4CP Is an Hourly Problem
ERCOT's Four Coincident Peak sets a year of transmission charges on four 15-minute intervals. The direction is easy; the hour is not.
Every summer, ERCOT market participants face the same structural problem, which devolves into a high-stakes guessing game.
ERCOT calculates annual transmission charges — the Four Coincident Peak, or 4CP — based on a single 15-minute interval in a single hour in each of four months: June, July, August, and September. Your average load across those four intervals sets your share of transmission costs for the next twelve months.
The exposure is real, it's quantifiable, and it arrives on a schedule. What's never been easy is positioning against it with precision.
This week, Thursday is the focus. ERCOT load is forecast above 84 GW and has been revised upward each day. Feels-like temperatures are expected well into the triple digits as Gulf humidity pushes inland, with conditions approaching the levels seen during the summer 2025 peak.
The directional read is straightforward. The hour is not.
Industrial loads face a harder version of this problem than most. Crypto and interruptible loads can curtail opportunistically. Traditional industrial facilities have longer lead times, require backup supply coordination, and can't respond to a signal that arrives too late. The decision must be made before the hour is confirmed, based on a forecast, with meaningful consequences in either direction.
Standard hedging products don't fully address this. An on-peak strip or 2x16 blunts the exposure but doesn't isolate it. You end up long or short a block of hours when the risk lives in one or two of them. That's risk carried by default, not by choice.
Hourly products isolate the exposure to the specific hours where the risk lives. Heading into Thursday there is solid liquidity sitting near the top of the book across the forecast peak window.
4CP risk is an hourly problem. Your hedge can now be an hourly solution.