18-month payback. The math has completely changed with these new rates.
Dale brings up a good point about the federal tax credits stacking with utility programs. The new 30% ITC for energy storage is huge when combined with these rate increases. LG&E customers can now justify battery systems just for peak shaving - the demand charge savings alone provide 4-5 year paybacks, and the federal credit makes it cash flow positive from day one. I've got five commercial customers installing batteries in Q1 2025 specifically to avoid Louisville's new $18.50/kW demand charges.
Ray, what size batteries are you recommending for peak shaving? Dominion's new demand charges here in Richmond are $16.20/kW, so the economics are getting close. I'm looking at a 500kW/2MWh system for a manufacturing client who peaks at 800kW for about 3 hours daily. The battery could cut their peak demand by 300-400kW, saving $60,000+ annually just on demand charges. Add in the arbitrage opportunities buying power at $0.08/kWh at night and selling back at $0.35/kWh during peaks, and the numbers get very interesting.
Pam, for peak shaving applications I typically size batteries at 50-60% of the customer's peak demand with 4 hours of storage. Your 500kW/2MWh system sounds about right for an 800kW peak load. The key is having enough energy storage to cover the entire peak window without depleting the battery. Here in Pennsylvania, PPL's peak window is 2-6pm, so I need 4 hours minimum. Met-Ed customers only have a 1-3pm peak window, so 2 hours of storage is sufficient. The sizing really depends on your utility's specific peak hours and demand charge structure.
Sylvia's sizing methodology is spot on. I'm seeing similar battery installations up here in Washington. Avista's peak window is 6-10am and 5-9pm in winter, 1-7pm in summer, so customers need different discharge strategies by season. The smart battery systems can be programmed to automatically adjust based on the utility's peak windows and real-time pricing signals. One sawmill I'm working with will save $85,000 annually just from peak shaving, plus another $40,000 from energy arbitrage. The technology has finally reached the point where it pays for itself.
Larry, what brand/model batteries are you seeing the best performance from? I'm specifying Tesla Megapacks for most commercial applications but wondering if there are better options for peak shaving specifically. The Tesla units are great for grid services and arbitrage, but I'm not sure they're optimized for the daily cycling that peak shaving requires. SCE has some pretty aggressive demand charges now - $19.50/kW in summer - so battery performance and longevity are critical to maintaining the economics over a 10-year payback period.