What is 4CP and how can Texas businesses reduce 4CP charges?

4CP is the primary driver of transmission charges for most Texas C&I customers, and understanding how the four coincident summer peaks are calculated lets a business target the specific 15‑minute intervals that set next year’s bill. By shaving demand during those intervals, a company can cut its transmission allocation by tens of thousands of dollars, but the effort must be weighed against operational constraints and capital costs.

How ERCOT Defines the Four Coincident Peaks

ERCOT monitors real‑time demand at each node in 15‑minute intervals. For the summer transmission season (June 1 through Sept 30), ERCOT identifies the single highest‑demand interval in each of four separate months—typically one in June, July, August, and September. The rule is that the four intervals must be coincident: they are the highest system‑wide demand points, not the highest demand for any individual customer. These four intervals become the “4CP” and are published after the season ends. The total 4CP transmission cost—about $150 million annually across the ERCOT footprint—is then allocated to each participant based on its contribution to demand during those intervals.

How Your Share Becomes a Transmission Charge

Your 4CP charge is calculated in three steps:

1. Measure your demand during each of the four identified 15‑minute intervals (in kW).
2. Sum the four values to get your 4CP demand footprint.
3. Allocate cost: ERCOT publishes the total 4CP transmission cost for the season. Your share equals (your 4CP demand ÷ total system 4CP demand) × total cost.
   Because the denominator is the same for every customer, a modest reduction in your 4CP demand can produce a disproportionate dollar impact. For example, a 5 % drop in a 500 kW 4CP footprint can shave roughly $12,000–$15,000 off the next year’s transmission bill, depending on the final cost pool.

Predicting the Next 4CP – Services and Tools

Accurately forecasting which 15‑minute windows will become the next 4CP is a specialized skill. ERCOT releases a “Projected 4CP” schedule mid‑summer, but the final set can shift as weather patterns evolve. Most Texas businesses rely on three resources:

• Internal load‑forecasting models that ingest weather, production schedules, and historical demand.
• Third‑party prediction services that combine ERCOT data with machine‑learning algorithms.
• UPG’s free Energy Health Check, which includes a bill review and a TDSP delivery‑charge audit, and can surface hidden 4CP exposure in minutes. These tools give you a shortlist of high‑risk intervals weeks in advance, allowing you to plan mitigation actions.

Operational Strategies to Reduce 4CP

Load Shifting and Pre‑Cooling

If your facility can tolerate a 1–2 °C temperature rise, pre‑cooling the building or process equipment an hour before a predicted peak can shift a few hundred kilowatts off the 4CP window. Thermal storage tanks, chilled‑water loops, or ice‑storage systems are common in Texas manufacturing.

Battery Discharge or On‑Site Generation

A 500 kW battery can fully cover a 15‑minute peak, eliminating your contribution to that interval. The economics depend on the battery’s round‑trip efficiency and the value of avoided 4CP charges, which can be up to $30/kW‑year in high‑cost years.

Demand‑Response Participation

ERCOT‑approved demand‑response aggregators can dispatch your load during 4CP events for a pre‑negotiated payment. Payments typically range from $0.05 to $0.15 per kWh curtailed, which often exceeds the marginal cost of the 4CP charge.

Process Rescheduling

Non‑critical processes—such as batch production, water treatment, or HVAC‑intensive cleaning—can be shifted to off‑peak hours. Even a 30‑minute shift for a 200 kW process can reduce your 4CP footprint by 1.3 %.

Contract Structures

Fixed‑rate contracts lock in a transmission component that is independent of 4CP, while block and index contracts can provide a hedge against volatile 4CP spikes. UPG’s supplier panel of 30 + top‑tier REPs can structure a hybrid contract that caps transmission exposure at a negotiated level.

When Chasing 4CP Isn’t Worth It

Not every business benefits from aggressive 4CP mitigation. Consider these signals:

• High load factor – If your facility runs near capacity year‑round, the incremental cost of adding storage or demand‑response may exceed the savings.
• Critical processes – Industries that cannot tolerate temperature or production variance (e.g., food‑processing safety limits) may find the operational risk too high.
• Capital constraints – Battery or thermal‑storage projects often require multi‑year capital commitments. If your internal rate of return is below the effective 4CP avoidance rate (often 8‑12 % after tax), the project fails the financial test.
• Diminishing returns – After the first 10‑15 % reduction, each additional kilowatt shaved yields a smaller dollar impact because the cost pool is shared among many participants. In those cases, focusing on broader energy‑cost strategies—such as negotiating better fixed‑rate terms or improving overall efficiency—delivers a higher ROI.

How UPG Can Help You Navigate 4CP

United Power Group brings 25 + years of Texas market expertise to the table. We serve more than 8,000 business customers and have saved clients an average of $3.2 M annually through targeted procurement and demand‑side actions. Our 30 + supplier panel enables us to negotiate contracts that can reduce total spend by up to 27 %. Through a free Energy Health Check, we audit your bill, verify TDSP delivery‑charge allocations, and pinpoint 4CP exposure. From forecasting to implementation of battery‑discharge or process‑shift plans, UPG provides a consultative roadmap that balances cost savings against operational risk.

Bottom line

4CP charges are a predictable, high‑impact component of Texas C&I electricity bills. By identifying the four summer peak intervals, measuring your contribution, and applying targeted load‑shifting, storage, or demand‑response tactics, you can reduce transmission spend by tens of thousands of dollars. However, the effort must be justified against capital costs and operational flexibility. Leveraging UPG’s 25‑year expertise, free Energy Health Check, and supplier relationships can accelerate the analysis and ensure that any 4CP mitigation delivers a net financial benefit.