4CP Warning and What to Do About It

4CP Warning and What to Do About It

Today is forecasted to be a potential 4CP event for the month of June, and the first 4CP event of this 2012 Summer. The peak will occur between 4 and 5:00. Various 10 day weather forecasts and views show today as hottest, with ERCOT currently forecasting today’s total peak on their website at 62,916 (revised upward from 62,700 this morning). Other forecasting services are calling for 62,961 and 63,400 and as the day progresses we will provide an update.

Why is this relevant? It is important to understand how business electricity rates are affected and how you can take steps to mitigate impact. For a primer/reminder on the function and value of the 4CP Avoidance Strategy, please see below:

Customers with IDR meters can lower or reduce the annual costs contained within their regulated TDSP charges by reducing their power usage when the grid is at its peak demand levels during the Summer months. The strategy is known as 4CP. 4CP stands for Four Coincident Peak, or, the average coincident peak demand reading set by a Customer’s electric load over a four-month period (June, July, August and September) when the ERCOT system monthly peak took place.

June, July, August and September are the peak generating months in Texas. The ERCOT system peak (the single point in time when the most generating capacity is needed) is set sometime during this four-month period. Each month will set a monthly demand peak. If a Customer’s end use load is running at the same time that ERCOT sets its monthly demand peak, then you have contributed to the monthly coincident peak. For every One Megawatt (1 MW) that a Customer can curtail during each of the 4CP events this Summer, they will realize approximately $25,000 annually in savings on their TDSP costs.

The combined Transmission Charge and the TCRF for the four largest TDSPs are:

• Oncor: $2.37 per 4CP
• CenterPoint Energy: $2.09 per 4CP
• AEP Texas Central (CPL): $2.17 per 4CP
• AEP Texas North (WTU): $2.45 per 4CP

If a large Customer were to reduce their electric load by 1 MW for each 4CP event, they would be able to save the following annual amounts during next year’s total month billings:

• Oncor: 1 MW x $2.37/4CP KW x 12 months = $28,440
• CenterPoint Energy: 1 MW x $2.09/4CP KW x 12 months = $25,080
• AEP Texas Central (CPL): 1 MW x $2.17/4CP KW x 12 months = $26,040
• AEP Texas North (WTU): 1 MW x $2.45/4CP KW x 12 months = $29,400

The 4CP reading being used now and for all billings for 2012 was set during the summer months of 2011. 4CP Actions taken this Summer will impact all 2013 TDSP billings. For questions about your business electricity rate and how it may be impacted we recommend you speak to your energy broker.


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