What is being modeled in this PJM hotel example?
This is a hypothetical full-service hotel in the PECO zone of PJM. There is no client, site address, assigned utility tag, supplier invoice, or observed reduction. Assume a 300 kW capacity tag and a commercial agreement that calculates a separate capacity component from an adjusted obligation. The purpose is to reconcile units and decision scenarios, not reproduce a complete utility methodology or present an actual supplier offer.
An capacity-tag sensitivity shows how an assumed change in a power-based obligation affects a defined cost component while other inputs are held constant. The bills hub provides the broader bill context. Capacity should remain separate from the hotel’s energy quantity and monthly delivery demand unless the actual agreement explicitly combines the relevant costs.
PJM Manual 18, Revision 63 effective September 24, 2026 and reviewed October 12, 2026, distinguishes zonal obligations, scaling factors, customer contributions, and load-serving-entity daily obligations. Its updated Sections 7.2–7.3 include forecast-load adjustments. Those wholesale procedures do not make the hotel’s retail charge equal to the teaching formula below. The invented 1.10 combined adjustment is not a prescribed PJM factor; replace it with the actual applicable determinants and executed agreement before calculating an account’s charge.
Which inputs are assumed rather than verified market values?
Assume the assigned tag is 300 kW, the applicable combined adjustment factor is 1.10, and the modeled retail capacity component price is $250 per MW-day. The factor and price are invented inputs. The price is not a PJM auction result. Assume a 365-day delivery period and, for one monthly illustration, a 31-day billing period. No current hotel obligation or live market quotation is implied.
Also assume annual electricity of 1,440,000 kWh, 200 available rooms, and 70% occupancy throughout the 365-day period. These are independent worksheet quantities, not a consumption benchmark for full-service hotels. Assume the isolated component contains any capacity-specific pricing adder. Other supply components, delivery, taxes, and separate compensation outside this component are omitted.
The actual billing record needs the verified tag, utility methodology, delivery year, zone, factors, agreement coverage, and days. Retain the source for each determinant and identify estimates.
How do kW, MW, and daily prices reconcile?
Begin by converting 300 kW ÷ 1,000 = 0.300 MW. Multiply by the assumed 1.10 adjustment factor to obtain 0.330 MW. Then multiply 0.330 MW × $250 per MW-day = $82.50 per day. Finally, $82.50 × 365 days = $30,112.50 for the assumed delivery period. Units cancel in sequence, leaving dollars.
For the assumed 31-day billing period, the same daily component is $82.50 × 31 = $2,557.50. Do not multiply an annual figure by 31 or treat the daily price as dollars per kWh. Both mistakes would mix power obligations, time, and energy quantities. A spreadsheet should show the unit next to each input so the reviewer can follow the cancellation.
| Assumed determinant | Baseline calculation | Result |
|---|---|---|
| Assigned tag | 300 kW ÷ 1,000 | 0.300 MW |
| Adjusted obligation | 0.300 MW × 1.10 | 0.330 MW |
| Daily component | 0.330 MW × $250/MW-day | $82.50/day |
| 31-day illustration | $82.50/day × 31 | $2,557.50 |
| 365-day illustration | $82.50/day × 365 | $30,112.50 |
PJM’s guide to billing describes wholesale daily unforced-capacity obligation charges at the applicable zonal price. This supplies the wholesale context for the units. The hotel is evaluating a hypothetical retail component, not receiving a direct PJM invoice through this example.
What changes if the future assigned tag is lower?
In a second scenario, assume a future assigned tag of 240 kW, with the same 1.10 factor and $250 per MW-day component price. Convert 240 kW to 0.240 MW, then adjust to 0.264 MW. The daily component becomes $66.00. The 365-day component is $24,090, and the 31-day component is $2,046.
The annual modeled difference is $30,112.50 − $24,090 = $6,022.50. The monthly difference is $2,557.50 − $2,046 = $511.50. Each reflects the assumed 20% tag change with other inputs unchanged. These are arithmetic differences, not expected savings or evidence that the hotel can reduce its actual assigned tag by 60 kW.
Before choosing an operating project, identify the relevant measurement periods and the utility’s actual adjustment method. PJM’s PLC and NSPL methodology inventory lists utility-specific procedures, including PECO. A simplified average of selected hotel peaks is not necessarily the final customer tag. Meter class, utility adjustments, and governing methodology must be checked.
What if price rises while the tag falls?
For an adverse-price scenario, keep the lower 240 kW assumed tag and 1.10 factor but use an invented component price of $325 per MW-day. This is a hypothetical input even if a reader recognizes similar values from market reporting; it is not cited here as an auction result. The adjusted obligation remains 0.264 MW. Its daily component becomes $85.80 and its 365-day component becomes $31,317.
That is $1,204.50 above the baseline annual illustration despite the lower tag. The scenario shows why a physical or assigned-obligation change and a price change should be tested independently. It does not forecast the price direction or assign a likelihood to either scenario. A smaller obligation does not automatically produce a smaller capacity dollar component when the applied price changes.
The break-even component price for the lower tag is $30,112.50 ÷ (0.264 MW × 365 days), or $312.50 per MW-day. Under these assumptions, a lower-tag scenario priced below that figure costs less than the baseline component; above it, the component costs more. This is a worksheet threshold, not an offer or trading recommendation.
How should the capacity component appear in hotel ratios?
Divide the baseline annual component by the assumed annual 1,440,000 kWh to obtain approximately $0.02091 per kWh. The lower-tag, unchanged-price scenario is about $0.01673 per kWh. These are allocated capacity-component equivalents for explanation. They do not convert the original charge into an energy-based tariff or establish a retail supply rate.
Annual occupied room nights are 200 × 365 × 70% = 51,100. The baseline capacity component is about $0.589 per occupied room night; the lower-tag scenario is about $0.471. If occupancy changes while the assigned tag and component remain unchanged, that ratio changes through its denominator. It should not be labeled total energy cost per occupied room.
Use matching energy and room-night periods for monthly ratios and identify partial periods.
How do retail coverage and project timing affect the decision?
Consider two hypothetical contract treatments. One fixes capacity inside an all-inclusive supply component for the stated term. The other passes an adjusted obligation through at its stated formula. A tag change may affect their current invoices differently. The comparison must come from the actual documents; the operating project alone cannot establish how each supplier will bill it.
For a future tag scenario, record when the operating change occurs and when its measurements can enter the relevant obligation period. A current reduction should not be booked as an immediate change to an already assigned tag without verified support. Track the actual utility-issued determinant and the first invoice using it. Keep project performance and contractual treatment distinguishable in the owner’s budget.
Broker compensation may be embedded or separate. Include it once in the complete comparison. If the accepted supply component already covers capacity, adding this standalone sensitivity as another cost would double count. This example isolates one component specifically so its relationship to the broader agreement can be inspected.
What should a reviewer verify before using this calculation?
- Confirm the utility zone, customer identifier, tag source, and applicable delivery year.
- Identify every factor needed to translate the verified determinant into the agreement’s obligation.
- Convert kW to MW and use a price with matching MW-day units.
- Multiply by the exact modeled period’s days and reconcile monthly and annual boundaries.
- Test tag and price changes separately, with assumptions labeled.
- Check included capacity, compensation, notices, and invoice treatment for duplicate costs.
The ComEd supply-structure example, Texas four-coincident-peak example, and Maryland demand-ratchet example address different determinants. A capacity worksheet should not borrow their formulas simply because all three involve a hotel’s peak-related costs.