Below is a glossary of terms that are helpful for energy shoppers. The list was compiled from the U.S. Energy Information Administration and other sources.
Any marketer, broker, public agency, city, county, or special district that combines the loads of multiple end-use customers in facilitating the sale and purchase of electric energy, transmission, and other services on behalf of these customers.
Necessary services that must be provided in the generation and transmission of electricity. As defined by the Federal Energy Regulatory Commission, they include coordination and scheduling services (load following, energy imbalance service, control of transmission congestion); automatic generation control (load frequency control and the economic dispatch of plants); contractual agreements (loss compensation service); and support of system integrity and security (reactive power or spinning and operating reserves).
The minimum amount of electric power delivered or required over a given period of time at a steady amount.
The generating level of output that is usually operated to serve loads on an around-the-clock basis.
The abbreviation for one billion cubic feet of natural gas is equivalent to one million Mcf.
An entity arranges the sale and purchase of electric energy, transmission, and other services between buyers and sellers. Still, it does not take title to any of the power sold and is sometimes referred to by energy suppliers as a channel partner.
Btu (British Thermal Unit)
A standard unit for measuring the quantity of heat energy equal to the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit.
Bundled Utility Service
All generation, transmission and distribution services are provided by one entity for a single charge. This would include ancillary services, transmission, capacity, energy supply and related services.
Reserve generation (in MW) is typically based on the highest hour or based on the average of several peak hours of use over a term.
Competitive Transition Charge
Typically assessed during the transition period between a traditional monopoly construct and a competitive model. A non-bypassable charge is levied on each distribution utility customer, including those served under contracts with non-utility suppliers, for recovery of a utility’s transition costs.
A characteristic of the power grid is produced by a constraint on the optimum economic operation of the power system, such that the marginal price of energy to serve the next increment of load, exclusive of losses, at different locations on the transmission grid.
Traditional electric utility regulation under which a utility is allowed to set rates based on the cost of providing services to customers and the right to earn a guaranteed profit.
Allows all customers to purchase their energy or gas from any number of retail suppliers that compete with each other.
The forward market for energy and ancillary services is to be supplied during the settlement period of a particular trading day conducted by the Independent System Operator (ISO), the power exchange, and/or other Scheduling Coordinators. This market closes with the ISO’s acceptance of the final day-ahead schedule.
A schedule is prepared by a Scheduling Coordinator or the Independent System Operator before the beginning of a trading day. This schedule indicates the levels of generation and demand scheduled for each settlement period that trading day.
Delivery Only Providers
Owners and/or operators of transmission and distribution system equipment who provide billing and related energy services for the transmission and delivery of electricity.
The rate at which electric energy is delivered to or by a system, part of a system, or piece of equipment, at a given instant or averaged over any designated period of time (typically measured in kW or MW).
A bid into the Day-Ahead market indicates a quantity of energy or an ancillary service that an eligible customer is willing to purchase and, if relevant, the maximum price that the customer is willing to pay.
The planning, implementation, and monitoring of utility activities designed to encourage consumers to modify patterns of electricity usage, including the timing and level of electricity demand. It refers only to energy and load-shape modifying activities that are undertaken in response to utility-administered programs. It does not refer to energy and load-shape changes arising from the regular operation of the marketplace or government-mandated energy-efficiency standards. Demand-Side Management (DSM) covers the complete range of load-shape objectives, including strategic conservation and load management, as well as strategic load growth.
The ability of a retail customer to purchase commodity electricity directly from the wholesale market, rather than through a local distribution utility.
The delivery of electricity to retail customers (including homes, businesses, etc.).
The portion of an electric system that is dedicated to delivering electric energy to an end user.
Electric Rate Schedule
A statement of the electric rate and the terms and conditions governing its application, including attendant contract terms and conditions that have been accepted by a regulatory body with appropriate oversite authority.
Electric Service Provider
An entity that provides electric service to a retail or end-use customer. Sometimes called an ESCO, an ARES, a CES, a TPS, an EGS, an ES, a REP, a CRES, an AES, and/or an ESP depending on the state. This list is not all inclusive, there are several other names/abbreviations used as well.
A corporation, person, agency, authority, or other legal entity or instrumentality that owns and/or operates facilities within the United States, its territories, or Puerto Rico for the generation, transmission, distribution, or sale of electric energy primarily for use by the public and files forms listed in the Code of Federal Regulations, Title 18, Part 141. Facilities that qualify as co-generators or small power producers under the Public Utility Regulatory Policies Act (PURPA) are not considered electric utilities.
The capacity for doing work is measured by the capability of doing work (potential energy) or the conversion of this capability to motion (kinetic energy). Energy has several forms, some of which are easily convertible and can be changed to another form useful for work. Most of the world’s convertible energy comes from fossil fuels that are burned to produce heat that is then used as a transfer medium to mechanical or other means to accomplish tasks. Electrical energy is usually measured in kilowatt-hours, while heat energy is usually measured in British thermal units.
That portion of the charge for electric service is based upon the electric energy (kWh) consumed or billed.
Energy Only Providers
Power marketers or other electricity vendors who provide an unbundled service and bill for only the energy component of the electricity consumed by the end-use customer.
Gas sold on a continuous and generally long-term contract.
Power or power-producing capacity intended to be available at all times during the period covered by a guaranteed commitment to deliver, even under adverse conditions.
Gas sold to customers with a provision that permits curtailment or cessation of service at the discretion of the distributing company under certain circumstances, as specified in the service contract.
Refers to program activities that, in accordance with contractual arrangements, can interrupt consumer load at times of seasonal peak load by direct control of the utility system operator or by the action of the consumer at the direct request of the system operator. It usually involves commercial and industrial consumers. In some instances, the load reduction may be affected by the direct action of the system operator (remote tripping) after notice to the consumer in accordance with contractual provisions. For example, loads that can be interrupted to fulfill planning or operating reserve requirements should be reported as Interruptible Load. Interruptible Load as defined here excludes Direct Load Control and Other Load Management. (Interruptible Load, as reported here, is synonymous with Interruptible Demand reported to the North American Electric Reliability Council on the voluntary Form EIA-411, “Coordinated Regional Bulk Power Supply Program Report,” with the exception that annual peak load effects are reported on the Form EIA-861 and seasonal (i.e., summer and winter) peak load effects are reported on the EIA-411).
A meter which records energy consumption for each hour of the day during a billing period.
One thousand watts.
One thousand watt-hours.
Locational Forward Reserve – Locational market to acquire forward commitments for ten and thirty-minute reserves.
Locational Marginal Price – Locational Marginal Price. An hourly price value which may be RT or DA and which varies by region and/or zone.
The amount of electric power delivered or required at any specific point or points on a system. The requirement originates at the energy-consuming equipment of the consumers.
Market Clearing Price
The price at which supply equals demand for the Day-Ahead and/or Real-Time Markets.
Electric service prices are determined in an open market system of supply and demand under which the price is set solely by agreement as to what a buyer will pay and a seller will accept. Such prices could recover less or more than full costs, depending upon what the buyer and seller see as their relevant opportunities and risks.
The greatest of all demands of the load that has occurred within a specified period of time.
One thousand cubic feet.
One million watts.
Megawatt hour (MWh)
One million watt-hours.
One million cubic feet.
One seller of electricity with control over market sales.
North American Electric Reliability Corporation – Develops and enforces reliability standards; monitors the bulk power system; assesses future adequacy; audits owners, operators, and users for preparedness; educates personnel.
Network Integrated Transmission Service – Service used to transport power across a transmission system to serve customers.
A regulatory mandate to allow others to use a utility’s transmission and distribution facilities to move bulk power from one point to another on a non-discriminatory basis for a cost-based fee.
The maximum load during a specified period of time.
Business entities engaged in buying, selling, and marketing electricity. Power marketers may or may not own generating facilities. Power marketers, as opposed to brokers, take ownership of the electricity and are involved in interstate trade. These entities file with the Federal Energy Regulatory Commission for status as a power marketer.
An association of two or more interconnected electric systems having an agreement to coordinate operations and planning for improved reliability and efficiencies.
To calculate proportionately across a billing cycle when a component(s) of the bill change during the billing cycle.
Purchase of Receivables
In a purchase of receivables (“POR”) program, the utility purchases the receivables of a retail supplier at a discount rate equal to the utility’s actual uncollectible rate percentage. This discount rate is then offset from the monthly payments the utility makes to the retail supplier and is subject to a periodic reconciliation process.
The value of capital investment upon which a utility is permitted to earn a specified rate of return as established by a regulatory authority. The rate base generally represents the value of capital used by the utility in providing service and may be calculated by anyone or a combination of the following accounting methods: fair value, prudent investment, reproduction cost, or original cost. Depending on which method is used, the rate base includes cash, working capital, materials and supplies, and deductions for accumulated provisions for depreciation, contributions in aid of construction, customer advances for construction, accumulated deferred income taxes, and accumulated deferred investment tax credits. In restructured (competitive) markets, utilities typically no longer place generating assets into the rate base.
A utility commission’s legal authority to fix, modify, approve or disapprove rates, as determined by the powers given the commission by a State or Federal legislature.
Regional Transmission Organization
A wholesale power industry concept that the Federal Energy Regulatory Commission embraced for the certification of voluntary groups of transmission and generation owners that would be responsible for transmission planning and grid reliability rules use on a regional basis. Also called an Independent System Operator (ISO).
The governmental function of controlling or directing economic entities through the process of rulemaking and adjudication.
Electric system reliability has two components – adequacy and security. Adequacy is the ability of the electric system to supply to aggregate electrical demand and energy requirements of the customers at all times, taking into account scheduled and unscheduled outages of system facilities. Security is the ability of the electric system to withstand sudden disturbances, such as electric short circuits or unanticipated loss of system facilities. The degree of reliability may be measured by the frequency, duration, and magnitude of adverse effects on consumer services.
The process of replacing a monopoly system of electric utilities with competing sellers, allowing individual retail customers to choose their electricity supplier but still receive delivery over the power lines of the local utility. It includes the restructuring of the vertically integrated electric utility.
Sales covering electrical energy supplied for residential, commercial and industrial end-use purposes. Other small classes, such as agriculture and street lighting, also are included in this category.
The concept under which multiple sellers of electric power can sell directly to end-use customers and the process and responsibilities necessary to make it occur.
A market in which electricity and other energy services are sold directly to the end-use customer.
Retail Load Responsibility – Load that a supplier is responsible for supplying in a particular zone of an electric distribution company.
Reliability Must Run – Resources that are required to run out of merit by an ISO to maintain system reliability.
Summary Meter (sometimes called a profile meter)
A non-interval meter that records total energy consumed over a billing period (sometimes max. demand as well) but not on an hour-by-hour basis.
The movement or transfer of electric energy over an interconnected group of lines and associated equipment between points of supply and points at which it is transformed for delivery to consumers or is delivered to other electric systems. Transmission is considered to end when the energy is transformed for distribution to the consumer.
Transmission System (Electric)
An interconnected group of electric transmission lines and associated equipment for moving or transferring electric energy in bulk between points of supply and points at which it is transformed for delivery over the distribution system lines to consumers or is delivered to other electric systems.
This is a regulated entity that owns and may construct and maintain wires used to transmit wholesale power. It may or may not handle the power dispatch and coordination functions. It is regulated to provide non-discriminatory connections, comparable service, and cost recovery. According to EPACT, this includes any electric utility, qualifying cogeneration facility, qualifying small power production facility, or Federal power marketing agency which owns or operates electric power transmission facilities which are used for the sale of electric energy at wholesale.
The separating of the total process of electric power service into it’s components such as generation, capacity, ancillaries, transmission, delivery, metering, etc. for the purpose of separate pricing or service offerings.
Utility Consolidated Billing
In a market with Utility Consolidated Billing (“UCB”), the utility offers an option to retail suppliers in which it provides, for a fee, a single bill to the customer that includes both the utility’s delivery charges and the retail supplier’s supply charges. A retail supplier’s supply charges, included on the consolidated bill, are sent to the utility via electronic communication. The utility performs all regular billing and payment processing functions that it performs for customers on utility supply. The utility then forwards customer payments for the retail supplier supply portion of the consolidated bill to the retail supplier. The utility recovers the cost of UCB through fees assessed to the retail supplier.
Utility Distribution Companies
The entities that will continue to provide regulated services for electricity distribution to customers and serve customers who do not choose direct access. Regardless of where a consumer decides to purchase power, the customer’s current utility, also known as the utility distribution company, will deliver the power to the consumer’s home, business or farm. Sometimes called an Electric Distribution Company (EDC).
A system whereby a distributor of power (such as a municipal utility or a coop or an EDC) would have the option to buy its power from a variety of wholesale power producers. The wholesale power producers would be able to compete to sell their power to a variety of companies.
Wholesale Power Market
The purchase and sale of electricity from generators to resellers (who sell to retail customers), along with the ancillary services needed to maintain reliability and power quality at the transmission level.
Energy supplied to other electric utilities, cooperatives, municipals and Federal and State electric agencies for resale to ultimate consumers.
A broad term that refers to charges levied on power suppliers or their customers for the use of the transmission or distribution wires.