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Q. What’s the difference between capacity and energy? Does it change electricity prices?

by on May 16, 2012

A. It’s a good question. The two are very different commodities.

Capacity
Capacity is the physical amount of generation – power plants – the company has available to serve load in megawatts (MW); it represents power plants’ potential to generate electricity.

Capacity is related to peak demand. In other words, AEP Ohio must maintain a level of available capacity sufficient to meet the peak demand of its customers during the hottest summer days and the coldest winter nights and have some in reserve.

A utility’s capacity is calculated by totaling the capacity of each plant it owns and other contracted capacity it may have secured.

Energy
Energy is the amount of electricity (produced from capacity) customers consume over time. Energy is measured in megawatt-hours (MWH). Unlike capacity, each of us consumes or uses energy. When you turn on a light, plug in a computer or cool a home, you consume energy.

Retail marketing of electricity
Competitive Retail Electric Supply (CRES) providers must provide both generation capacity and electricity to participate in the market.  If they do not own one or both entities they must buy them.  This cost will affect the price they offer to retail electricity customers.

6 Comments
  1. I would like 2 know why in March I signed up with an alternative Energy Supplier, then my rates doubled & had 2 call AEP, and they stated they couldn’t comment on prices with other suppliers but could switch me back, so my rates would go back down and a then received a letter stating I could no longer accept an alternative supplier, because I was locked in with AEP when I changed back in April, 2012.

    • tom frank permalink

      did they say how long . I heard it was contract for two years what are they charging you on your kilowatt they say it’s got a be lower than 6 1/2 thanks for letting me know this God bless

  2. AEP Ohio permalink

    Hi Patricia,

    Would you please email your address, phone number and account number to help@aep.com? A customer service rep will look into the situation and respond via email.

    Thanks,
    Carey S.

  3. Richard permalink

    Why does American Electric Power (AEP) not support the new EPA rules. I kind of like what the EPA does to protect familys who do not have the resources to protect themselves from large companies. Yes, it is difficult for companies to work with these tough regulations in place. Just as my child complains when I ask him to keep his room clean but then never thanks me that didn’t trip over his toys injuring himself. We NEED the EPA and its tough regulations to protect our families from companies and oversee the safe production of energy. To downplay the EPA’s role in our society is just shameful.

  4. tom frank permalink

    We do not need an EPA, everything they have their hands the price goes up you got a be a stupid Democrats.. We need to get rid of the EPA. You ever dealt with these morons. I’ve seen a lot of businesses small ones. Go under.. The EPA has further crooked business most big ones..

  5. I really like what you guys are usually up too.

    This type of clever work and coverage! Keep up the very good works guys
    I’ve included you guys to our blogroll.

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