ERCOT 4CP Strategies 2026: Mitigating Coincident Peak Transmission Charges in Texas
In the ERCOT (Texas) market, your facility\'s transmission delivery charges for the entire year are NOT based on how much total energy you use, but rather on your demand during just four specific 15-minute intervals. Known as the Four Coincident Peaks (4CP), this structure measures your load during the grid\'s absolute highest moment of stress in June, July, August, and September. Successful load shedding or shifting during these critical summer 2026 intervals can reduce a large facility\'s 2027 power bill by up to 30%.
Executive Impact (ERCOT Market)
- →The 4CP Mechanic: The Public Utility Commission of Texas (PUCT) uses a facility\'s average demand during the four summer grid peaks to allocate transmission costs (TDU delivery fees).
- →High-Stakes Forecasting: Businesses rely on predictive models to alert them when a peak is imminent (typically a string of 100°F+ afternoons) so they can voluntarily curtail load.
- →Rising Transmission Costs: As ERCOT invests heavily in grid upgrades (new lines, interconnections for renewables), the base rate per kW for transmission charges has been steadily climbing, making 4CP avoidance more valuable than ever.
How the 4CP Calculation Works
Transmission and Distribution Utility (TDU) charges make up a significant portion of a Texas commercial electric bill—often 30% to 50% of the total monthly cost. For Demand-metered customers (typically those over 700 kW of peak demand), the transmission portion of these TDU charges is determined by the 4CP multiplier.
ERCOT retroactively looks at the single 15-minute interval during each of the four summer months (June, July, August, September) where the *entire state grid* was drawing the most power. They then look at your smart meter data to see exactly how much power (kW) you were drawing during those exact same four intervals.
June Grid Peak (June 24, 4:45 PM): Your Load = 1,200 kW
July Grid Peak (July 18, 5:00 PM): Your Load = 1,150 kW
Aug. Grid Peak (Aug 10, 4:30 PM): Your Load = 200 kW (Successful Shed!)
Sept Grid Peak (Sept 5, 5:15 PM): Your Load = 1,180 kW
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Your 4CP Average dictating next year\'s rate = 932.5 kW
The Challenge: "Chasing the Peak"
Because peaks are determined retroactively, businesses don\'t know *for sure* when the peak is happening in real-time. They must forecast it.
When the grid gets tight, businesses will execute a "shed event"—moving production shifts, raising thermostat setpoints, turning off auxiliary lighting, or firing up onsite natural gas generators.
The risk is "chasing a false peak." If a business shuts down production on a Wednesday expecting a peak, but the actual peak occurs on Thursday when they are back online, they lose the revenue from the Wednesday shutdown AND they get hit with the high transmission charge for next year.
Strategies for Summer 2026
- Targeted Forecasting Services: Relying on sophisticated weather and grid load models to reduce the number of "predictive shed alarms" required per month.
- Automated Demand Response (Auto-DR): Integrating Building Management Systems (BMS) with retail supplier API signals to automatically dim lights and adjust HVAC without manual facility manager intervention.
- Battery Energy Storage Systems (BESS): Deploying onsite lithium-ion batteries that are charged overnight and discharged during the 3 PM - 6 PM daily window, effortlessly shaving the peak without interrupting operations.
Source: ERCOT System Planning & Transmission Load Allocation Data.
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