What are peak days and peak day alerts?
To understand Peak Day Alerts, let’s discuss what a Peak Day is. Peak days are essentially the day(s) within a given period (often the summer months from June to August) when the highest level of electricity usage, called “demand”, occurs across a specific region or power pool. This period of peak demand is typically driven by extreme weather conditions or other factors that lead to increased consumer electricity usage. Therefore, peak day alerts are notifications sent to electricity consumers to inform them that a potential period of high electricity usage has been projected. While peak days are not officially determined until the end of the summer season, peak day alerts are still incredibly significant.
How are they determined?
The methodology to determining peak days varies between power pools. Today we’ll focus on the power pools of NYISO and PJM. In the context of NYISO, peak energy days in summer typically occur during July and August when electricity demand reaches its highest levels. Within this time frame the day that displays the highest electricity demand at the end of the summer season is labeled as the peak day within the NYISO power pool.
In contrast, PJM specifically focuses on the top five highest demand hours between June and September to assess peak demand.
Why are they important and how can you take advantage of them?
While peak days aren’t determined until after the summer season ends, peak day alerts are important notifications that electricity consumers can receive. These notifications alert consumers about potential upcoming peak hours so that they can voluntarily curtail their usage. What benefits does curtailing electricity usage during peak hours/days have? First, during peak hours, the cost of electricity can rise substantially due to increased demand. NYISO and PJM manage competitive energy markets where prices are influenced by supply and demand dynamics. Consequently, the surge in demand during peak hours often leads to higher energy prices, which are reflected in consumer bills. Curtailing usage during these hours can potentially offer substantial savings than those who are not.
Additionally, your usage during these peak days is used to determine your capacity tags. In a previous article, we discussed that the electricity supply cost consists of energy, transmission, capacity, and ancillary components. Capacity tags, assigned to electricity consumers, represent their share of the peak load on the power grid and are based on the highest levels of demand during peak periods. These tags determine each consumer’s responsibility for capacity costs through a complex equation factoring in usage during peak hours/days. Lowering your usage during potential peak times can reduce your capacity charges for the following year. In NYISO, capacity tags are calculated based on the single highest peak day, while in PJM, they are based on the average usage of the top five peak days identified after the summer season ends.
Since actual peak days are only identified after the summer season concludes, peak day alerts are essential for informing consumers about potential peak hours or days. These alerts warn of times that might later be designated as peak days, allowing consumers to adjust their energy usage accordingly. This proactive approach may not only lower your current electricity cost but also future electricity costs.
For those in a fixed supply contract, your supply price remains stable throughout the contract period. However, you likely paid a premium for the assurance that your price wouldn’t change. Additionally, your load profile, which includes your on-peak, off-peak, and intermediate power usage, and when you use it, can change over time. If your load profile becomes less favorable, you may face significantly higher prices in the next contract period.
Therefore, managing your peak demand by creating and executing a plan in response to peak demand alerts is crucial to a well-thought-out energy management strategy. If you ever wonder why your rate is higher this time compared to the last contract period, failing to manage your energy usage could be a significant factor.
