Peak Demand Charge Planner
Calculate real demand-charge savings from load-shifting, accounting for the utility ratchet clause, not the full shifted kW a naive estimate would credit.
Ratchet clause
Continue Analysis
Based on your results, these related decisions are available.
Resources
How this works
Many utilities bill demand charges on a ratchet clause, the greater of the current month's peak or a percentage of the highest peak in the trailing 11 months. Load-shifting only saves money if it lowers the metered peak below that ratchet floor.
Key terms
- Ratchet floor: the trailing-11-month high times the ratchet percentage, the minimum billable demand regardless of the current month's actual peak.
- Billable demand: the greater of the metered peak or the ratchet floor.
Assumptions
- One flat ratchet percentage, no time-of-use demand tiers
Limitations
- One billing account and rate schedule, not a multi-schedule comparison
Sources
Standard utility demand-charge / ratchet-clause billing practice.
Worked example
A naive estimate credits the full 150 kW shifted against the $15/kW rate across 12 months, $27,000/year. The ratchet floor (80% of the 600 kW trailing high = 480 kW) still binds after shifting the peak down to 350 kW, so real savings are only $3,600/year.
Common use cases
- Deciding whether a load-shifting or battery-storage investment pays off
- Checking whether a ratchet clause caps real demand-charge savings
- Estimating real annual demand-charge exposure for budgeting