Peak Shaving 101: Reducing Capacity Tags in ComEd

For businesses in ComEd territory, the capacity tag is one of the few electricity costs shaped directly by how a facility operates during a small number of hours each year. Peak shaving is the practice of reducing load during those hours so that the capacity tag assigned for a future delivery year is lower than it otherwise would be. This article explains the mechanics, the role of coincident-peak alerts, and the real-world limits of the approach.

Why Peak Hours Matter So Much

A capacity tag, also called peak load contribution or PLC, is not a measure of your total energy use. It is a measure of how much power your facility was drawing during the grid's highest-demand hours. In northern Illinois, ComEd operates within the PJM Interconnection, and PJM identifies the system coincident peak hours that drive each customer's tag.

Because the tag is calculated from those specific hours, the amount of energy you use on an ordinary day has little bearing on it. What matters is the load you carry during the handful of hours when the whole PJM system is straining. If you can be running lighter during those exact hours, the usage that gets averaged into your tag is smaller, and the tag for the next delivery year can come down. Our companion guide on what a capacity tag is and how it is set covers the measurement mechanics in more detail.

The Basic Mechanics of Peak Shaving

Peak shaving works by shifting or curtailing controllable load during likely peak hours. The steps most facilities follow look like this:

1. Identify controllable load. Look for equipment or processes that can be paused, slowed, or rescheduled for a few hours without harming safety, product quality, or occupant comfort. Examples often include certain HVAC setpoints, non-urgent pumping or charging, and batch processes with scheduling flexibility.
2. Anticipate the peak. Because PJM peaks are not announced ahead of time, facilities rely on forecasts and alerts to estimate which afternoons are most likely to become peaks.
3. Reduce during the window. When a likely peak is flagged, the facility temporarily lowers its draw during the alert window, commonly a span of a few afternoon hours.
4. Return to normal. After the window passes, operations resume as usual.

The goal is not to use less energy overall. It is to be drawing less power specifically when the grid hits its peak. That distinction is what separates capacity-tag management from general energy conservation.

Coincident-Peak Alerts and Forecasting

The hardest part of peak shaving is timing, because no one knows in advance exactly which hours PJM will record as its coincident peaks. PJM peaks tend to land on hot summer weekday afternoons, when air conditioning across the region and commercial activity rise together, but the precise day and hour vary from year to year.

To manage this uncertainty, many businesses subscribe to coincident-peak alert services. These come from suppliers, curtailment service providers, or independent monitoring platforms, and they use weather and load forecasts to flag days that are likely to produce a system peak. On a flagged day, the facility executes its reduction plan.

Forecasts improve the odds of catching real peaks, but they are estimates. A service may call a peak day that turns out not to be the highest, or it may reduce load on several afternoons to be safe. Because the actual peaks are only confirmed after the fact, some over-calling is normal. For businesses that want to understand the forecasting side more deeply, our resource on capacity tag forecasting methods walks through common approaches.

The Forward-Looking Timing

A point that surprises many first-time managers of capacity costs is that peak shaving does not lower the current bill. The tag measured during a given summer's peak hours generally applies to a future delivery year. So the reductions you make this summer influence the capacity portion of your bill later, once the new tag takes effect.

This forward timing has two consequences. First, peak shaving is a planning exercise, not a quick fix; the payoff arrives in a later delivery year. Second, consistency matters, because each year's peak-hour performance sets the tag for the following year. A single strong year of peak shaving followed by a return to old habits will show up in the next measurement.

Practical Limits and Trade-Offs

Peak shaving is a genuine lever, but it is bounded by several realities that any honest plan should acknowledge.

• You can only shave what you control. Continuous industrial processes, life-safety systems, refrigeration, and occupied spaces often cannot be curtailed meaningfully. The share of load that is truly flexible varies widely by business type.
• Operations come first. Reducing load must not compromise safety, product quality, service levels, or comfort. A reduction that damages output or violates a process requirement is not worth the capacity benefit.
• Forecasts are imperfect. Even good alert services miss peaks or call extra days. The tag reflects what actually happened during the true peak hours, not your intentions.
• Non-peak reductions do not help the tag. Trimming usage on an ordinary day has no effect on the capacity tag, even though it may help energy costs generally.
• Effort has a cost. Staff time, controls, and coordination are required to respond to alerts reliably. For some facilities the effort is modest; for others it is significant.

Some businesses pair peak shaving with on-site technology to reduce load during peaks without curtailing operations. Energy storage, for example, can discharge during peak hours so the meter shows a lower draw while equipment keeps running. Our resource on how storage lowers capacity and transmission charges explains that approach.

How Peak Shaving Fits a Broader Plan

Peak shaving is one component of managing electricity costs, alongside how you buy supply and how your delivery charges are structured. The delivery utility always owns the wires, the meter, and delivery charges regardless of who supplies your power, while a competitive supplier affects only the supply portion of the bill. Because the capacity tag can flow into supply pricing, it is worth discussing during procurement. Our overview of commercial energy procurement explains how those pieces connect, and the guide to commercial demand charges covers the related, but separate, demand-based components.

Key Takeaways

• Peak shaving reduces load during PJM coincident-peak hours to lower a future capacity tag in ComEd territory.
• The savings are forward-looking, applying to a later delivery year, not the current one.
• Coincident-peak alerts help time reductions, but forecasts cannot guarantee they catch every peak hour.
• The approach is limited by how much load a facility can safely curtail and by the accuracy of peak forecasts.

Sources

• PJM Interconnection
• ComEd
• Illinois Commerce Commission
• Plug In Illinois

This article is general educational information about peak shaving and capacity tags and does not promise any specific savings, rate, or outcome for your business.