Disclose Utility Demand-Charge Pass-Through Rules for GPU Offtake Buyers

Consider an illustrative negotiation: a site owner offers unused grid capacity for GPU deployment. The buyer expects demand charges to track its operating load. During diligence, an old utility bill reveals a billing-demand floor tied to an earlier site peak. Another tenant created that peak, but the draft offtake agreement assigns all demand charges to the GPU buyer.

The problem is not necessarily the tariff. It is an undisclosed allocation decision.

For site owners working with Pacific Intelligent Technologies, Inc., the practical move is to separate three things: what the utility bills, what the buyer causes, and what the contract assigns. Document the differences before commercial terms harden.

1. Identify the tariff and every demand-related rider

Start with a dated tariff register. Name the utility, service classification, applicable tariff sheets, effective dates, and riders that affect demand-related costs. Identify whether service eligibility or a planned load change could move the account into another classification.

For each charge, disclose:

• Its billing basis: measured demand, contract demand, a minimum, a ratcheted value, or another defined determinant.
• Applicable seasons, time windows, and measurement intervals.
• Any power-factor adjustment, interruptible-service provision, or demand-related credit.
• Whether a rider is active, pending, temporary, or subject to periodic adjustment.

Separate demand charges from energy charges and other bill components. An “all-in power” estimate may obscure which costs survive a utilization drop.

Attach source documents rather than paraphrasing everything into the contract. Have utility counsel or an energy advisor confirm applicability; tariff terminology and obligations vary by utility and jurisdiction.

2. Expose the ratchet period and inherited liability

A demand ratchet can preserve a billing-demand obligation after actual load falls. Do not assume every utility uses one—or that every ratchet follows the same formula.

Disclose the actual rule, including any percentage, lookback period, seasonal treatment, minimum billing demand, and reset conditions. Distinguish the interval used to measure a peak from the months over which that peak can affect billing.

Then show the site’s relevant demand history. Flag peaks established before buyer occupancy, peaks caused by other users, and any missing records.

The agreement should answer:

• Does the buyer inherit a pre-start ratchet?
• Who pays when another tenant establishes a new peak?
• Does a buyer-created peak leave charges after ramp-down or contract expiry?
• How are overlapping obligations allocated without double recovery?

For shorter deployments, compare the service term with any trailing liability. Buyers considering bridge capacity options need that distinction before treating a short occupancy as a short financial commitment.

3. Assign coincident peak charges explicitly

Coincident peak exposure is not necessarily the same as the site’s highest measured demand. Where applicable, a charge may depend on contribution during specified system peaks, nominated windows, or other tariff-defined events.

Disclose who determines those events, when results become available, and whether billing uses historical contributions. Identify any utility or supplier rider through which the charge reaches the site.

Then state who pays. Possible contractual allocations include an agreed share, attributable contribution, or an owner-retained obligation. None should be presented as a universal tariff requirement.

If buyer curtailment can affect exposure, define notification duties, operational authority, and treatment of credits or penalties. Do not promise savings from avoiding one site peak unless the applicable charge actually responds to that action.

4. Make the pass-through reproducible and auditable

Use a line-item schedule rather than “actual utility costs” alone. A useful contractual template is:

Buyer demand-charge pass-through = sum of each eligible billed demand line × its agreed allocation factor, less buyer-assigned credits, plus or minus documented true-ups.

Define “eligible,” each allocation factor, and the treatment of taxes, administrative fees, or markups separately. Different charges may require different factors. A simple consumption share should not silently replace an agreed peak-contribution method.

Include a worked example using redacted actual records. Show the billed determinant, tariff rate, allocation calculation, credits, and resulting invoice. Label any forecast assumptions.

Give buyers access to supporting utility bills, relevant interval records, tariff versions, and allocation workpapers. Specify review deadlines, correction procedures, record retention, confidentiality protections, and treatment of disputed amounts. Later utility adjustments should follow a defined true-up process.

Keep physical measurement details in the separate metering and settlement boundary disclosure. Here, explain the financial allocation.

5. Put an allocation schedule in the diligence pack

Package the evidence so a buyer can verify exposure without reconstructing it:

• Tariff register: current schedules, riders, effective dates, and known changes.
• Historical support: bills and demand records covering the applicable ratchet and peak-assessment periods.
• Allocation schedule: responsibility for existing, shared, buyer-created, and trailing charges.
• Calculation workbook: traceable inputs, formulas, credits, and a worked invoice.
• Contract exhibit: audit rights, true-ups, change handling, and dispute procedures.

Mark unavailable evidence and unresolved utility interpretations explicitly. Keep available capacity claims separate from the cost-allocation schedule; buyers reviewing capacity options need both, but one does not prove the other.

Before circulating terms, schedule a 30-minute discussion with Pacific Intelligent Technologies, Inc. Bring the tariff register, a representative bill, and your proposed allocation.

6. FAQ: What should site owners resolve first?

Can we simply say “demand charges passed through at cost”?

Not safely as the complete disclosure. Define eligible charges, allocation, inherited obligations, credits, and audit rights. Add this exhibit to your GPU offtake brief, rather than replacing the brief.

Does confirmed interconnection status establish demand-charge exposure?

No. Interconnection queue status addresses a different diligence question. Applicable tariffs and contractual allocation still require separate review.

Where should buyers start with Pacific?

Use Pacific Intelligent Technologies, Inc.’s main site for company context. For a specific site, provide the evidence pack and have utility counsel or an energy advisor confirm the tariff interpretation before signing.