Beth from Jacksonville. Six months in and still getting comfortable with demand charge analysis. What specific errors or opportunities do you look for when reviewing the demand portion of a commercial bill?
Demand charges 101 — what should I be looking for?
Walt from Pittsburgh. First thing I look for is whether the billing demand matches the metered demand. Utilities occasionally bill a higher number than what the meter recorded. Simple arithmetic error but I have found it more than once.
Derek from Charlotte. Second is the ratchet calculation. Pull 12 months of demand readings and verify that the billed demand in each month is either the actual peak or the ratchet floor, whichever is higher. Then verify the ratchet percentage matches the tariff exactly.
Terry from Knoxville. Power factor is another. If the client has low power factor the utility may be billing a higher effective demand than the real peak. Some tariffs apply a power factor correction multiplier that significantly inflates demand charges.
Mike D. Also check meter multipliers. Commercial accounts sometimes have current transformers that scale the meter reading by a multiplier. If that multiplier is wrong every demand reading for the life of the account is wrong by the same factor.
This is useful. I had been focused mostly on the energy charge side. Sounds like demand is where a lot of the money is.