A demand ratchet sets a floor under billed demand. Instead of billing only the highest demand recorded this month, the tariff bills the greater of that figure or a stated percentage of the highest demand recorded over a look-back period, typically the prior 11 or 12 months. The percentage varies by tariff and by season: 50%, 60%, 75% and 80% are all common, and some schedules apply the ratchet only to summer peaks. Because the ratchet is computed in the utility's billing system from stored history, it fails quietly. A peak can stay in the calculation after it has aged out of the window. The wrong percentage can be applied after a rate change. A one-time spike from equipment testing or a utility-caused outage restart can set the ratchet for a year. And when a meter is replaced, the old meter's peak is sometimes carried over at the wrong multiplier. Each of these produces billed demand above what the tariff allows.
How it happens
- The billing system keeps a peak in the ratchet calculation after it falls outside the 11 or 12 month window.
- A tariff revision changed the ratchet percentage or season, but the account still uses the old parameters.
- A startup spike after a utility outage, or a commissioning test, sets the ratchet when the tariff or a written agreement allows it to be excluded.
- A meter exchange carries the old peak forward at the wrong multiplier.
- The ratchet is applied to a schedule or a season the tariff does not ratchet.
How to detect it
- For each bill, recompute billed demand as the greater of metered demand and the tariff's percentage of the highest demand in the stated window.
- Confirm the window length and whether it counts the current month, the prior 11 months or the prior 12 months.
- Check whether the tariff ratchets all months or only summer months, and whether the percentage differs by season.
- Look for single-interval spikes in the interval data that coincide with outages or meter work.
Evidence the utility will accept
- Bills for the full look-back period showing metered and billed demand
- The tariff sheet containing the ratchet provision for the billing period
- 15-minute interval data around the peak that set the ratchet
- Utility outage notices or meter exchange records, where the peak followed one
Recovering the overcharge
We file a dispute with a month-by-month recomputation of billed demand, cite the ratchet provision, and request rebilling of every affected month inside the back-billing window. Because a ratchet error persists until the bad peak ages out, a single mistake usually spans 6 to 12 bills. Utilities generally accept these claims once the calculation is shown against their own stored demand history.