Take Control of Your Capacity Charges and Save Thousands

PJM, the local grid operator, must ensure that adequate capacity is available to meet the system peak demand. PJM passes the costs associated with building and maintaining generation capacity off to local utilities and retail suppliers. Those costs are then passed on to you as either “capacity charges,” or “PLC charges”. What’s more, capacity charges are not always itemized; if they are embedded in your bill they can become particularly difficult to manage.

Capacity charges are not based on the amount of energy you use during a given month. Instead, capacity charges are determined by the five highest one-hour system coincident peaks (5CP) on the electric grid. Your average demand during the 5CP comprises your “capacity tag” or Peak Load Contribution (PLC). The system peak hours occur during the hottest weekdays of the summer between June and September.

 

The grid operator determines the PLC hours after September 30th of each year, and the utility passes on the associated capacity tag to you during the following year.

You stand to significantly reduce your capacity charges for a full 12 months if you accurately anticipate system peaks and reduce your load when the grid needs it most. Organizations that reduce their demand by 1MW could save on average $22k annually.

Enel X has extensive experience creating energy reduction strategies that work within the operational limits of a wide variety of facilities, including cold storage, manufacturers, food processors, universities, malls, office building and more. Common reduction examples include:

 

• Reduce non-essential lighting
• Modify manufacturing processes
• Adjust HVAC equipment
• Dial back pumps
• Change settings in industrial freezers

 

Ask about our experience working with customers like you.

Our market analysts assess the probability of a system peak every day. If the probability is high, we notify you. The more you can reduce energy usage during peak periods, the lower your PLC charges will be in the following PJM Planning Year (June 1 – May 31).

 

1. 1. Monitor: Combining our proprietary predictive analytics (based on the more than 1 billion points of energy data we collect each month) with externally-sourced weather and market data, we continually monitor the market to assess the likelihood of a system peak.
   
   
2. 2. Notify: During high seasons, we email you by 10:00 a.m. daily, advising you on the probability of a system peak occurring that day. Your color-coded notification will also include an outlook to help you and your staff plan for the week ahead.
   
   
3. 3. Respond: On high-probability days, existing Enel X demand response customers simply implement their energy reduction plans when notified. If you’re not an Enel X customer—no problem. Our team of experts will design an energy reduction plan that works for your site. On low probability days, no action is necessary.

In general, customers that try to strategically lower their demand during annual system peaks in PJM will sacrifice demand response revenue the following year as their baselines will most likely be reduced. Determining which strategy (capacity management, demand response, or some combination) is best for your business requires a thoughtful consideration of operational flexibility, savings/earnings opportunity, and DR program rules. Enel X advisors are here to help with that.

We start by performing a tariff analysis to assess your eligibility and determine your potential capacity cost avoidance for the next year. Customers with passed through capacity contracts are the best equipped to benefit from Enel X’s System Peak Predictor, but even some fixed-price shoppers can benefit by managing their peak demands.