Managing energy use at peak times can reduce costs

Cities and towns pay capacity- and transmission-related charges that account for 20 percent to 30 percent of their total electric bill. What many consumers don’t know is that these charges are based on their consumption during only one hour each summer in Massachusetts.

Those who use a lot of electricity during this summer’s one peak hour will be “tagged” with a high rate that will affect their electricity charges for the next ISO-New England energy year (June 1, 2014-May 31, 2015).

Every year, the Regional Grid Operator, Independent System Operator (ISO-New England) analyzes every electricity customer’s consumption during the peak-use hours to determine each entity’s share of the capacity and transmission charges, which ISO-New England allocates to all electricity consumers.

In short, during those days when the region is using the most electricity – typically a very hot day in July or August – ISO-New England calculates how much electricity each customer was demanding during that peak hour. Once this is determined, the ISO applies those transmission and capacity charges to each customer’s bill every month for the following energy year, which runs from June to the next May.

Therefore, managing electricity usage during the high-use summer months may result in lower capacity and transmissions charges in the following June-May year.

Most consumers don’t know when the summer’s one peak hour is going to happen. But participants in the MMA’s MunEnergy program can find out.

MunEnergy’s supply partner, Constellation, can help its members manage their “tag” and, hopefully, save money for their community. Constellation uses its market knowledge to predict peak-setting hours and notify members on a day-ahead and day-of basis of expected peak-setting hours. When customers elect to reduce consumption and the predicted hour coincides with the grid peak, they may be able to reduce their capacity and transmission costs during the following energy year of their power supply agreement with Constellation.

It’s also worth noting that participants of Peak Response are never obligated to respond during a peak-setting hour. Participation and active involvement in the program is solely up to the customer.

To learn more, visit constellation.com/mma or call (855) 269-1316.

Stephen Fabiani is Vice President of Northeast Sales at Constellation.