Electricity cost is primarily based on two charges: the energy charge and the capacity charge. The energy charge is based on the number of kilowatt-hours consumed. The capacity charge is based on the actual electricity usage at the single peak hour of electricity demand on the entire New England grid in the calendar year.
Since energy usage peaks in the afternoons of the hottest days, FEL has advised smart consumers to curtail consumption between the hours of 1 and 5 Thursday afternoon. Says Howard M. Plante, Vice President of Marketing, “The capacity fee can be a substantial part of the electricity bill, therefore, any amount of electricity use reduction will help reduce your capacity fee. In 10 out of the past 11 years the peak has been at 3 p.m. If 1 to 5 is too long a curtailment period, the critical period to try and curtail would be 2-4 p.m.
“Last year’s peak was on July 22 with a demand of 27,312 MW. The peak demand forecasted by ISO-NE for Thursday is 26,620 MW. In 5 of the past 11 years, the annual peak demand was less than this Thursday’s forecast. Therefore, we believe that Thursday stands a very good chance of being the peak for the year.”
There is no definitive method to predict the peak capacity hour in New England for the year, so FEL has pledged to its customers to issue similar advisories when data indicates a particular day could be the peak. Data considered includes grid demand, weather forecasts and historical statistics.