Your Demand
Capacity Tag (kW)
Your demand during PJM’s five coincident peaks sets your capacity tag.
PJM Capacity Cost Management
Why 5 hours can Impact a Full Year of Electricity Costs
Your electricity use during just five peak hours determines your capacity costs for the next 12 months. See what yours could cost and how Meter helps you lower it.
The 5CP effect
PJM summer peak events
5Peak
Hours
Hours
12Months
of Costs
of Costs
Your capacity tag × PJM auction price
Reducing demand during likely 5CP events can lower the following year’s capacity obligation.
The Basic Formula
Three Inputs Determine Your Annual Capacity Cost
Your Demand
Auction Price ($/MW-day)
The annual price is established through PJM’s capacity auction.
Delivery Year
365 Days
Capacity is purchased for the entire delivery year.
Your Result
Annual Capacity Cost
Typically billed monthly across the delivery year.
Five Hours → Twelve Months
Your Capacity Tag is Set When the Grid is Under the Most Strain
PJM identifies the five highest system-demand hours that occur on different days during the summer. Your average demand during those five hours becomes the basis for the following delivery year’s capacity obligation.
Mon
6/23/2025
6PM
160,649 MW
Tue
6/24/2025
6PM
160,629 MW
Tue
7/29/2025
6PM
156,035 MW
Wed
6/25/2025
3PM
152,903 MW
Mon
7/28/2025
4PM
151,525 MW
12Months
of capacity costsIllustrative 2025 RTO coincident peaks based on PJM preliminary peak data.
Why This Matters Now
PJM Capacity Auction Prices have Climbed Sharply
$28.92
2023/24
$28.92
2024/25
$269.92
2025/26
$329.17
2026/27
$333.34
2027/28
Meter Capacity Case Study
Small Adjustments.
Nearly $50,000 in Annual Savings
Pittston Area School District used Meter’s 5CP alerts to temporarily adjust building thermostats during likely peak events—without equipment upgrades or permanent energy reductions.
See how Meter 5CP alerts workCapacity Tag
Pittston Area School District
Previous tag
1.218 MW
New tag
0.812 MW
Capacity-tag reduction
33%
Demand reduction
406 kW
Estimated annual savings
$49,398
Using the June 2027–May 2028 price of $333.34/MW-day.
PJM Capacity Cost Calculator
Turn Your Capacity Tag Into a Dollar Estimate
Your capacity tag—also called Peak Load Contribution or PLC—determines your share of PJM capacity costs.
Model a capacity-tag reduction
Custom scenario25%
1.500 MW × $333.34/MW-day × 365 days
Estimated annual cost
$182,504
$15,209/month after modeled reduction
Unitized Cost
$0.01825/kWh
Based on entered usage
Modeled new tag
1.500 MW
Down from 2.000 MW
Modeled reduction
$60,835/year
Compare Delivery Years
Why has the capacity portion of my bill increased?
Annual costs use your current capacity tag in both years. Annual usage is used only for the $/kWh equivalent.
→
2024/25 estimated cost
$21,112
2027/28 estimated cost
$243,338
Estimated increase from auction price
+$222,227
+1,053% · $18,519/month
+$0.02222/kWh
Planning estimate only. Actual billed charges may reflect zonal factors, supplier calculations, losses, and contract terms.
A Common Point of Confusion
Capacity and Transmission are not the Same Charge
Both may appear as separate pass-through items, but they pay for different parts of the grid.
Capacity
Pays generators to be available
Your capacity tag is generally based on demand during PJM’s five coincident peaks.
Transmission
Pays to move electricity across the grid
Your transmission obligation is calculated separately and may be based on different peak methodology.
How to Reduce PJM Capacity Charges
Prepare. Respond.
Lower Future Costs.
Meter combines peak forecasting, operational planning, alerts, and charge verification to help reduce your Peak Load Contribution.
- 01
Predict likely peak events
We monitor PJM demand, weather, and grid conditions.
- 02
Build a reduction plan
We identify practical actions to temporarily lower demand.
- 03
Alert your team
You receive advance notice before likely 5CP hours.
- 04
Lower your capacity tag
Reducing load during 5CP events can lower the next year’s costs.
- 05
Verify capacity charges
We review your tag and supplier pass-through calculations.
What Energy Buyers
Want to Know
What is a PJM capacity tag or PLC?
Your capacity tag — also called Peak Load Contribution, or PLC — is your facility’s share of the grid’s peak demand. It is set by your average demand during PJM’s five coincident peak (5CP) hours the prior summer, and it determines your capacity obligation for the following delivery year.
Where can I find my capacity tag?
It may appear on your bill or supplier documents as Capacity PLC, Peak Load Contribution, Capacity Obligation, or Cap Tag. If you can’t find it, Meter can retrieve and verify it for you from your utility and supplier data.
When do PJM’s five peak events occur?
The five coincident peaks fall on the five highest system-demand hours of the summer, each on a different day — typically late afternoon or early evening during a heat wave, between June and September. The exact hours are only confirmed after the season, which is why Meter forecasts likely peaks in advance.
How can we reduce PJM capacity charges?
Lower your demand during the hours that become the 5CP. Meter forecasts likely peak events, alerts your team ahead of time, and helps you temporarily curtail load — a reduction in your capacity tag this summer lowers your capacity cost across the entire next delivery year.
Are capacity charges the same as demand charges?
No. Demand charges are billed by your utility based on your monthly peak demand. Capacity charges pay generators to stay available and are driven by your capacity tag against the PJM auction price. They are calculated differently and appear as separate line items.
Is capacity included in a fixed electricity rate?
Sometimes, but not always. Some fixed rates bundle capacity in; many pass it through separately, so it moves with the auction price even when your energy rate is locked. Reviewing your contract terms is the only way to know which applies to you.
Find Savings Others Miss
33% More Savings Could Be Hiding Beyond Your Energy Rate
Your electricity bill is made up of more than the energy you buy. Capacity is one of several costs behind your bill, and one of the fastest-rising.