Interesting situation in Louisville. Client owns two nearly identical warehouse buildings ? same square footage, same HVAC, same lighting, similar occupancy. Building A is served by LG&E. Building B is served by KU (Kentucky Utilities). Both are Duke Energy subsidiaries. Building A demand charge: $11.20 per kW on Rate TTP. Building B demand charge: $9.85 per kW on Rate GS. Same parent company, neighboring service territories, 20% difference in demand charge rates.
Demand charge comparison ? same building different utilities
Diane ? LG&E and KU maintain separate tariffs despite both being owned by PPL Corporation (which acquired them from Duke). The tariffs were set in separate rate cases before different hearing examiners. The rate difference reflects different cost structures in each service territory. Its legitimate but frustrating for clients who see the disparity.
Kevin ? I know the rate difference is legitimate. My point is that auditing only one building without comparing to the other would miss the question of whether either building is on its optimal tariff. Building A on LG&E might benefit from a different LG&E rate schedule. Building B on KU might benefit from a different KU schedule. The sister building serves as a benchmark for what the demand charges COULD be.
Diane raises an important analytical approach. I use cross-utility benchmarking whenever a client has multiple locations. Even if you cant change which utility serves a building, seeing that a similar building in a different territory pays less per kW helps identify whether the higher-cost building is on the optimal rate within its own utilitys offerings.
Good discussion. The cross-utility comparison has become a standard part of my multi-location client audits. I build a normalized cost comparison ? demand charge per kW, energy charge per kWh, total cost per square foot ? across all locations. It immediately highlights which locations are outliers and where the audit should focus first. The highest-cost-per-square-foot location usually has the most audit opportunity.
In Iowa, clients along the MidAmerican/Alliant border see similar rate disparities. MidAmerican demand rates run 15-20% lower than Alliant for comparable service. Clients with locations in both territories always ask why. The answer is that each utilitys rate case is independent and reflects that specific utilitys costs, investments, and regulatory outcomes. But the comparison motivates clients in the higher-cost territory to be more aggressive about demand management.