In competitive electric markets such as New England, New York and PJM, the Independent System Operator (ISO) is responsible for paying generators for their capacity to perform during critical hours. Simply, electric generators are paid to guarantee that there will be enough electric supply available to meet forecasted demand requirements into the future. These costs are pre-determined using competitive auctions.

Due to planned electricity generation plant closures and growing demands, future capacity costs are increasing. While the actual cost of the capacity is determined system-wide, your individual capacity tag is established by your electricity demand when the system is peaking. A business’s capacity tag is tied to the number of capacity units that the business will require on the peak demand day(s) of the year.

Capacity costs_CapTag_total charges

By effectively predicting the potential peak day(s), companies can temporarily reduce their electricity usage to lower their capacity tag for the next capacity year. A reduction in the capacity tag will help mitigate the increase in the capacity costs going forward and likely generate additional savings.

Key Points:

  • Increasing capacity rates have become a challenge for businesses of all sizes
  • Capacity costs are indisputable charges that have already been approved by the ISO
  • The energy you use this year on peak day(s) will become your future capacity assignment
  • Your capacity assignment will impact your energy costs for the next capacity year

To request a Capacity Tag Analysis, call 888.686.4845 or complete the form.


Capacity Charts_04.2016
Sample Capacity Tag Analysis


View our 5-minute video on capacity costs in New England:


Request a Capacity Tag Analysis

About Usource

Usource, based in Hampton, NH, helps clients manage, control, monitor, and reduce electricity and natural gas costs as their trusted energy advisor. Founded in 1999, Usource is highly sought after for its expertise in navigating the complexities of deregulated energy commodities markets. Learn More