Hot Texas Summer

You already know Texas electricity prices can spike dramatically. Are you ready for a record-breaking summer?

Electricity used to be a “cost of doing business.” It’s not that simple anymore.

Utility bills are now a major line item in an industrial P&L. There are many reasons for this. Inflation has hit the energy sector hard, and weather events are driving massive price volatility. In Texas, electricity prices can spike 10,000% during extreme events.

Considering recent grid instability and soaring prices, large energy users are looking for ways to manage their risk. That’s especially true as we enter the hot summer months. Grid operators around the country are forecasting massive shortfalls this summer, especially in Texas.

In addition to price spikes, industrial customers need to watch out for big demand charges and Coincident Peak charges. Coincident Peak charges penalize users for taxing the grid at its busiest time each month. These additional penalties can be a hefty surprise on your utility bill.

And in Texas, everything is bigger. The Texas grid operator, known as ERCOT, has its own version of Coincident Peak called 4CP. Your 4CP charge is based on your demand during the hottest 4 months of the year. If you use a lot of energy during critical peak periods, it will haunt you for another year.

Here’s how it works:

• The utility tries to predict which periods will have the most grid congestion during each of the hottest 4 months (June, July, August and September).
  
• They then notify you that a 4CP event may be coming, giving you a chance to reduce your load.
  
• Each month for the next year, you’re charged an extra fee based on your average power draw during each of the 4CP events.

These fees can account for as much as 30% of your bill, so managing your demand during 4CP events can mean huge savings.

There’s one big problem: ERCOT’s notifications aren’t always accurate, and they don’t give you much time to prepare unless you work with a partner who can better predict these events and help you respond quickly.

So how do you beat the game?

• Prediction: event notifications are available from different sources, with varying degrees of accuracy. Experienced partners can analyze weather data and grid conditions to predict the Coincident Peak further in advance.
  
• Notification: good communication helps ensure the right people have the right information at the right time. Using multiple communication channels helps. It’s also important to understand who is available (and qualified) to curtail systems when needed.
  
• Automation: the easiest way to respond quickly is to automate the process. This means codifying which loads should be curtailed under various circumstances and how to properly sequence the shutdown. It also requires integrating with existing control systems to provide Automated Load Management.

Learn more about Ndustrial’s Demand Management solutions here.