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IMA Energy & Environment Blog

A Second Look At Energy Curtailment

By Constellation, the IMA’s energy partner …

Load Response has been around for a long time, and can be structured in various ways that can turn energy curtailment into a great opportunity for your overall energy costs and usage. However, it can feel constricting having to keep up with curtailment events. You don’t want to be obligated to turn-off your machinery on a high production day or when you’re trying to bring customers into your store.

But have you had it happen the other way? When you saw your capacity charges for the year, cringed and thought, “Maybe I could have curtailed, and possibly been able to bump that number down a bit!”

Give yourself the option without the obligation, and take control of your energy supply with Constellation’s Peak Response program.

Understand your Capacity Charges

Capacity charges ensure that there is an adequate excess supply of electricity to meet the highest levels of grid demand. In most regions, these charges are based on several hours each year when the grid hits its highest levels of demand. The Capacity Charges for your individual facilities is based on your consumption during the grid’s peak hours. This usage establishes your capacity charge the following year, and your average consumption during these hours is known as your peak load contribution (PLC).

Receive Notifications

When you elect to participate in Peak Response, we let you know when possible peak grid hours may occur. Constellation leverages the company’s wholesale market expertise and aims to predict these peak grid hours. We then send day-ahead and day-of notifications, alerting you to the anticipated peak. This allows you to choose if you would like to curtail load or not. There is no obligation; it is completely voluntary.

Curtail If You Want To …

We will send you the notifications, and it’s your choice whether you curtail load through turning down the air conditioning or turning off lights or machinery. Electing to participate in the program makes the option available, giving you more control over how you manage your long-term energy costs. If you do not respond during an event, there is no penalty and you merely forego the savings opportunity.

… And See Future Capacity Costs Start to Drop

If you choose to actively curtail load at the designated notification times, capacity costs could drop in subsequent years. Savings are realized the following year when regional grid operators and utilities determine the customer’s share of capacity charges based on historical consumption during peak grid hours. There are two ways to realize the benefits from the Peak Response Program and they depend on how you’ve decided to treat Capacity Costs in your underlying Power agreement.

If you have included the Capacity Costs in your contract price, you could see a benefit through a one-time credit (or Capacity adjustment) on your invoice. If you have passed through the Capacity Costs, you could be charged less next year.

Capacity charges can account for 20-30 percent of a business’s power bill. What are you doing to change it?

Source: Constellation’s Energy4Business blog

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