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Factors outside of our control – such as weather, the economy or market conditions – impact energy price. However, customers can influence their power price through various tactics like using less energy during peak hours to lower capacity and transmission costs and implementing energy-efficient measures into their business. By taking advantage of the controllable factors, customers can be on their way to reducing their bill and increasing their bottom line.
For starters, ask your supplier about certain items in your bill. Your total energy contract price is made up of many components, some that can be actively managed and some that are locked. If you’re able to decide how and when to run operations, you may see a benefit of reduced energy price by choosing an adjustable contract. This type of contract can provide a customer with more flexibility based on their risk tolerance and budget requirements. It may not always be a customer’s best bet to fix all components of their power price.
Inquire About Capacity and Transmission Charges
Capacity and transmission are two price components that are often incorporated into your total energy bill. There are components of capacity and transmission charges that you may be able to manage, depending on your contract.
Capacity ensures that an electric supplier has enough generation capacity available to cover the total demand obligations of their customers at times when the grid is at its peak demand, whereas transmission represents the cost to secure the flow of electricity over high voltage wires from power plants to local distribution lines.
Components of capacity charges that can be adjusted include Peak Load Contribution (PLC) and capacity rates:
- Peak Load Contribution (PLC), also known as capacity tag or capacity obligation, is generally based upon your account’s energy usage during your region’s highest demand hours (during the summer season) during the previous year.
- Customers who opt for an adjustable contract with respect to capacity costs can lower their PLC charge during their term through reduced energy usage during those peak hours (See recommendations on how to do so below).
- Contingent on your contract, the capacity rate might also adjust with the PLC; this is often the case for those who pursue the pass-through option.*
Components of transmission charges that can be adjusted include Network Service Peak Load (NSPL) and transmission rates:
- Network Service Peak Load (NSPL), also known as transmission tag or transmission obligation, is calculated similarly to Peak Load Contribution, however, in determining the NSPL, the highest demand hour(s) can occur in the winter or the summer season, and can be decided upon by the local distribution utility.
- Customers who opt for an adjustable contract with respect to transmission costs can lower their NSPL during their term through reduced energy usage during certain peak hours (See recommendations on how to do so below).
- Contingent on your contract, the transmission rate may also adjust as the NSPL charge adjusts, depending upon transmission tariff rates that can adjust during the contract term. This is often the case for those with a price adjust transmission or a pass-through transmission option.*
*Keep in mind that not all suppliers credit the customer when their transmission or capacity charges drop. If you have an adjustable contract, find out if your business will see a reduction in capacity and/or in transmission charges after lowering your PLC and NSPL tags, respectively.
Because your energy demand and consumption dictate your energy price, consider the following steps to reduce your energy spend and consequently the adjustable components of transmission and capacity charges mentioned above.
Monitor Your Energy Usage Pattern
- Consider shifting your load (i.e., your energy usage) to off-peak hours, reducing your capacity and transmission costs. If possible, adjust production schedules to take advantage of off-peak pricing.
- Sign up for Constellation’s Peak Response program. It is a free, voluntary, no-penalty program that leverages our wholesale expertise to help customers reduce demand during system peaks. Customers are notified of peak demand times and energy-saving tips, such as turning up the air conditioning a couple degrees during peak hours.
Implement Energy Efficiency Measures
- Replace your older light fixtures with efficient lights. In 2017, Liberty National Golf Club upgraded its facilities with the installation of an LED lighting system, reducing energy consumption by 50% and saving an estimated $135,000 a year.
- Install a Building Automation System that allows control of lighting, based on occupancy, time of day, space usage and other adjustable criteria.
- Find out if your supplier offers any special programs or incentives for energy efficiency projects. Some may offer special financing options (like Constellation’s Efficiency Made Easy® solution) or have suggested preferred vendors to work with to put you on your best path towards a successful project.
In summary, both educating yourself on the actions you can take to reduce your power price and working with an energy expert who can help you manage costs with targeted precision can ultimately reduce your business’s energy spend.
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