Cost optimization of electrical contracted capacity for large customers

► We propose a methodology for the reduction of electrical costs for large customers. ► We optimize the contracted capacity using the historical behavior of the customer. ► Mathematical programming and forecasting tools are considered. ► A substantial reduction on the electric bill of a large Spanish hospital is reported. Reduction of costs is an important component of competitiveness. This paper proposes a methodology for the reduction of electrical costs for large customers, such as industrial companies or hospitals, whenever the electric supply tariff contains a time of use factor and penalizations due to excess of capacity demand (which are usual in a lot of countries). The proposed methodology uses statistical and optimization tools to take advantage of the information obtained from the historical behavior of the customer in order to balance the contract and excess terms in the bill and to allow an appropriate forecast of its future needs. To prove the usefulness of the proposed methodology, a case study is presented in which the electric bill of a large Spanish hospital is substantially reduced.