Memorial Day is coming up soon, which means that the official kick-off to summer is almost here. The beginning of summer is also when many regional power grids start to measure a business’ Coincidental Peak demand. The Coincidental Peak (CP) is the value of an electricity meter’s peak demand (in kW) when the regional power grid’s demand is at a maximum. This value is used to determine that meter's share of the entire grid’s electricity demand and is used to set certain supply and delivery charges. The specific methodologies of how those costs are determined varies across states and utilities but the overall concept is the same. Utilities in ERCOT and PJM will use CP values, beginning in June, to establish electricity cost components that will go into effect next year. These measurements in the NYISO start in July. Details for each regional power grid are below.
ERCOT’s 4CP Program
The 4CP program in Texas uses the peak demand in each of the four summer months to determine important parts of next year’s electricity bill. Specifically, a facility’s demand (in kW) during the four highest 15-minute intervals on ERCOT’s grid in June, July, August and September is measured by each utility to set the coincident peaks. The four monthly, 15-minute values during these intervals are averaged together to determine the 4CP demand value used by TDSPs during the next calendar year for all transmission charges.
PJM’s 5CP Program
PJM applies a similar methodology to determine each electricity meter’s CP value but takes the five highest hours from the five highest peak days during the months of June, July August and September. Unlike ERCOT, those five hours of the summer are not limited to a single day in each month. In PJM, it is possible that multiple peak days and hours could be set during a single five-day heatwave. During the summer of 2022, the 5CP hours in PJM were set during three consecutive days in July and two days in August. The average of those five hourly demand values on those five highest days determine a meter’s Peak Load Contribution (PLC) or Capacity Obligation for the following planning year. PLC values set this summer will be used to determine a meter’s PLC/Capacity Obligation for PJM’s planning year from June 2025 to May 2026.
NYISO
Unlike ERCOT and PJM, the NYISO uses the single highest hour of demand on the grid in the months of July and August to determine a meter’s capacity obligation or installed capacity (ICAP) tag. That hour can occur on any day in either month that is not a weekend or a holiday. A meter’s ICAP tag is determined by measuring its demand value during that hour of peak demand on the grid. The ICAP value from this summer will determine your capacity obligation beginning in May 2025.
What can your business do to decrease demand on peak demand days?
While no one can perfectly predict when each grid will peak, 5’s analysts use grid and weather data to forecast potential peak demand days. 5 will send out a weekly outlook, similar to a 7-day weather forecast, that alerts clients to the days that have a high potential to be a high electricity demand day along with daily notifications on higher probability days. When an alert is issued, consider taking some of the following actions in the afternoons to reduce electric load:
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Pre-cool buildings in the early afternoon and adjust the thermostat up through the projected peak demand period
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Reduce fan speeds on air handlers
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Dim or completely turn off lights
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Turn off pumps, air compressors or other high-demand equipment, if possible
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Consider adjusting operational hours or scheduling downtime in the afternoons
With high energy prices as high as they are, any steps taken to curtail electricity during this summer’s CP intervals will help to lower your business’ electricity costs throughout 2025.
