Fair Plan

What is the Fair Plan?

The Fair Plan is specifically designed for qualified residential customers, typically those with higher electricity usage than the average home in their area.  It splits their energy supply charges into two types…

  • Fixed Monthly Charges with No Markup
  • Usage-Based Energy Rate

Other suppliers usually charge a single all-in, usage-based energy rate that covers both their fixed and usage-based costs, but this does not benefit everyone. In fact, this method results in certain customers paying less than their cost to supply the energy and some customers with high-usage paying more than their cost to supply.

For many customers, passing through the fixed monthly costs with no markup can result in savings on their energy bill.

Who does the Fair Plan benefit?

The Fair Plan benefits qualified residential customers with higher electricity usage than the average home in their area, but more precisely, those whose usage is higher than average and consistent…not those that are really high sometimes and average to low at other times.

Think higher than average and steady – that’s a Fair Plan candidate.

How does the Fair Plan work?

Most customers don’t know the different costs incurred by suppliers to deliver electricity to their home, mainly because all those costs are embedded in one all-in, usage-based rate.  They also don’t know that some of those costs are fixed each month…not usage-based.  Well, what if you pay more than your fixed costs because your usage is high? You’ll never know with an all-in rate.

By splitting the energy charges into two types – a Fixed Monthly Charge (with no markup) and a Usage-Based Energy Rate – Fair Plan customers don’t pay more than their fixed monthly costs each month.  This can result in savings that are best explained in the example shown in the table below.

*Each customers usage, energy rate, fixed cost and savings will be unique to their home.

 

 

What are the fixed costs of my electricity supply?

There are two fixed-cost components to your electricity supply – Capacity and Network Integrated Transmission Service or NITS.

Capacity costs are associated with grid reliability. Payments go to generators (power plants) to ensure there is always enough electricity generation to meet your demand.  These costs are based on your  home’s peak demand, ie highest usage hour, within a calendar year.

NITS payments go to transmission owners to recover their annual transmission costs and revenue requirements from PJM network customers. Transmission is the bulk transfer of electrical energy from generating power plants to electrical substations located near demand centers. This is different from distribution which is the local wiring between high-voltage substations and customers.

These costs are different for each customer because peak demand is different for each customer.  A customer’s peak demand is identified by their tags – Peak Load Contribution (PLC) tag and Network Service Peak Load (NSPL) tag.

Can my fixed costs for Capacity and NITS change?

Yes, but not by your supplier.  These costs are calculated by the grid operator (PJM) or transmission owners and charged to your electricity supplier or utility.  They change when either a customer’s tag changes or when PJM and the transmission owners adjust their charges.

What is PLC (Peak Load Contribution) Tag?

PJM PLC’s are calculated by PJM 5 Coincidental Peaks from the previous year (5 highest demand hours between June to September for the entire region

What Is NSPL (Network Service Peak Load) tag?

NSPL is a value unique to each customer and is determined by their electricity demand level during their local utility’s zonal transmission network peak(s).

What is PJM?

PJM Interconnection is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

Acting as a neutral, independent party, PJM operates a competitive wholesale electricity market and manages the high-voltage electricity grid to ensure reliability for more than 65 million people.

PJM’s long-term regional planning process provides a broad, interstate perspective that identifies the most effective and cost-efficient improvements to the grid to ensure reliability and economic benefits on a system-wide basis.

An independent board oversees PJM’s activities. Effective governance and a collaborative stakeholder process help PJM achieve its vision: “To be the electric industry leader – today and tomorrow – in reliable operations, efficient wholesale markets, and infrastructure development.”

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