Lowering kW Through Efficient Building Systems
If your electric bill has felt heavier than usual this summer, kW is likely the reason. Demand, measured in kilowatts (kW), is a recording of your property's peak 15-minute interval of electric usage in a given billing period. Unlike consumption, which reflects how much energy you use over time, demand reflects how hard your systems pull at their busiest moment. One extreme heat day can set that peak for the entire month.
Con Edison prices demand differently across the year, with summer months carrying a meaningfully higher rate per kW than the rest of the year. Their summer block covers the months of June through September. On a typical EL8 master meter, demand now makes up 60 percent or more of delivery charges, compared to roughly 25 percent for energy (or kWh), with the remainder split among System Benefit Charges, taxes, and other line items. This is a shift from years past, when demand and energy made up a closer to even split of delivery charges, and the trend has only accelerated recently:
· Summer kW rates: up 40 percent since 2023 (3 percent of that in 2026 alone)
· Energy usage rates: down 27 percent since 2023 (7 percent of that in 2026 alone)
NYC saw its first heat wave of the season this July, and the billing period covering it may turn out to carry some of the most expensive demand charges on record.
Con Ed points to several reasons for the rate increases, but two stand out as the main drivers. The first is grid infrastructure and reliability. Con Edison has been replacing aging equipment, reinforcing feeders, and modernizing substations to improve the reliability of the electric system. The second is preparing for greater electricity demand. New York's electrification policies are expected to increase demand from heat pumps, electric vehicles, new construction, and other uses that previously relied on fossil fuels. To keep up, Con Edison needs to expand the equipment that generates, moves, and delivers power across the grid before that additional demand arrives.
The good news is that demand is manageable, and there are strategies to address it that work year-round, not just during summer's peak pricing. Some of these come from reducing overall energy consumption in the first place, while others come from being smarter about when equipment runs. The same projects that reduce peak demand also support your building's Local Law 97 compliance and broader sustainability goals, making this a rare case of one investment paying off twice.
A few strategies worth a closer look:
· Load shifting. Beyond reducing overall consumption, one of the most practical ways to lower peak demand is to shift when equipment runs rather than letting it all draw power at once. Staggering start-ups, such as reducing power elsewhere for 20 to 30 minutes before ramping up a chiller, spreads out demand and avoids stacking spikes on top of each other. This can be done manually, but it takes discipline and constant attention from building staff. Or a BMS system can control it.
· BMS systems. A building management system makes load shifting, and demand management generally, far easier to execute consistently. Rather than relying on staff to manually sequence equipment, a BMS gives operators a central point to automate timing, monitor demand in real time, and catch issues before they show up on the bill.
· HVAC and chiller upgrades. Aging or oversized equipment often runs harder than it needs to, especially during peak cooling hours. Right-sizing or replacing this equipment can meaningfully reduce peak demand readings.
· Roof exhaust fans. These units run continuously and are frequently overlooked, but outdated motors draw more power than necessary around the clock. Upgrading to variable-speed or properly sized fans is a lower-visibility opportunity that can still move the needle on demand.
· Building envelope improvements. Better insulation, air sealing, or window upgrades reduce how hard HVAC systems need to work to hit setpoints, which lowers cooling demand in the summer. As a bonus, since most NYC buildings rely on fossil fuel heating, the same improvements also reduce fuel consumption in the winter, extending the benefit beyond just electric costs.
These are the kinds of projects that pay for themselves in avoided demand costs and lower consumption while also supporting sustainability targets, making now a good time to put them on the radar as next year's budget planning takes shape. Many of these upgrades also qualify for incentives that can meaningfully offset the upfront cost. If your building is ready to take the next step toward decarbonization, kW reduction, or unlocking available incentives, Aurora Energy Advisors can help you build the roadmap.
Market Analysis
Natural Gas
Natural gas prices have declined in recent weeks despite periods of hot weather. Record U.S. production, stronger than expected storage injections, and temporary reductions in LNG export demand have outweighed weather driven demand, leaving the market well supplied. As a result, the prompt month NYMEX contract has fallen below $3.00/MMBtu and is trading near some of its lowest levels in several months.
Electricity
NYISO Zone J electricity prices experienced significant volatility in early July as a heat wave drove peak demand across New York City. Daily average wholesale prices climbed into double digits and reached nearly 30 cents/kWh during the hottest days of the month. As temperatures moderated, electricity prices returned to more typical seasonal levels, averaging approximately 5 to 6 cents/kWh for the remainder of July. Looking ahead, wholesale electricity prices will continue to be driven primarily by weather conditions and natural gas prices through the rest of the summer.
Crude Oil
September WTI crude oil futures have swung sharply this month, climbing from the high $60s to nearly $94 per barrel before pulling back into the low $80s, reflecting developments around the Strait of Hormuz and Red Sea shipping routes. Prices surged on supply disruption fears linked to regional conflict, then retreated as U.S.-Iran diplomatic efforts progressed. Futures remain elevated relative to earlier in the year, and continued volatility is likely into August.
💡 Mitchell’s Tip: Invest in energy efficiency projects.