How Your Building’s Peak Load Contribution Is Calculated and What It Will Cost You

Across PJM territory, capacity costs are rising rapidly —reaching as high as $333.44 per MW-day for the 2027–28 delivery year—and many commercial customers are seeing this one-line item grow into a meaningful share of their electric bill. For many businesses, these capacity-related charges now make up a quarter or more of their overall electric bill. The cause? Your building's peak load contribution (PLC), which is the highest demand your facility places on the grid during the grid’s 5 highest demand hours. The good news is that PLC isn’t fixed; you can reduce your grid demand during those peak windows by managing your peak load or the way you structure your energy contracts.

What is PLC and Why Does It Matter?

A PLC is basically the “score” PJM gives your building based on how much power you pull from the grid during a few of the hottest, most stressful hours of the year. The more you use it in those moments, the higher your score, and the more you pay in capacity charges on every bill the following year. If you can pull that peak down, you can pull your PLC down, and that’s one of the most efficient ways to shrink your overall annual electricity costs.​ Below, is an example of when these key peak hours occur according to PJM’s official report:

Source:  Summer 2025 RTO Coincident Peaks (5CP).

Note: 15:00 (3:00 PM) and 18:00 (6:00 PM)

Let’s say you’re a beverage manufacturer with steady, year‑round production versus a hospitality business with fluctuating seasonal occupancy. A manufacturer running chillers and processing equipment consistently will see high demand during PJM peak hours, so its PLC (and resulting capacity costs) can be quite high. A hospitality operation, on the other hand, might see usage spike only during busy or hot seasons—so those occasional peaks drive its PLC.

This is why lowering your PLC is important: pulling down your grid demand during those handful of critical hours is now one of the most powerful moves businesses can make to reduce their total annual electricity spend.

How to Lower PLC

There are a couple of practical levers most large C&I customers can pull to influence PLC and capacity costs.

• Implement proactive curtailment strategies—like pre-cooling, shifting batch processes, or staggering equipment start-ups—around peak alerts to shave your highest hours without disrupting operations.
• Use backup generators during likely PJM peak hours so a portion of your load rides on on-site generation instead of the grid.

For larger C&I sites, combining backup generation with smart curtailment is often the most effective way to keep PLC—and capacity costs—under control. When you run backup generation during likely peak hours and pair it with a simple curtailment playbook— like temporarily dialing back non-critical loads—you pull real kilowatts off the grid exactly when PJM is setting those capacity tags. For many manufacturers, distributors, and large facilities, that combination of on-site generation and targeted curtailment can turn a handful of summer afternoons into meaningful reductions of avoided capacity charges over the next year.

Best Practices for Maximizing Impact

• Work with your energy provider to understand when PJM’s peak windows typically occur and ensure on-site generation, like cogeneration (CHP), is always running during these times.
• Remember: while on-site generation can be integral, pairing it with other peak management strategies—load shifting, energy efficiency measures, including lighting retrofits—can drive even further PLC reductions.

Looking Forward

With capacity prices setting new records in 2025 and beyond, leveraging solutions that focus on on-site generation and smart curtailment is one of the most impactful moves a business can make to control pricey electricity costs. If you are able to reduce demand during those few hottest, highest-demand hours, you’ll realize real bottom-line value not just in utility bill savings, but also in major capacity charge reductions.​

Catalyst Power^® offers an efficient on-site generation solution that can help. Talk to our Energy Experts today about how our CHP systems can help lower your PLC.