Large commercial electricity: 1M kWh accounts

The threshold that decides your account is in kilowatts, not kilowatt-hours

The line that changes how an account is bought is not a spend band or an annual volume. It is whether the meter is interval-settled, because that decides what a supplier can see and therefore what it can price. Those lines are drawn in measured demand by the distribution utility, and they differ by state. Oncor requires interval data recorders for premises that exceed 700 kW at least twice in a 12-month period. AEP Ohio requires interval metering for every shopping delivery identifier whose maximum monthly billing demand over the most recent 12 months is 200 kW or greater. ComEd requires interval-capable metering for any customer whose 30-minute maximum demand is at least 100 kW. The same building can therefore be interval-settled in Chicago and settled on a profile in Houston, and the contract it can buy differs accordingly.

• 700 kW, twice in twelve months — Oncor's mandatory IDR threshold for ERCOT premises.
• 200 kW of maximum monthly billing demand over twelve months — AEP Ohio's interval line for Ohio shopping accounts.
• 100 kW of 30-minute maximum demand — ComEd's threshold for interval-capable metering in Illinois.
• Below the applicable line, the class load profile settles the account and the supplier has to price a shape it can only assume.

Compute your own peak before you accept a segment label

A million kilowatt-hours a year is arithmetic, not a description of load. Divided by the 8,760 hours in a year it is a little over 114 kW of average demand. What decides your settlement type is the peak, and the peak is the average divided by your load factor. At a 25 per cent load factor that same annual volume implies a peak near 457 kW; at 40 per cent, near 285 kW; at 70 per cent, near 163 kW. The first sits above AEP Ohio's interval line and below Oncor's; the third clears ComEd's threshold and neither of the others. Two accounts with identical annual consumption can land on opposite sides of the same tariff line because one runs a single shift and the other runs three. That is why an annual kWh figure, on its own, tells you nothing about which product you will be offered.

• Average kW = annual kWh ÷ 8,760.
• Peak kW ≈ average kW ÷ load factor, and load factor = average kW ÷ peak kW — the same equation read in either direction.
• Compare the result with the threshold in your own distributor's tariff, because there is no national rule to compare it with.
• A volume-only segment label describes the billing relationship; the meter describes the market.

What profile settlement hides, and what an interval record exposes

A cumulative meter produces a register read, and the hourly demand behind that read is estimated statistically. ComEd builds a profile for each delivery service class from a statistical sample of that class's historical hourly load and applies it to the month's total; below 100 kW of 30-minute maximum demand, that profile is what settles the account. AEP Ohio says plainly that while an interval meter is being installed, a generic load profile is used for settlement in PJM and consumption meter readings are used for billing. Oncor's interval-capable premises report 15-minute data through its meter data portal. The difference is commercial rather than administrative: against a profile, the supplier settles your total volume allocated by someone else's shape and must carry the risk that your shape differs from it. Against an interval record it settles your actual consumption in each interval, so it can price peaks, weekday structure and volatility directly instead of assuming them.

• Profile: a monthly total spread across intervals by class, season and day type.
• Interval: measured kWh, and usually kW, for each settlement interval, validated and estimated where data is missing.
• The pricing consequence is shape risk, and shape risk sits inside the quote even when it is not a line on it.

Capacity is bought on your peaks, and someone else calculates the number

Capacity converts your contribution to system peaks into a quantity that is bought on your behalf, and in every market that quantity is calculated rather than negotiated. In PJM the peak load contribution is a calculated value produced by the electric distribution company, and PJM publishes an inventory of the per-EDC methodologies precisely because they are not identical across zones. In New England the Installed Capacity Requirement is the minimum total system capacity needed to meet the Northeast Power Coordinating Council's resource adequacy criteria, with a net figure after tie benefits, calculated for each Forward Capacity Auction; your share of it is an allocation, not a number you can argue about at signature. ERCOT runs no capacity market of that shape: its four coincident peak programme calculates, for each distribution service provider, the system peaks in June, July, August and September, and Oncor bills the transmission cost recovery factor component of its invoice on that 4CP kW. The distinction to hold on to is that your individual maximum demand and your system-coincident demand are different numbers, and only the second one sets the allocation.

• PJM: the EDC calculates the peak load contribution under a methodology filed for its own zone.
• ISO-NE: the regional requirement is set through the Forward Capacity Auction, and a customer's exposure is an allocated share of it.
• ERCOT: four summer system peaks, one per month, averaged into a transmission allocation rather than a capacity obligation.
• A spike on a day the system did not peak affects your delivery demand charge and leaves the capacity allocation untouched.

The ratchet floors your billing demand whether or not you used the power

A delivery tariff can bill demand at the greater of the current month's measured demand and a stated percentage of the highest demand in a lookback period, commonly the preceding eleven or twelve months. The formula is the maximum of the two numbers. The percentage and the lookback are tariff facts rather than market conventions, so they have to be read off your own rate schedule; what matters for planning is the mechanism, because a shutdown, a seasonal lull or a half-occupied building does not reduce the billed demand when the ratchet floor is higher than the month's actual draw. Two things a ratchet does not do. It does not change your capacity tag or your 4CP number, which are separate calculations run by the market and the distributor. And it does not change the supply agreement, which prices energy and whatever capacity it has agreed to pass through. A large account that shrinks its operations without checking the ratchet discovers this on the first quiet month.

• Billing demand = the greater of current measured demand and the ratchet percentage times the prior maximum.
• The ratchet lives in the delivery tariff; the capacity tag lives in the market's allocation methodology.
• Both survive a low-usage month, which is why a vacancy does not produce a proportionate reduction.

Fixed, block-and-index, load-following: say which part is fixed

A full-requirements contract has the supplier serve your actual consumption for the term, which puts volume and shape risk on the supplier and puts the cost of carrying it into the price. A block-and-index contract fixes a quantity — a 7x24 block, a 5x16 on-peak block, a monthly or seasonal shape — and settles the difference between that block and your actual usage at an index; product sheets describe exactly this split, with the pre-purchased block at a fixed price and usage above it floating at the current index. Load-following fixes a percentage of expected energy and settles the remainder against a chosen index. The word that decides the outcome is not fixed but of what: a percentage of annual kWh, a percentage applied to each month's forecast, and a percentage that follows the hourly shape are three different contracts, and a 50 per cent annual hedge can leave most individual hours unhedged. A heat-rate product replaces the power index with a gas index multiplied by a contractual heat rate and adds a fixed adder, which is a gas exposure wearing an electricity label.

• Full requirements: the supplier carries volume and shape, and you pay for that transfer.
• Block-and-index: the block is fixed, the balance floats, and the block's definition is the contract.
• Load-following: a fixed percentage plus an index on the residual, with the reference load written down.
• Heat rate: gas index × contractual heat rate + adder, so the gas market sets the number.

Losses, settlement point and the volume you are actually buying

The electricity recorded at your meter is not the quantity procured at the settlement point; a loss or uplift factor bridges the two, expressed either as a percentage or as a multiplier. Scale makes this visible. At three million kWh a year, a five per cent loss adjustment is 150,000 kWh of settlement volume, which is the reason the contract has to say whether losses are embedded in the quoted price or passed through, which factor applies at your voltage, whether it varies by customer class, and what happens if the distributor changes it during the term. The same discipline applies to every other pass-through in the agreement. Capacity, transmission, ancillaries, renewable obligations and taxes are either inside the price or outside it, and a quote that does not label them cannot be compared with one that does. Two offers can differ by several per cent on exactly this question before any difference in the energy price is considered.

• Settlement volume = metered kWh × (1 + loss factor).
• Ask whether the factor is embedded or passed through, and which factor applies at your voltage.
• Label every pass-through before comparing; an unlabelled one is not a lower price, it is an unknown one.

Credit, term and the questions to settle before signing

A large agreement is a credit arrangement as well as a price. A supplier buys wholesale energy before it is paid for it, so the security the contract requires is a function of term, index exposure and its review of your legal entity — and the forms are the familiar ones: an unsecured limit, a parent guarantee, a letter of credit, a deposit, or collateral above a stated threshold. Ask what triggers additional collateral, how it is valued, how long a cure period runs, whether a deposit earns interest and when it is released. Then settle the questions that decide the shape of the buy rather than its level: which meters are in scope, whether capacity and transmission sit inside or outside the price, which index applies to the floating portion and at which hub, what volume tolerance applies if your load moves, and who can add or drop a meter mid-term. Those answers belong in the agreement, not in an email that preceded it.

• Ask for the collateral triggers, valuation method, cure period and release conditions in writing.
• Fix the index, the hub and the settlement convention for any floating portion of the volume.
• Decide who may add or drop a meter mid-term, and on what notice.

Where HighGround fits

This page explains how a large account is priced; it does not price yours. An inquiry starts with the account inventory — meters, rate schedules, twelve months of interval or billing data, expiration dates — because that is the input set any supplier or advisor needs before a number means anything. Availability depends on the service address, the meter and the utility territory: municipal utilities, cooperatives and some jurisdictions have no retail choice at all, and a large account in one of them buys from the utility under a filed tariff whatever its annual volume. HighGround may receive compensation from providers on completed purchases. An inquiry places no order and switches no supplier.

PUT THE OPTIONS SIDE BY SIDE

Your comparison checklist

Common questions