Peak Load Contribution (PLC) for Tenants in Multi-Tenant Buildings

Capacity charges, driven by a facility's peak load contribution or PLC, are complicated enough for a single business with its own meter. In a multi-tenant building, an added layer sits on top: who is actually assigned the capacity tag, and how is the cost divided among tenants who share the building. This article explains how PLC works in shared buildings, the difference between submetering and master metering, how allocation typically happens, and what an individual tenant can and cannot control.

Where the Capacity Tag Lives Depends on Metering

The starting question in any multi-tenant building is simple: how many utility meters are there? The answer determines where the capacity tag is assigned.

In a directly metered arrangement, each tenant has its own utility account and meter. The delivery utility measures that tenant's usage during peak hours and assigns it its own capacity tag, just as it would for a standalone business. For ComEd customers, this follows PJM's rules, since ComEd operates within the PJM Interconnection. In this setup, the tenant's capacity outcome is largely its own to manage, and our guide on what a capacity tag is and how it is set applies directly.

In a master-metered arrangement, the utility sees a single meter for the whole building. The building, not the individual tenant, is the utility's customer, and the capacity tag is assigned to the building as a whole. Each tenant's share of that cost is then handled internally through the building's own accounting, not through a separate utility tag. This is where submetering and allocation come into play.

Submetering Versus Master Metering

These two terms are often confused, so it helps to be precise.

A master meter is the utility's single measurement point for the entire building. Everything downstream of it, every tenant and every shared system, is invisible to the utility as separate loads. The utility bills the building owner or manager for the whole property, and the capacity tag reflects the combined peak-hour usage of everyone inside.

Submeters are additional meters installed behind the master meter to measure each tenant's usage separately. Critically, submeters are usually owned and read by the building, not the utility. They exist so that management can fairly divide the building's electricity bill among tenants. Submeter data can show how much each tenant used, and even when each tenant peaked, but it does not create separate utility accounts or separate utility capacity tags. The utility still sees only the master meter.

This distinction matters for tenants. In a submetered building, better data exists about your individual usage, which can support a fairer allocation and give you feedback on your peak-hour behavior. But you are still part of a building-level tag, and your influence over the total is shared with everyone else in the building.

How Capacity Costs Get Allocated

In master-metered buildings, the building's capacity cost has to be divided among tenants somehow. The method is set by the leases and the building's practices. Common approaches include:

• Square footage. Each tenant pays a share proportional to its floor area. This is simple and predictable, but it does not reflect that some tenants may use far more power during peak hours than others of the same size.
• Submeter-based. Each tenant's share is based on its measured usage. This is fairer to low users, and if the submeters can capture peak-hour usage, the allocation can better reflect actual contribution to the building's peak.
• Fixed lease share. The lease simply specifies a percentage or a flat amount. This offers predictability but may bear little relationship to actual usage.

Because capacity is fundamentally about usage during the grid's peak hours, an allocation method based purely on square footage or a flat share can misalign incentives. A tenant that carefully avoids peak-hour operation may still pay the same as a neighbor that runs heavy equipment every afternoon. Where submetering exists, an allocation that considers peak-hour usage tends to align cost with contribution more closely. These are worth discussing when leases are negotiated, alongside the broader treatment of demand-related charges covered in our guide to commercial demand charges.

What a Tenant Can and Cannot Control

Understanding the limits of your influence is essential, because it prevents wasted effort and sets realistic expectations.

What a tenant can control:

• Its own equipment and how it operates during likely peak hours.
• Scheduling flexibility for its own processes, lighting, and comfort systems where feasible.
• Whether it engages with building management about peak-hour coordination.
• The lease terms it negotiates around metering and allocation, at least at signing or renewal.

What a tenant usually cannot control:

• The building's shared systems, such as central HVAC, elevators, and common-area lighting, which contribute to the building tag but sit outside any single tenant's authority.
• Other tenants' peak-hour behavior, which affects the shared tag.
• The allocation method itself, once a lease is signed.
• The building's decision about whether to pursue capacity management at all.

In a directly metered space, a tenant's control is much greater, because its capacity tag reflects only its own load. In a master-metered building, meaningful capacity reduction generally requires cooperation. If several tenants and building management coordinate to trim load during likely peak hours, the building tag can respond; one tenant acting alone will have a smaller effect. The general mechanics of reducing peak-hour load are covered in our peak shaving material and in our resource on how storage lowers capacity and transmission charges, which can be a building-level investment.

Practical Questions Before Signing a Lease

Because metering and allocation are set contractually, the best time for a tenant to influence its capacity exposure is before signing. Useful questions include:

• Is this space directly metered by the utility or master-metered by the building?
• If master-metered, how are electricity and any capacity or demand costs allocated among tenants?
• Is submeter data available to me, and how often?
• Does the building do anything to manage peak-hour load, and can tenants participate?

Clear answers help you understand what you will pay, what you can influence, and whether your own peak-hour discipline will actually change your bill. For a broader view of how supply and delivery interact for any commercial account, see our overviews of commercial electricity and the role of the delivery utility, which owns the wires and meter regardless of who supplies the power.

Key Takeaways

• Where the capacity tag is assigned depends on metering: directly metered tenants get their own tag; master-metered buildings carry one building-level tag.
• Submeters support internal cost allocation but do not create separate utility tags for tenants.
• Allocation methods vary, and square-footage or flat shares may not match actual peak-hour contribution.
• A tenant controls its own equipment, but building-level capacity management requires coordination.

Sources

• Illinois Commerce Commission
• PJM Interconnection
• ComEd
• Ameren Illinois

This article is general educational information about capacity tags in multi-tenant buildings and does not promise any specific savings, rate, or outcome for your business.