Your "electricity rate" is only half the story. For large commercial users in PJM, up to 40% of your bill is determined by a single number: your PLC tag. Here is exactly how it is calculated—and how to lower it.
Your capacity cost for the entire year (June 1 – May 31) is based on your average usage during the 5 highest peak hours of the grid from the previous summer.
PJM looks back at the summer (June 1 - Sept 30) and finds the 5 single hours where total grid demand was highest. These typically occur on hot weekday afternoons between 3 PM and 6 PM.
Your local utility (EDC) takes your meter reading for each of those 5 specific hours.
| PJM Peak Date | Hour Ending (HE) | Grid Load (MW) | Your Usage (kW) |
|---|---|---|---|
| July 15 | 17:00 | 148,000 | 450 |
| July 16 | 16:00 | 151,000 | 480 |
| Aug 4 | 18:00 | 145,000 | 420 |
| Aug 5 | 17:00 | 149,000 | 460 |
| Sept 2 | 16:00 | 142,000 | 440 |
| Your Average (Raw PLC): | 450 kW | ||
Electricity is lost as it travels through transmission lines. The utility multiplies your raw average by a "Loss Factor" (usually around 1.05 - 1.10).
450 kW × 1.08 = 486 kW (Final PLC Tag)
Multiply your Final PLC Tag by the Zonal Capacity Price (e.g., $100/MW-day for ComEd).
You cannot change the capacity price, but you CAN change your tag. This is called Peak Shaving.
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