ERCOT 4CP: how four summer intervals set a year of transmission charges
For large Texas accounts, transmission cost is set by what the site drew during four 15-minute intervals: the moment of highest ERCOT-wide demand in each of June, July, August and September. That average, the 4CP, sets the transmission charge on every bill for the following year.
The 4CP method is under review
Texas Senate Bill 6 (2025) requires the Public Utility Commission of Texas to evaluate the 4CP method and amend its rules by December 31, 2026, in Project No. 58484. This page describes the method in use as of October 31, 2026, and will be updated when the Commission adopts a final rule.
How 4CP is measured
- After each summer month, ERCOT identifies the 15-minute interval with the highest total system demand. These usually fall on hot weekday afternoons.
- For each account with an interval data recorder (IDR) meter, the transmission and distribution utility (TDU) takes the account's average demand in each of the four intervals and averages the four numbers.
- That average, in kW, is multiplied by the TDU's transmission rate and billed every month of the following calendar year.
Three things follow from that method:
- Your own peak does not matter. What counts is what the site drew at the moment the whole grid peaked. A plant that peaks at 7 a.m. and slows by mid-afternoon can have a low 4CP.
- It is set once a year. Four intervals this summer set transmission charges for all of next year.
- It is a delivery charge. Switching retail electricity providers does not change it. Only the site's load during those intervals does.
Who it applies to
4CP-based transmission billing generally applies to accounts large enough to need an IDR meter, typically those with demand above about 700 kW, in the areas served by Oncor, CenterPoint Energy, AEP Texas and TNMP. Smaller accounts are billed for transmission on their own demand or usage.
Municipal utilities and cooperatives inside ERCOT, such as Austin Energy, CPS Energy and Pedernales Electric Cooperative, set their own retail rates. Their large-customer tariffs may or may not pass 4CP through the same way, so check the tariff for each account.
What it costs: a worked example
The charge is the account's 4CP in kW, times the TDU's transmission rate per kW per month, times 12.
| Scenario | 4CP | Rate | Annual transmission charge |
|---|---|---|---|
| Running normally during all four intervals | 4,000 kW | $5 per kW per month | $240,000 |
| Cutting load for about an hour around each interval | 2,500 kW | $5 per kW per month | $150,000 |
| Difference | $90,000 a year |
The $5 rate is illustrative, not a tariff rate. Transmission rates differ by TDU and change at least once a year.
How facilities lower their 4CP
ERCOT does not announce the peak interval in advance. Managing 4CP means predicting which afternoons are most likely to hold the monthly peak and reducing load around them.
- Use a peak alert. Several retail providers and third parties send alerts on days with a high chance of a monthly peak. Expect many more alert days than actual peaks.
- Decide what can move for an hour. Pre-cool and let HVAC coast, pause a batch process, shift compressor or pump cycles, or run on-site generation or storage.
- Automate the response. The peak lasts 15 minutes. A building system that acts on the alert is more reliable than a phone call.
- Price it into procurement. Some retail products share 4CP savings. Compare them against managing it yourself; see contract structures.
Data centers usually cannot reduce IT load. Those that manage 4CP rely on generation, storage or pre-cooling. New large loads in Texas are tracked in our Data Center Index.
Check the 4CP on your bill
The 4CP kW on a bill is a number someone calculated, and it can be wrong. Before planning next summer, test this year's:
- Find ERCOT's four published 4CP intervals for last summer.
- Pull your own interval data for those four intervals and average them.
- Compare the result with the 4CP kW your TDU is billing.
Look closely at accounts that had a meter exchange, a change of account holder or a new service during the summer. A difference is worth raising with the TDU, and it is part of what a utility bill audit checks on Texas accounts.
In PJM, the same idea is called a capacity tag
PJM sets capacity and transmission charges from peak hours of the prior summer too. See capacity tag errors.
What the review could change
Senate Bill 6 asks the Commission to evaluate whether the 4CP method still assigns transmission costs fairly across customers, including whether alternatives such as several seasonal peaks or different interval lengths would work better. As of October 31, 2026, no final rule had been adopted.
Until a rule is final, large Texas loads should budget under today's method and keep a second case that assumes 4CP curtailment is worth less than it is today.
Sources
- Texas Senate Bill 6, 89th Legislature (2025)
- Public Utility Commission of Texas, Project No. 58484, evaluation of transmission cost allocation
- ERCOT, published 4CP intervals
- Transmission tariffs of Oncor, CenterPoint Energy, AEP Texas and TNMP