An energy bill has many more components than just commodity price. One of the costliest and often-overlooked elements is capacity charges — fees assessed based on the amount of electricity consumed during periods of peak energy use and stress across the entire grid. It’s basically the price users and suppliers pay to “play” in the market and wholly influenced by the cost to transport the electricity from the generating facility to any site.
So how can companies trim and hedge against these charges? Well, there’s a little/big thing called a capacity price tag that gets set every year. The trick is finding a way to reduce that capacity tag because a lower tag means lower fees. Having a basic understanding of what a site’s capacity is and how to control it enables energy managers to limit peak-load contributions and shrink utility bills for a substantial amount of time.
There is one other option: Embedding capacity tags into a fixed energy price. But it isn’t a silver bullet. Yes, a fixed energy price provides certainty and protection from events such as a polar vortex, which can lead to higher-than-normal energy use and ballooning invoices. However, a fixed price means suppliers are taking the marketplace risk and companies are likely to pay a premium as a result.
While energy costs are low for now, it is a good time to be proactive, and discover more efficient and effective ways to keep energy bills low. Learn from our team of experts on how capacity charges can drastically affect prices and how to take action to reduce these charges.