Understanding Demand Ratchets in ETB
What is a Demand Ratchet?
A demand ratchet is a crucial component of certain rate schedules that affects how customers are charged for their demand. Demand Ratchets are defined by the utility to determine the customer's Billed Demand (see definition below). Typically, ratchets are defined based on the greater of 1) a percentage of the customer's max demand usage in the past 12 months or the max usage in specified season(s) or month(s) 20 Or the current billing periods max demand.
Lets look at the demand ratchet definition below:
The Non-Coincident Demand Charge shall be based on the higher of the Maximum Monthly Demand or 50% of the Maximum Annual Demand.
This means, if your customers annual max is 200 kW, the utility will take 50% of that max (100 kW) and compare it to the current months max usage and charge the customer based the higher usage .
Using the example above, Lets say the max demand in the month of May is 80 kW, but in the month of June it’s 105 kW.
This means, in May, the customer will be charged for 100kW (50% of the max annual demand) and in June they will be charged 105 kW (the max monthly demand).
Differentiating Billed Demand from Measured Demand:
- Billed Demand: the amount of demand, measured in kilowatts (kW), that the utility charges the customer for in each billing period. The billed demand takes into consideration any Demand Ratchet the utility has defined.
- Measured Demand: the highest kW interval recorded during a billing period.
Year One Demand Savings
It's important to be aware that with rate schedule that includes a demand ratchet, customers may not experience immediate demand savings in year one. To consider a conservative approach in your analysis, you can either:
Remove demand savings from year one.
Utilize our demand throttle inside of ETB Analytics to reduce your demand by a chosen percentage.
Learn more about our demand throttle here.
How does ETB know my customers billed demand?
Our utility rates account for a variety of demand ratchets, but we also rely on the usage data that you provide when creating your Energy Use Profile in ETB Developer. This typically includes monthly bills and interval data. If your customers rate schedule has a demand ratchet, and the max value the utility uses to obtain the billed demand falls outside of the twelve months of data we have access to; please note that we will calculate the billed demand using the highest demand measurement that occurred in the dataset available to us.
Understanding Your Rate's Impact on Demand Savings:
It's crucial for users to fully comprehend the demand ratchet associated with their specific rate plan. Understanding how the demand ratchet functions and its potential impact on demand savings will help you make informed decisions in your analysis.