Market Update

Recent Heat Wave Setting Peak Demand in 2019

Depending upon your location within the U.S., capacity costs can amount to up to 40% of your overall monthly electric supply bill. Capacity is a charged levied by each regional Independent System Operator (ISO) to ensure that resources are available to meet maximum energy demand periods, or peak days, on the electric grid throughout the calendar year. These “Peak Days” typically occur during hot summer months.

In New England, the Capacity Year (CY) runs from June 1st through May 31st of each year. During this period, each end user is assigned a new Capacity Tag based upon the on-site energy demand during the day in which the electric grid experiences Peak Demand relative to all other days. In PJM (PA, NJ, MD, etc.), the Capacity Tag assignment is based upon the average demand of the top 5 coincident peak days.

Some large C&I energy consumers elect to manage their capacity tag strategically by curtailing energy usage on expected peak days by shutting down production, closing the building early, limiting A/C usage, etc. Atlas has curated solutions for these clients and quantified the benefits and risks associated with such action.

The week of Monday July 15th through Friday July 19th was the warmest week so far of summer 2019, resulting in maximum energy demand levels across most regions of the U.S. Longer range forecasts for balance of summer 2019 are calling for “normal” weather patterns with lack of support for additional and significant heat waves. It is likely that Capacity Tag assignments have been established, however, there is risk of unforeseen warmer weather.

ISO NE Peak to Date:

  1. Saturday 7/20/2019. Demand = 23,865.17 mw

PJM ISO Peak’s to Date:

  1. Friday 7/19/2019. Demand = 152,311 mw
  2. Saturday 7/20/2019. Demand = 150,507 mw
  3. Wednesday 7/17/2019. Demand = 143,962 mw
  4. Wednesday 7/10/2019. Demand = 141,844 mw
  5. Tuesday 7/16/2019. Demand = 140,733 mw

Please contact your Atlas Energy Advisor to discuss options for strategically managing this cost for your organization.

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