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Manage Your Peak Demand: Capacity Charges

Understanding Capacity Charges Will Give You Better Control and Save You Money Understanding Capacity Charges “Capacity charge” is a line

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Understanding Capacity Charges Will Give You Better Control and Save You Money

Understanding Capacity Charges

“Capacity charge” is a line item in your electric bill made up of two factors:
 
1) Your average peak energy usage and
2) The capacity rate
 
Next to energy itself, capacity rate is the second largest expense in your bill. 

How to lower your capacity charges?

Capacity rates are non-negotiable and are decided in advance. For example PJM, a company that transmits energy to 13 states, decides it’s capacity rates three years prior to them taking effect.
 
You can however reduce your peak energy usage through Energy Efficiency solutions.

What is peak energy usage?

Officially called “PLC” – Peak Load Contribution – your peak energy usage may show up on your bill under various labels, such as “billed load KW” or “demand charge”. 
 
Your utility company measures your kilowatt usage on the five highest demand days of each year and then provides that average, known as PCL. Energy suppliers use your PCL from the prior year to calculate your monthly capacity costs/obligations based on their preset capacity rate.

Reducing your Capacity Charges Demand Response Management

To reduce your PLC, you need to reduce energy consumption on the five days of the year when you suspect peak electricity demand will occur.

Lets simplify things

Many energy consumers can enroll in Demand Response programs or initiate Demand Response solutions that help reduce peak energy usage by distributing energy loads, ensuring they do not spike at specific times, and alerting you ahead of time as to when those five peak days of the year might be, allowing energy consumers to better manage their energy on those five days. 
 
Some consumers qualify to receive payments for voluntarily reducing consumption when notified. 
 
Demand Response Management solutions have saved commercial energy consumers thousands of dollars on their monthly electricity bills, giving them better control on their energy budgets.
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Shave 10% Off Your Energy Bill

According to a recent report from the American Council for an Energy Efficient Economy demand-response programs can reduce utilities’ peak usage an average of 10 percent, complementing savings from energy efficiency programs. 

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