Hi everyone, I'm working on a ConEd account in Manhattan and struggling with their demand charge ratchet provision. The customer is on Rate Schedule SC-9 and their demand charges seem to be stuck at 450 kW even though actual demand dropped to 320 kW last month. The tariff language about "75% of highest demand in preceding 11 months" is confusing me. Has anyone dealt with ConEd's ratchet provisions before? Any help would be appreciated!
ConEd NYC Demand Charge Ratchet - Need Help Understanding
Welcome to the forum! ConEd's ratchet can be tricky. The way it works is they take the higher of: (1) actual demand for the month, or (2) 75% of the highest demand in the previous 11 months. So if your highest demand was 600 kW in any of the past 11 months, the ratchet would be 450 kW (600 × 0.75). That's why you're seeing 450 kW billed even though actual was only 320 kW.
Jan is absolutely correct on the ratchet calculation. ConEd uses this to ensure revenue stability since demand charges cover their distribution infrastructure costs. The good news is the ratchet resets every 12 months, so older high-demand months will eventually drop off. I'd recommend plotting out the demand history month by month to show your client when they can expect relief. Also check if they qualify for any demand management programs that might help reduce future peaks. Welcome to AAUBA!