Identify where capacity sits in the offer
A supplier can include capacity in a fixed rate or pass some capacity costs through under contract terms. Ask for the exact clause, the applicable delivery year and the load value used. A quote labeled fixed does not settle this question. If capacity is excluded, a low headline energy rate can omit a material exposure. Ask for a written inclusions list and the method for updating any excluded charges.
Understand the units before multiplying
PJM auction clearing prices are expressed in dollars per megawatt-day. A business bill may show a different allocation, unit or embedded rate. A monthly measured peak, a capacity obligation and annual kWh are not interchangeable. Do not multiply an auction price by the building’s highest meter reading and present that as a bill forecast without confirming conversions, scaling and allocation. The supplier should explain the actual account-specific calculation.
Distinguish a demand project from a capacity strategy
Reducing a monthly billing peak may help a tariff demand charge. Reducing a future capacity allocation depends on the applicable methodology and relevant system peaks. One does not automatically deliver the other. Ask the utility or supplier how your obligation is established, which data is available and when changes take effect. Avoid assuming an equipment shutdown will reduce a charge in the same month.
Evaluate risk alongside the quoted rate
Request examples of the bill under different allowed capacity assumptions, using the supplier’s documented formula. Compare the contract’s treatment of regulatory changes and new capacity costs. Keep any illustrative scenario separate from an actual forecast. A product with more inclusions may cost more at signing while exposing the business to fewer unplanned supply adjustments; the right choice depends on budget tolerance and the full agreement.
A practical example
Illustrative explanation, not a customer outcome.
PJM’s 2026/2027 Base Residual Auction report records a $329.17/MW-day clearing price for that delivery year. That is a wholesale capacity result, not an Ohio retail electricity quote. A business’s bill depends on its allocation and contract treatment; no retail percentage increase follows directly from that number.
Put the review into practice
| Review step | What to record |
|---|---|
| Identify the charge | Monthly tariff demand, capacity allocation and program obligations differ. |
| Request the method | Obtain the relevant units, measurement period and calculation. |
| Check operational feasibility | Protect safe operation and confirm what can be controlled. |
| Verify the result | Do not count a projected benefit as a measured or guaranteed outcome. |
Questions worth asking
Is capacity the same as demand?
No. Monthly tariff demand and capacity allocation can use different measurements and periods.
Does a fixed rate include capacity?
Only the written offer and agreement can establish that. Ask for an explicit inclusion or pass-through statement.
Continue the comparison
Sources and scope
Reviewed October 15, 2026. Follow the source’s own data period, effective dates and current terms. Examples are hypothetical unless expressly identified as a dated published result. A source is context, not a guarantee of eligibility or a product endorsement.