What Is the 4CP Program and Why It Matters
The 4 Coincident Peak program, commonly known as 4CP, is the mechanism by which ERCOT allocates transmission costs to commercial and industrial electricity consumers across Texas. Transmission costs typically represent 15 to 25 percent of a commercial building's total electric bill, making 4CP one of the most significant cost drivers that property managers can actively influence through operational decisions.
The program works by measuring each customer's electricity demand during the single highest-demand 15-minute interval on the ERCOT grid during each of the four summer months: June, July, August, and September. Your demand during those four peak intervals determines your share of the total ERCOT transmission cost for the following year. The higher your consumption during those four peak intervals, the larger your transmission cost allocation. Conversely, if you can reduce your consumption during those peaks, your transmission charges for the entire following year decrease proportionally.
The Financial Impact of 4CP
For a commercial property consuming 2,000 kW of peak demand, the transmission cost allocation based on 4CP performance can range from $80,000 to $140,000 per year depending on the TDU territory and the customer's demand during the peak intervals. A successful 4CP curtailment strategy that reduces demand by 40 percent during the four peak intervals can save $30,000 to $55,000 annually for a single property. Across a ten-property Texas portfolio, the savings potential is substantial enough to justify dedicated operational resources and technology investments.
How ERCOT Determines the 4CP Intervals
The 4CP intervals are not scheduled in advance. They are determined retroactively based on when the ERCOT system-wide demand reaches its single highest 15-minute peak during each summer month. The peak typically occurs on the hottest weekday afternoon in each month, usually between 3:00 PM and 5:00 PM, when commercial and residential cooling loads converge with industrial demand.
Because the exact timing of the peak is unknown until after it occurs, 4CP participants must monitor grid conditions in real time and make curtailment decisions based on probabilistic forecasts. ERCOT publishes system-wide load forecasts, weather data, and real-time demand information that experienced operators and third-party 4CP management firms use to predict when the monthly peak is likely to occur.
Predicting Peak Days
Several indicators signal a high probability of a 4CP event. The most reliable signals include ERCOT day-ahead load forecasts that exceed recent peaks, weather forecasts projecting temperatures above 100 degrees Fahrenheit across the Dallas, Houston, and San Antonio metro areas simultaneously, low wind generation forecasts during the afternoon hours, and weekday timing during the latter half of the month when cumulative heat buildup has maximized cooling demand. Third-party 4CP alert services combine these signals into actionable notifications, typically issuing warnings 24 hours in advance and confirmed alerts two to four hours before the anticipated peak window.
Curtailment Strategies for Commercial Buildings
Effective 4CP curtailment requires a building-specific plan that identifies which loads can be reduced or eliminated during a two- to four-hour window without unacceptably disrupting operations or tenant comfort. The most common curtailment strategies for commercial properties fall into three categories.
- Pre-cooling and HVAC setpoint adjustment. The single most effective strategy for most commercial buildings. By pre-cooling the building to 70 or 71 degrees during the morning hours and then raising setpoints to 76 or 78 degrees during the anticipated peak window, HVAC demand can be reduced by 30 to 50 percent during the critical interval. The thermal mass of a large commercial building provides a natural buffer that limits temperature drift during the curtailment period.
- Lighting reduction. Reducing interior lighting by 30 to 50 percent during the curtailment window can shave 5 to 10 percent off total building demand. In buildings with daylight harvesting systems, this reduction may be imperceptible to occupants. Exterior and parking structure lighting can often be fully shut down during afternoon peak hours without safety concerns.
- Discretionary load shedding. Non-essential loads such as electric water heaters, kitchen equipment in common areas, EV chargers, and decorative lighting can be temporarily shut down during the curtailment window. For properties with on-site laundry or fitness facilities, scheduling these operations outside the peak window eliminates their contribution to the peak demand measurement.
A Class A office building in the Galleria area of Houston reduced its 4CP demand by 38 percent through a combination of pre-cooling, lighting reduction, and elevator bank scheduling. The resulting transmission cost savings exceeded $42,000 in the first year, with no reported tenant comfort complaints.
Technology and Automation for 4CP Management
Manual 4CP management, where a building engineer receives a phone call or email alert and then walks through the building adjusting equipment, is unreliable and limits the curtailment depth that can be achieved. Modern 4CP programs rely on building automation systems that can execute pre-programmed curtailment sequences automatically when triggered by a 4CP alert signal.
The essential technology components for an automated 4CP program include real-time interval metering that provides 15-minute demand data with minimal latency, a building automation system capable of executing multi-step curtailment sequences including HVAC setpoint changes and load shedding commands, integration with a 4CP alert service that provides automated trigger signals, and a monitoring dashboard that allows property managers to verify curtailment performance during and after each event.
The Role of Battery Storage
Behind-the-meter battery storage systems offer a complementary approach to 4CP demand reduction. A battery system sized to cover 30 to 50 percent of a building's peak demand can discharge during the 4CP window, reducing the grid-visible demand without any impact on building operations or occupant comfort. The battery charges during off-peak hours when wholesale electricity prices are low, creating a cost arbitrage opportunity that supplements the 4CP transmission savings. For buildings where operational curtailment is difficult due to tenant sensitivity or critical loads, battery storage may be the most practical path to meaningful 4CP savings.
Common Mistakes in 4CP Programs
Even well-intentioned 4CP programs can underperform due to a few recurring mistakes that property managers should actively avoid.
- Curtailing on the wrong days. Over-responding to false alerts wastes operational effort and causes unnecessary tenant disruption. Under-responding means missing the actual peak. The quality of the 4CP alert service and the accuracy of the prediction model directly determine program effectiveness. Evaluate alert providers based on their historical accuracy, not just their marketing claims.
- Ignoring the 15-minute measurement interval. The 4CP measurement is based on the average demand over a 15-minute interval, not the instantaneous peak. A building that ramps down load gradually over 20 minutes may still register a high demand for the first measurement interval. Curtailment sequences must execute within minutes, not gradually over an hour.
- Failing to verify performance. After each curtailment event, review the interval meter data to confirm that the building actually achieved the target demand reduction. Building automation systems do not always execute commands as expected, and equipment malfunctions can negate the planned curtailment.
- Not communicating with tenants. Tenants who are surprised by temperature changes or lighting reductions during a 4CP event may file complaints or override building automation settings. Proactive communication explaining the program and its benefits can turn tenants into allies rather than obstacles.
Implementing a 4CP Program: A Step-by-Step Approach
For property managers new to 4CP management, the following implementation roadmap provides a structured path from assessment to execution.
- Baseline your current 4CP exposure. Obtain your historical 4CP demand data from your REP or TDU and calculate your current transmission cost allocation. This establishes the savings potential and provides a benchmark for measuring program performance.
- Audit curtailable loads. Walk each building with the engineering team to identify every load that can be reduced or shifted during a two- to four-hour afternoon window. Quantify the demand reduction potential of each load category.
- Program the building automation system. Create curtailment sequences that can be triggered automatically by an external signal. Test each sequence during a non-critical period to verify that it executes correctly and achieves the expected demand reduction.
- Select a 4CP alert service. Subscribe to a reputable 4CP prediction and alert service that provides advance notification of probable peak days and automated trigger signals for building automation systems.
- Execute and measure. During each summer month, respond to 4CP alerts by activating the pre-programmed curtailment sequences. After each event, review interval meter data to verify performance and adjust the curtailment plan as needed for subsequent events.
The 4CP program represents one of the few areas in commercial energy management where operational decisions directly and measurably reduce a specific cost component. For Texas property managers willing to invest in the planning and technology required, the returns are reliable, quantifiable, and recurring year after year.