ERCOT 4CP: How to Reduce Transmission Costs
Key Takeaway
ERCOT 4CP (Four Coincident Peak) determines your facility's transmission cost allocation for the entire following year based on your demand during the four highest 15-minute system peaks each summer (June-September). By monitoring grid conditions and reducing load during predicted 4CP intervals, Texas industrial consumers can save $50-$150+ per kW annually in transmission charges — often the largest controllable cost on an industrial electric bill.
What Is ERCOT 4CP?
In the ERCOT (Electric Reliability Council of Texas) market, transmission costs are not evenly distributed among all consumers. Instead, each customer's share of total transmission costs is based on their demand during the four 15-minute intervals when the ERCOT system reaches its highest load each year — one peak per month during June, July, August, and September.
These four intervals are called the "Four Coincident Peaks" or 4CP. Your facility's demand during these four intervals determines your transmission cost allocation for the entire following calendar year.
Why 4CP Matters Financially
Transmission costs in ERCOT are substantial and growing:
- Current rates: Transmission charges range from $50-$150+ per kW per year, depending on the Transmission Service Provider (TSP)
- Example: A facility with a 10 MW peak during 4CP intervals faces $500,000 - $1,500,000 per year in transmission charges
- If that facility reduces to 2 MW during 4CP: Charges drop to $100,000 - $300,000 — saving $400,000 - $1,200,000 annually
- Key insight: You only need to reduce load during four specific 15-minute intervals per year to realize savings for the entire following year
How 4CP Intervals Are Determined
Each month (June-September), ERCOT identifies the single 15-minute interval with the highest system-wide demand. Key characteristics:
- Timing: Peaks typically occur between 3:00 PM and 5:30 PM on the hottest weekdays
- You won't know the exact interval until after the fact: ERCOT publishes preliminary 4CP data in October and final data in March of the following year
- Prediction is essential: You must predict when peaks will occur and curtail proactively
- Multiple curtailments per month: Since you can't know which day will be THE peak, you may need to curtail on 5-15 potential peak days per summer month
4CP Prediction Methods
Grid Condition Monitoring
- ERCOT load forecast: ERCOT publishes day-ahead and real-time system load forecasts
- Weather data: Temperature, humidity, and cloud cover across the ERCOT footprint
- Historical patterns: Peak loads correlate strongly with Heat Index and time of day
- Real-time system load: Monitor actual system load approaching previous month's peak
Alert Services
Several companies provide 4CP alert services that notify you when curtailment is recommended:
- Real-time monitoring of ERCOT system conditions
- Probability scoring for each day and interval
- Automated alerts via text, email, and API integration
- Historical accuracy tracking (most services achieve 90%+ accuracy in identifying the actual 4CP interval within their alert windows)
Load Curtailment Strategies
Non-Essential Load Shedding
Identify loads that can be temporarily reduced without significant production impact:
- HVAC systems (pre-cool before curtailment, raise setpoints during)
- Lighting (reduce to minimum safe levels)
- Non-critical process loads (batch operations, material handling)
- Charging systems (EVs, battery banks, forklifts)
Process Scheduling
- Schedule high-demand processes for off-peak hours (before 2 PM or after 7 PM)
- Shift production schedules during peak summer months
- Run backup generators for critical loads during curtailment
Automation
Automated curtailment systems provide the fastest and most reliable response:
- PLC-based load shedding controllers that receive 4CP alert signals
- Automated breaker/contactor controls for pre-defined load groups
- Sequenced shedding with priority levels
- Automated restoration when the alert clears
- Override capability for safety-critical loads
Measurement and Verification
After each summer, verify your 4CP performance:
- Request interval data from your Retail Electric Provider (REP)
- Compare your demand during identified 4CP intervals against your baseline
- Calculate actual transmission cost savings
- Identify opportunities to improve curtailment depth or timing for next year
Getting Started
NFM Consulting helps Texas industrial facilities implement 4CP reduction programs including load analysis, curtailment system design, PLC programming, and integration with 4CP alert services. Contact us for a free assessment of your 4CP reduction potential.
Frequently Asked Questions
Typically 5-15 days per summer month (June-September), or 20-60 days total per summer. You need to curtail on every day that could potentially be the monthly system peak, since you won't know which day is THE peak until after the summer. Most alert services narrow this window to 8-12 days per month by predicting which days have the highest probability.
Yes, running backup generators during 4CP intervals is a common strategy. Your interval meter measures what you draw from the grid, so any load served by on-site generation reduces your metered demand. However, consider generator fuel costs, emissions permits (TCEQ), and runtime limitations when evaluating this approach. For many facilities, a combination of load shedding and generator operation provides the best result.
4CP demand measured in summer 2026 (June-September) determines your transmission cost allocation for calendar year 2027. There is a one-year lag. ERCOT publishes preliminary 4CP data in October and final data by March. Your REP applies the new transmission charges starting in January of the following year. This means savings from your first curtailment summer won't appear on your bill for 6-15 months.