Demand charge and ratchet errors
A demand charge error is an incorrect billed peak demand, in kW, caused by a misread or stuck meter, a wrong multiplier, a misapplied tariff or a miscalculated ratchet. Because demand can be a large share of a commercial electric bill, small errors compound quickly.
Warning signs
- The same demand value month after month. Real demand moves.
- Billed demand above the maximum the rate schedule allows.
- Billed demand far above what interval data shows.
- A ratchet floor still applied after the look-back window has passed.
A real example
At an agribusiness facility in Clayton, North Carolina, the demand reading stuck at one value for months, then stuck at a second value that exceeded the rate schedule's maximum. Duke Energy confirmed the error and refunded $97,843.45.
How ratchets inflate bills
With an 80% ratchet, a one-time 600 kW peak sets a 480 kW billing floor. At $15 per kW, a site that returns to 450 kW still pays for 480, an extra $450 a month. Check that the ratchet percentage, window and starting peak on your bill match the tariff.
Questions buyers ask
What causes incorrect demand charges?
Meter misreads, incorrect meter multipliers, a misapplied tariff, or a billing system that calculates peak demand or the ratchet incorrectly. Peak demand is commonly measured over a short interval, often 15 minutes.
What is a demand ratchet?
A tariff rule that sets a minimum billed demand based on a past peak, for example 80% of the highest demand in the previous 11 months. A single spike can raise bills for most of a year.
Find out what your bills should have cost.
Send one recent bill per site, or a list of accounts. We tell you where we expect findings before you sign anything. No upfront audit fee.