When you look at your energy bill, you may see several factors contributing to your due amount. After generation costs, the second highest expense on your bill is a capacity fee. A capacity charge is an amount you must pay to ensure the grid operator can meet your energy demands during a peak energy usage hour, even if you rarely use the largest expected amount.
At Freedom Energy, we help our clients save money through a proactive approach to capacity fees for electricity. We encourage you to contact an energy expert today to learn more.
How Capacity Management Works
Effective capacity management begins with understanding how an annual system peak works. This peak is a single hour each year that requires the highest demand for electricity in a specific area.
Every electricity account also has a capacity tag or “cap tag” associated with the account. The local electricity distribution utility will assign the cap tag to the account based on how much electricity your account demands during the annual system peak. After a utility sets a cap tag, it becomes effective in June of the following year and remains valid for 12 months.
Reduce Energy Costs With Capacity Management
The Freedom Energy team has years of experience advising clients on their annual system peaks and helping them manage capacity assessment charges. We monitor and evaluate all daily influencing factors, such as grid demand and weather forecasts, to predict when a peak hour is most likely to occur. We typically send notifications to clients two days before a potential peak, which allows them to save money on their electric bill through:
- Capacity avoidance: Reducing usage during peak events can lower capacity costs.
- Load shaping: Load shaping can smooth out usage patterns and ensures better pricing from suppliers as they can purchase less energy during expensive hours.
- Peak shaving: Peak shaving is the process of reducing your highest hours of energy consumption each month for a lower electric bill.
Find a Full Suite of Energy Advisory Solutions With Freedom Energy
Since the creation of Freedom Energy in 2006, we have provided clients in various industries across the country with comprehensive electricity capacity management solutions. If you would like to learn more about our energy solutions and how we can work with your company to develop a customized energy supply management plan, complete our online contact form or call us at 877-292-4931.
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