Glossary of Energy Terms

Get comfortable with the following terms.

Above-Market Cost  The cost of a service in excess of the price of comparable services in the market.
Access Charge  A charge for a power supplier, or its customer, for access to a utility’s transmission or distribution system.  It is a charge for the right to send electricity over another’s wires.
Actual Peak Load Reductions  Reduction in annual peak load by consumers who participate in a DSM program that reflect changes in demand.
Affiliate  A company that is controlled by another or that has the same owner as another company.
Affiliated Power Producer  A generating company that is affiliated with a utility.
After-Market  Broad term that applies to any change after the original purchase, such as adding equipment not a part of the original purchase.  As applied to alternative fueled vehicles, it refers to conversion devices or kits for conventional fuel vehicles.
Aggregation  The process of organizing small groups, businesses or residential customer into a larger, more effective bargaining unit that strengthens their purchasing power with utilities.
Aggregator  An entity that puts together customers into a guying group for the purchase of a commodity service.  The vertically integrated investor owned utility, municipal utilities and rural electric cooperatives perform this function in today’s power market.  Other entities such as buyer cooperatives or brokers could perform this function in a restructured power market.
Alaskan System Coordination Council (ASCC)  One of the ten regional reliability councils that make up the North American Electric Reliability Council (NERC).
Allowance for Funds Used During Construction (AFUD)  Construction activities may be financed from internally generated funds (primarily earnings retained in the business), or from funds provided by other external sources (short- and long-term debt).  The allowance for funds used during construction is intended to recognize the cost of these funds dedicated to construction activities during the construction period.  To arrive at the “allowance”, a common procedural method makes use of a formula that is based on the assumption that short-term debt is the first source of construction funds.  The cost rate for short-term debt is based on current costs.  Since a utility plant is subject to depreciation, the allowance for funds used during construction is recovered in the form of depreciation from ratepayers over the service life of the plant to which it applies.
Alternating Current (AC)  Flow of electricity that constantly changes director between positive and negative sides.  Almost all power produced by electric utilities in the United States moves in current that shifts direction at a rate of 60 times per second.
Ampere  Unit that measures electrical current in a circuit by 1 volt acting through a resistance of 1 ohm.
Ancillary Services  The services other than scheduled energy, which are required to maintain system reliability and meet WSCC/NERC operating criteria.  Such services include spinning, non-spinning, replacement reserves, regulation (AGC) and voltage control and black start capability.  This additional energy can be self-provided by Load Serving Entities (LSE) on behalf of their customers.
Annual Effects  Effects in energy use and peak load resulting from participation in DSM programs in effect during a given period of time.
Annual Equivalent  An equal cash flow amount that occurs every year.
Annual Fuel Utilization Efficiency  A measure of heating efficiency, in consistent units, determined by applying the federal test method for furnaces.  This value is intended to represent the ratio of heat transferred to the conditioned space by the fuel energy supplies over one year.
Annual Maximum Demand  The greatest of all demands of the electrical load which occurred during a prescribed interval in a calendar year.
Annuity   A series of equal cash flows over a number of years.
Appliance Saturation  The percentage of households or buildings in a service area that have the type of equipment to which the demand-side technology applies.  For example, if 50 percent of the residential customers have a central air conditioner, the appliance saturation is 50 percent.
Applicability Factor  The percentage of end-use energy and demand used by a technology to which the demand-side management (DSM) measure applies.  For example, the high-efficiency fluorescent lighting DSM measure applies to fluorescent lighting but not all lighting.  Applicability therefore represents the percent of the lighting end-use attributable to fluorescence for which there could be high-efficiency replacements installed.
Area Load  The total amount of electricity being used at a given point in time by all consumers in a utility’s service territory.
Attributes  Attributes are the outcomes by which the relative “goodness” of a particular expansion plan is measured e.g.  fuel usage.  Some attributes, such as fuel usage, are measured in well-defined parameters.  Other attributes (e.g.  public perception of a technology) are more subjective.  Attributes may be grouped in several ways.  Categories include financial, economic, performance, fuel usage, environmental, and socio-economic.  The attributes chosen must measure issues that directly concern the utility and have an impact on its planning objectives.  Limiting the number of attributes reduces the complexity and cost of a study.
Available but not Needed Capability  Capability of generating units that are operable but not necessary to carry load.
Average Cost  The revenue requirement of a utility divided by the utility’s sales.  Average cost typically includes the costs of existing power plants, transmission, and distribution lines, and other facilities used by a utility to serve its customers.  It also includes operations and maintenance, tax, and fuel expenses.
Average Demand  The energy demand in a given geographical area over a period of time.  For example, the number of kilowatt-hours used in a 24-hour period, divided by 24, tells the average demand for that period.
Average Revenue per Kilowatt-hour  Revenue by sector and geographic area calculated by dividing the monthly revenue by monthly sales.
Avoided Costs  These are costs that a utility avoids by purchasing power from an independent producer rather than generating power themselves, purchasing power from another source or constructing new power plants.  A Public Utility Commission calculates avoided costs for each utility, and these costs are the basis upon which independent power producers are paid for the electricity they produce.  There are two parts to an avoided cost calculation: the avoided capacity cost of constructing new power plants and the avoided energy cost of fuel and operating and maintaining utility power plants.
Base Bill  The base bill is calculated by multiplying the rate from the electric rate by the level of consumption.
Base Load  The minimum load experienced by an electric utility system over a given period of time.
Base Load Unit  A generating unit that normally operates at a constant output to take all or part of the base load of a system.
Base Rate  The portion of the total electric or gas rate covering the general costs of doing business unrelated to fuel expenses.
Baseline Forecast   A prediction of future energy needs which does not take into account the likely effects of new conservation programs that have not yet been started.
Baseload Capacity  Generating equipment operated to serve loads 24-hours per day.
Bilateral Contract  A direct contract between the power producer and user or broker outside of a centralized power pool.
Bilateral Transaction  A transaction between two willing parties who negotiate an agreement.  For example, the sale of electricity from an Independent Power Producer (IPP) to utility customers and other large customers is often the result of a bilateral transaction.
Biomass  Plant materials and animal waste used as a source of fuel.
Blackout  A power loss affecting many electricity consumers over a large geographical area for a significant period of time.
British Thermal Unit  The standard unit for measuring quantity of heat energy.  It is the amount of heat energy necessary to raise the temperature of one pound of water one degree Fahrenheit.
Broadband Communications  The result of utilities forming partnerships to offer consumers “one-stop-shopping” for energy-related and high-tech telecommunications services.
Broker  A retail agent who buys and sells power.  The agent may also aggregate customers and arrange for transmission, firming and other ancillary services as needed.
Brownout  A controlled power reduction in which the utility decreases the voltage on the power lines, so customers receive weaker electric current.  Brownouts can be used if total power demand exceeds the maximum available supply.  The typical household does not notice the difference.
Bulk Power Market  Wholesale purchases and sales of electricity.
Bulk Power Supply  Often this term is used interchangeably with wholesale power supply.  In broader terms, it refers to the aggregate of electric generating plants, transmission lines, and related equipment.  The term may refer to those facilities within one electric utility, or within a group of utilities in which the transmission lines are interconnected.
Buy Through  An agreement between utility and customer to import power when the customer’s service would otherwise be interrupted.
California Public Utilities Commission (CPUC)  The CPUC regulates privately owned electric, natural gas, telecommunications, water, railroad, rail transit, and passenger transportation companies, in addition to authorizing video franchises.
Capability  Maximum load that a generating unit can carry without exceeding approved limits.
Capacitor  This is a device that helps improve the efficiency of the flow of electricity through distribution lines by reducing energy losses.  It is installed in substations and on poles.  Usually it is installed to correct an unwanted condition in an electrical system
Capacity  The maximum load a generating unit, generating station, or other electrical apparatus is rated to carry by the user or the manufacturer or can actually carry under existing service conditions.
Capacity (Purchased)  Energy available for purchase from outside the system
Capacity Charge  An assessment on the amount of capacity being purchased.
Capacity Factor  The ratio of the average load on a machine or equipment for a period of time to the capacity rating of the machine or equipment
Capital Recovery Factor (CRF)  A factor used to convert a lump sum value to an annual equivalent.
Captive Customer  A customer who does not have realistic alternatives to buying power from the local utility, even if that customer had the legal right to buy from competitors.
Circuit  Conductor for electric Current
Cogeneration  Production of heat energy and electrical or mechanical power from the same fuel in the same facility.  A typical cogeneration facility produces electricity and steam for industrial process use.
Cogenerator  A facility that produces electricity and/or other energy for heating and cooling
Coincidental Demand  Two or more demands that occur at the same time.
Coincidental Peak Load  Two or more peak loads that occur at the same time.
Combined Cycle  Similar to the combustion turbine simple cycle, but includes a heat recovery steam generator that extracts heat from the combustion turbine exhaust flow to produce steam.  This steam in turn powers a steam turbine engine.
Combined Cycle Plant  An electric generating station that uses waste heat from its gas turbines to produce steam for conventional steam turbines.
Combined Power Supplier  An entity that owns and or operates one or more independent power facilities that are not regulated under the traditional terms.  These suppliers are regulated and monitored by the Federal Energy Regulatory Commission (FERC).
Combustion Turbine  A fossil-fuel-fired power plant that uses the conversion process known as the Brayton cycle.  The fuel, oil, or gas is combusted and drives a turbine-generator.
Commercial Operation  Commercial operation occurs when control of the generator is turned over to the system dispatcher.
Commercialization  Programs or activities that increase the value or decrease the cost of integrating new products or services into the electric sector.
Comparability  When a transmission owner provides access to transmission services at rates, terms and conditions equal to those the owner incurs for its own use.
Competitive Bidding  This is a procedure that utilities use to select suppliers of new electric capacity and energy.  Under competitive bidding, an electric utility solicits bids from prospective power generators to meet current or future power demands.  When offers from independent power producers began exceeding utility needs in the mid-1908’s, utilities and state regulators began using competitive bidding systems to select more fairly among numerous supply alternatives.
Competitive Franchise  A process whereby a municipality (or group of municipalities) issues a franchise to supply electricity in the community to the winner of a competitive bid process.  Such franchises can be for bundled electricity and transmission/distribution, or there can be separate franchises for the supply of electricity services and the transmission and distribution function.  Franchises can be, but typically are not, exclusive licenses.
Competitive Transition Charge (CTC)   A “nonbypassable” charge generally placed on distribution services to recover utility costs incurred as a result of restructuring (stranded costs – usually associated with generation facilities and services) and not recoverable in other ways.
Comprehensive National Energy Policy Act  Federal legislation in 1992 that opened the U.S. electric utility industry to increase competition at the wholesale level and left authority for retail competition to the states.
Conductor  An object or substance which conducts or leads electric current.  A wire, cable, busbar, rod, or tube can serve as a path for electricity to flow.  The most common conductor is an electrical wire.
Connection  The connection between two electrical systems that permit the transfer of energy.
Conservation  A foregoing or reduction of electric usage for the purpose of saving natural energy resources and limiting peak demand in order to ultimately reduce the capacity requirements for plant and equipment.
Consumer Education  Efforts to provide consumers with skills and knowledge to use their resources wisely in the marketplace.
Consumption (Fuel)  Amount of fuel used for gross generation
Contingency  Disconnection or separation, planned or forced, of one or more components from the electric system.
Contract Path  The most direct physical transmission tie between two interconnected entities.  When utility systems interchange power, the transfer is presumed to take place across the “contract path” , notwithstanding the electric fact that power flow in the network will distribute in accordance with network flow conditions.  This term can also mean to arrange for power transfer between systems.
Contract Price  Price marketed on a contract basis for one or more years.
Contract Receipts  Purchases that cover at least one year.
Control Area  A power system or systems to which an automatic control is applied.
Converter  Any technology that changes the potential energy in fuel into a different form of energy such as heat or motion.  The term also is used to mean an apparatus that changes the quantity or quality of electric energy.
Cooperative Electric Utility  A utility established to be owned by and operated for the benefit of those using its services.
Cross-subsidization  This refers to the transfer of assets or services from the regulated portion of an electric utility to its unregulated affiliates to produce an unfair competitive advantage.  Also, cross-subsidization can refer to one rate class (such as industrial customers) subsidizing the rates of another class (such as residential customers).
Current (Electric)  Flow of electrons in an electric conductor.
Current Transformers  These are used in conjunction with metering equipment.  They are designed to permit measurement of currents beyond the range of a meter.
Daily Peak  The maximum amount of energy or service demanded in one day from a company or utility service.
Day-Ahead Market  The forward market for the supply of electrical power at least 24 hours before delivery to Buyers and End-Use Customers.
Degree-day  A unit measuring the extent to which the outdoor mean (average of maximum and minimum) daily dry-bulb temperature falls below (in the case of heating) or rises above (in the case of cooling) an assumed base.  The base is normally taken as 65 degrees for heating and cooling unless otherwise designated.
Demand (electric)  The rate at which electric energy is delivered to or by a system, part of a system, or a piece of equipment.  Demand is expressed in kW, kVA, or other suitable units at a given instant or over any designated period of time.  The primary source of “demand” is the power-consuming equipment of the customers.
Demand Billing  The electric capacity requirement for which a large user pays.  It may be based on the customer’s peak demand during the contract year, on a previous maximum or on an agreed minimum.  It is measured in kilowatts.
Demand Charge  The sum to be paid by a large electricity consumer for its peak usage level.
Demand Controller   An electrical, mechanical, or electromechanical device or system that monitors the customer demand and causes that demand to be leveled and/or limited.
Demand Ratchet  This is the minimum billing demand based upon a given percentage of the actual demand use, recorded during the last eleven months of demand history
Demand-Side Management (DSM)  Measures or programs undertaken by a utility designed to influence the level or timing of customer demands for energy in order to optimize the use of available supply resources, thus allowing suppliers to defer the purchase of additional generating capacity.
Demonstration  The application and integration of a new product or service into an existing or new system.  Most commonly, demonstration involves the construction and operation of a new electric technology interconnected with the electric utility system to demonstrate how it interacts with the system.  This includes the impacts the technology may have on the system and the impacts that the larger utility system may have on the functioning of the technology.
Departing Member  A member consumer served at retail by an electric cooperative corporation that has given notice of intent to receive generation services from another source or that is otherwise in the process of changing generation suppliers.  These persons shall nonetheless remain members of the electric distribution cooperative corporation for purposes of distribution service.
Dependable Capacity  The system’s ability to carry the electric power for the time interval and period specified.  Dependable capacity is determined by such factors as capability, operating power factor and portion of the load the station is to supply.
Dependable Energy Sources  This includes: 1) electricity purchased from a public utility and 2) energy obtained from burning coal, oil, natural gas or liquefied petroleum gasses.
Depreciation, Straight-line  Straight-line depreciation takes the cost of the asset less the estimated salvage value and allocates the cost in equal amounts over the asset’s estimated useful life.
Deregulation  The elimination of regulation from a previously regulated industry or sector of an industry.
Designated Agent  An agent that acts on behalf of a transmission provider, customer or transmission customer as required under the tariff.
Direct Access  Affording generators, marketers and large users of electricity the ability to receive transmission services to serve load directly without exercising the traditional method of going through the utility.
Direct Current (DC)  Electric that flows continuously in the same direction.
Direct Energy Conversion  Production of electricity from an energy source without transferring the energy to a working fluid or steam.  For example, photovoltaic cells transform light directly into electricity.  Direct conversion systems have no moving parts and usually produce direct current.
Direct Load Control  Activities that can interrupt load at the time of peak by interrupting power supply on consumer premises, usually applied to residential consumers.
Direct Utility Cost  A cost identified with one of the DSM categories.
Disaggregation  The functional separation of the vertically integrated utility into smaller, individually owned business units (I.e.  generation, dispatch/control, transmission, distribution).  The terms “deintegration”, “disintegration” and “delimitation” are sometimes used to mean the same thing.
Discount /Interest Rate  The discount rate is used to determine the present value of future or past cash flows.  The rate accounts for inflation and the potential earning power of money.
Dispatchability  This is the ability of a generating unit to increase or decrease generation, or to be brought on line or shut down at the request or a utility’s system operator.
Distributed Generation  A distributed generation system involves small amounts of generation located on a utility’s distribution system for the purpose of meeting local (substation level) peak loads and/or displacing the need to build additional (or upgrade) local distribution lines.
Distribution  The system of wires, switches, and transformers that serve neighborhoods and business, typically lower than 69,000 volts.  A distribution system reduces or downgrades power from high-voltage transmission lines to a level that can be used in homes or businesses.
Distribution Line  This is a line or system for distributing power from a transmission system to a customer.  It is any line operating at less than 69,000 volts.
Distribution System  That part of the electric system that delivers electric energy to consumers.
Distribution Utility (Disco)  The regulated electric utility entity that constructs and maintains the distribution wires connecting the transmission grid to the final customer.  The Disco can also perform other services such as aggregating customers, purchasing power supply and transmission services for customers, billing customers and reimbursing suppliers, and offering other regulated or non-regulated energy services to retail customers.  The “wires” and “customer service” functions provided by a distribution utility could be split so that two totally separate entities are used to supply these two types of distribution services.
Distributive Power  A packaged power unit located at the point of demand.  While the technology is still evolving, examples include fuel cells and photovoltaic applications.
Diversity Exchange  The ratio of the sum of the non-coincident maximum demands of two or more loads to their coincident maximum demand for the same period.
Diversity Factor  The ratio of the sum of the non-coincident maximum demands of two or more loads to their coincident maximum demand for the same period.
Divestiture  The stripping off of one utility function from the others by selling (spinning-off) or in most other way changing the ownership of the assets related to that function.  Most commonly associated with spinning-off generation assets so they are no longer owned by the shareholders that own the transmission and distribution assets.
DSM Measure Technology Program  Single devices, equipment, or rates as listed in the Reference Data.  A demand-side management program is usually a group of DSM measures or technologies.  However, a DSM program could in some cases be a single measure.
East Central Area Reliability Coordination Agreement  One of the ten regional reliability councils that make up the North American Electric Reliability Council (NERC).
Economic Dispatch  The distribution of total generation requirements among alternative sources for optimum system economy with consideration to both incremental generating costs and incremental transmission losses.
Economic Efficiency  A term that refers to the optimal production and consumption of goods and services.  This generally occurs when prices of products and services reflect their marginal costs.  Economic efficiency gains can be achieved through cost reduction, but it is better to think of the concept as actions that promote an increase in overall net value (which includes, but is not limited to, cost reductions).
Economy Energy  Energy produced and substituted for the traditional but less economical source of energy.  Economic energy is usually sold without capacity and is priced at variable costs plus administration costs.
Efficiency Service Company  A company that offers to reduce a client’s electricity consumption with the cost savings being split with the client.
Elasticity of Demand  The ratio of the percentage change in the quantity demanded of a good to the percentage change in price.
Electric Capacity  This refers to the ability of a power plant to produce a given output of electric energy at an instant in time, measured in kilowatts or megawatts (1,000 kilowatts).
Electric Distribution Company  The company that owns the power lines and equipment necessary to deliver purchased electricity to the customer.
Electric Plant (Physical)  A facility that contains all necessary equipment for converting energy into electricity.
Electric Power Supplier  Non-utility provider of electricity to a competitive marketplace.
Electric Rate Schedule  An electric rate and its contract terms accepted by a regulatory agency.
Electric Reliability Council of Texas (ERCOT)  One of the ten regional reliability councils that make up the North American Electric Reliability Council (NERC).
Electric System  This term refers to all of the elements needed to distribute electrical power.  It includes overhead and underground lines, poles, transformers, and other equipment.
Electric Utility  A legal entity that owns and/or operates facilities for the generation, transmission, distribution, or sale of electric energy.
Electric Utility Affiliate  This refers to a subsidiary or affiliate of an electric utility.  Many utilities form affiliates to develop, own, and operate independent power facilities.
Electric Wholesale Generator  A power producer who sells power at cost to a customer.
Embedded Cost  A utility’s average cost of doing business, which includes the costs of fuel, personnel, plants, poles, and wires.
Emergency  Any abnormal system condition which required immediate manual or automatic action to prevent loss of load, equipment damage, or tripping of system elements which might result in cascading and to restore system operation to meet the Minimum Operating Reliability Criteria.
End-Use  The specific purpose for which electric is consumed (I.e.  heating, cooling, cooking,
Energy  This is broadly defined as the capability of doing work.  In the electric power industry, energy is more narrowly defined as electricity supplied over time, express in kilowatt-hours.
Energy Acronyms  For a complete list of energy acronyms, go to
Energy Charge  The amount of money owed by an electric customer for kilowatt-hours consumed.
Energy Consumption  The amount of energy consumed in the form in which it is acquired by the user.  The term excludes electrical generation and distribution losses.
Energy Costs  Costs, such as for fuel, that are related to and vary with energy production or consumption.
Energy Deliveries  Energy generated by one system delivered to another system.
Energy Effects  Changes at the consumer meter that reflect activities undertaken in response to utility-administered programs.
Energy Efficiency  Programs that reduce consumption.
Energy Policy Act of 1992  This act which was the first comprehensive federal energy law promulgated in more than a decade will help create a more competitive U.S. electric power marketplace by removing barriers to competition.  By doing so, this act allows a broad spectrum of independent energy producers to compete in wholesale electric power markets.  The act also made significant changes in the way power transmission grids are regulated.  Specifically, the law gives the Federal Energy Regulatory Commission the authority to order electric utilities to provide access to their transmission facilities to other power suppliers.
Energy Receipts  Energy generated by one utility system that is received by another through transmission lines.
Energy Reserves  The portion of total energy resources that is known and can be recovered with presently available technology at an affordable cost.
Energy Resources  Everything that could be used by society as a source of energy.
Energy Services Companies (ESCOs)   ESCOs would be created in a deregulated, openly competitive electric marketplace.  The Energy Services industry would be made up of power aggregators, power marketers and brokers, whose job is to match buyers and sellers, tailor both physical and financial instruments to suit the needs of particular customers, and to allow even the smallest residential customers to form buying groups or cooperatives that will give them the same bargaining power as large industrial customers.
Energy Source   A source that provides the power to be converted to electricity.
Energy Use   Energy consumed during a specified time period for a specific purpose (usually expressed in kWh).
Entitlement   Electric energy or generating capacity that a utility has a right to access under power exchange or sales agreements.
Entrance Cable/Service Entrance Conductor  This is the cable running down the side of a customer’s house into the meter.  This cable is owned by the customer and its maintenance is the customer’s responsibility.  Work on this cable should be performed only by a licensed electrician.
Environmental Attributes  Environmental attributes quantity the impact of various options on the environment.  These attributes include particulate emissions, SO2 or Nox, and thermal discharge (air and water).
Escape Provision  A contract provision which allows a party, such as an electric customer, to get out of it.  Usually, there is a penalty.
Exempt Wholesale Generator (EWG)  An EWG is a category of power producer defined by the Energy Policy Act of 1992.  EWG’s are independent power facilities that generate electricity for sale in wholesale power markets at market-based rates.  The Federal Energy Regulatory Commission is responsible for determining EWG status.
Facility   A location where electric energy is generated from energy sources.
Feasibility Factor  A factor used to adjust potential energy savings to account for cases where it is impractical to install new equipment.  For example, certain types of fluorescent lighting require room temperature conditions.  They are not feasible for outdoor or unheated space applications.  Some commercial applications, such as color-coded warehouses, require good color rendition, so color distortions could also make certain types of lighting infeasible.  The feasibility factor equals 100 percent minus the percent of infeasible applications.
Federal Energy Regulatory Commission (FERC)  The regulatory agency, in the U.S. Department of Energy, that has jurisdiction over interstate electricity sales, wholesale rates, licensing, etc.
Federal Power Act  An act that includes the regulation of interstate transmission of electrical energy and rates.  This act is administered by the Federal Energy Regulatory Commission.
Feeder  This is an electrical supply line, either overhead or underground, which runs from the substation, through various paths, ending with the transformers.  It is a distribution circuit, usually less that 69,000 volts, which carries power from the substation.
Feeder Lockout  This happens when a main circuit is interrupted at the substation by automatic protective devices and cannot be resorted until crews investigate.  This indicates a serious problem on the circuit, usually equipment failure or a broken conductor.
Financial Attributes  Financial attributes measure the financial health of the company.  Utility management, security analysts, investors, and regulators use these attributes to evaluate a utility’s performance against its historic records and industry averages.  Key financial attributes include capital requirements, earnings per share of common equity, capitalization ratios, and interest coverage ratios.
Firm Energy  Power or power-producing capacity covered by a commitment to be available at all times during the period.
Firm Transmission Service  Service that is reserved for at least one year.
Fixed Costs  The annual Costs associated with the ownership of property such as depreciation, taxes, insurance, and the cost of capital.
Flat Rate  A fixed charge for goods and services that does not vary with changes in the amount used, volume consumed, or units purchased.
Flexible Load Shape  The ability to modify your utility’s load shape on short notice.  When resources are insufficient to meet load requirements, load shifting or peak clipping may be appropriate.
Flexible Retail PoolCo  This provides a model for the restructured electric industry that features an Independent System Operator (ISO) operating in parallel with a commercial Power Exchange, which allows end-use customers to buy from a spot market or “pool” or to contract directly with a particular supplier.
Forced Outage   An outage that results from emergency conditions and requires a component to be taken out of service automatically or as soon as switching operations can be performed.  The forced outage can be caused by improper operation of equipment or by human error.  If it is possible to defer the outage, the outage becomes a scheduled outage.
Franchise Area   This is the territory in which a utility system supplies service to customers.
Franchise Monopoly  Under this system, a utility has the right to be the sole or principal supplier of electric power at a retail level in a specific region or area knows as the franchise service territory.  In return for its sole supplier privilege, the utility has an obligation to serve anyone who requests service, and agrees to be accountable to state and/or federal regulatory bodies that regulate the utility’s performance, accounting procedures, pricing structures, and plant planning and siting.
Fuel  A substance that can be burned to product heat.
Fuel Adjustment  A clause in the rate schedule that provides for adjustment of the amount of a bill as the cost of fuel varies from a specified base amount per unit.  The specified base amount is determined when rates are approved.  This item is shown on all customer bills and indicates the current rate for any adjustment in the cost of fuel used by the company.  It can be a credit or a debit.  The fuel adjustment lags two months behind the actual price of the fuel.  For example, the cost of oil in January will be reflected in March’s fuel adjustment.
Fuel Cell  An advanced energy conversion device that converts fuels to power very efficiently and with minimal environmental impact.
Fuel Diversity  A utility or power supplier that has power stations using several different types of fuel.  Avoiding over-reliance on one fuel helps avoid the risk of supply interruption and price spikes.
Fuel Escalation  The annual rate of increase of the cost of fuel, including inflation and real escalation, resulting from resource depletion, increased demand, etc.
Fuel Expenses  Costs associated with the generation of electricity.
Fuel-Use Attributes  Fuel-use attributes are important to utilities concerned about reliance on a single fuel or reduction in usage of a particular fuel.  These attributes include annual fuel consumption by type and percent energy generation by fuel.
Full-Forced Outage  Net capability of generating units unavailable for load for emergencies.
Functional Unbundling  The functional separation of generation, transmission, and distribution transactions within a vertically integrated utility without selling of “spinning off” these functions into separate companies.
Generating Station (Generating Plant or Power Plant)  The location of prime movers, electric generators, and auxiliary equipment used for converting mechanical, chemical, and nuclear energy into electric energy.
Generating Unit  Combination of connected prime movers that produce electric power.
Generation (Electricity)  Process of producing electric energy by transforming other forms of energy.
Generation Charges   Part of the basic service charges on every customer’s bill for producing electricity.  Generation service is competitively priced and is not regulated by Public Utility Commissions.  This charge depends on the terms of service between the customer and the supplier.
Generation Company (Genco)  A regulated or non-regulated entity (depending upon the industry structure) that operates and maintains existing generating plants.  The Genco may own the generation plants or interact with the short term market on behalf of plant owners.  In the context of restructuring the market for electricity, Genco is sometimes used to describe a specialized “marketer” for the generating plants formerly owned by a vertically-integrated utility.
Generation Dispatch & Control  Aggregation and dispatching (sending off to some location) generation from various generating facilities, providing backup and reliability services.
Generator  Machine used to convert mechanical energy into electrical energy.
Geothermal  An electric generating station in which steam tapped from the earth drives a turbine-generator, generating electricity.
Gigawatt  This is a unit of electric power equal to one billion watts, or one thousand megawatts – enough power to supply the needs of a medium-sized city.
Good Utility Practice  Methods and practices that are approved by a significant portion of the industry.
Greenfield Plant  This refers to a new electric power generating facility built from the ground up.
Grid  Matrix of an electrical distribution system.
Gross Generation  Amount of electric energy produced by generating units as measured at the generator terminals.
Heat Rate  A measure of generating station thermal efficiency and generally expressed as Btu per net kWh.  The heat rate is computed by dividing the total Btu content of the fuel burned (or of heat released from a nuclear reactor) by the resulting net kWh generated.
High Heat Value (HHV)  The high or gross heat content of the fuel with the heat of vaporization included; the water vapor is assumed to be in a liquid state.
Hour-Ahead Market  The electric power futures market that is established 1-hour before delivery to End-Use Customers.
Hourly Metering  Tracking or recording a customer’s consumption during specific periods of time that can be tied to the price of energy.
Hourly Non-Firm Transmission Service  Transmission scheduled and paid for on an as-available basis and subject to interruption.
Hydroelectric  An electric generating station in which a water wheel is driven by falling water, thus generating electricity.
Incentive  A rebate or some form of payment used to encourage people to implement a given demand-side management (DSM) technology.  The incentive is calculated as the amount of the technology costs that must be paid by the utility for the participant test to equal one and achieve the desired benefit/cost ratio to drive the market.
Incremental Effects  Annual effects in energy use and peak load caused by new participants in existing DSM programs and all participants in new DSM programs during a given year.
Independent Power Producers (IPPs)  A type of competitive power supplier.  The term is synonymous with merchant generator, cogenerator, non-utility generator, private power producer, Qualifying Facility (QF) and exempt wholesale generator.
Independent System Operator (ISO)  An ISO is a non-profit entity established by AB-1890 to operate the transmission system in a safe, reliable manner; one form of a Regional Transmission Organization.
Indirect Utility Cost  Any cost that is not identified with a specific DSM category such as Administration, Marketing, etc.
Installed Capacity  The total generating units’ capacities in a power plant or on a total utility system.  The capacity can be based on the nameplate rating or the net dependable capacity.
Intangible Transition Charge  The amounts on all customer bills, collected by the electric utility to recover transition bond expenses.
Integrated Resource Plan (IRP)  A comprehensive and systematic blueprint developed by a supplier, distributor, or end-user of energy who has evaluated demand-side and supply-side resource options and economic parameters and determined which options will best help them meet their energy goals at the lowest reasonable energy, environmental, and societal cost.
Interchange (Electric Utility)  The agreement among interconnected utilities under which they buy, sell and exchange power among themselves.  This can, for example, provide for economy energy and emergency power supplies.
Interconnection (Electric Utility)  In a competitive power producer context, the point at which the transmission lines carrying the electricity output of a power facility connects with the utility grid, usually the local utilities nearest substation.
Interdepartmental Service (Electric)  Amounts charged by the electric department at specified rates for electricity supplied by other utility departments.
Intermediate Load (Electric Systems)  Range from base load to a point between that and peak load.
Intermittent Resources   Resources whose output depends on some other factory that cannot be controlled by the utility e.g.  wind or sun.  Thus, the capacity varies by day and by hour.
Interruptible Loads   Loads that can be interrupted in the event of capacity or energy deficiencies on the supplying system.
Interruptible Power  This refers to power whose delivery can be curtailed by the supplier, usually under some sort of agreement by the parties involved.
Interruptible Rates  These provide power at a lower rate to large industrial and commercial customers who agree to reduce their electricity use in times of peak demand.
Interval Metering  The process by which power consumption is measured at regular intervals in order that specific load usage for a set period of time can be determined
Investor-Owned Utility (IOU)  An IOU is a form of electric utility owned by a group of investors.  Shares of IOUs are traded on public stock markets.
Jurisdictional  Utilities, ratepayers and regulators (and impacts on those parties) that are subject to state regulation in a state considering restructuring.
Killowatt-Hour (kWh)  The basic unit of electric energy equal to one kilowatt of power supplied to or taken from an electric circuit for one hour.
Kilovolt ampere (kVA)  The practical unit of apparent power, which is 1,000 volt-amperes.  The volt-amperes of an electric circuit are the mathematical products of the volts and amperes of the client.
Kilowatt (kW)  The electrical unit of power equal to 1,000 watts
Layoff  Excess capacity of a generating unit, available for a limited time under the terms of a sales agreement
Levelized  A lump sum that has been divided into equal amounts over period of time.
Lightning Arrestor  This protects lines, transformers, and equipment from lightning surges by carrying the charge to the ground.  Lightning arrestors serve the same purpose on a line as a safety valve on a steam boiler.
Line  A line is a system of poles, conduits, wires, cables, transformers, fixtures, and accessory equipment used for the distribution of electricity to the public.
Load  An end-use device or an end-use customer that receives power from the electric system.  Load should not be confused with Demand, which is the measure of power that a Load receives or requires.
Load Building  Programs aimed at increasing use of existing electric equipment or the addition of new equipment.
Load Centers  A limited geographical area where large amounts of power are used by customers.
Load Diversity  The condition that exists when the peak demands of a variety of electric customers occur at different times.  This is the objective of “load molding” strategies, ultimately curbing the total capacity requirements of a utility.
Load Duration Curve  A curve that displays load values on the horizontal axis in descending order of magnitude against percent of time (on the vertical axis) the load values are exceeded.
Load Factor  The ratio of the average load supplied to the peak or maximum load during a designated period.  Load factor, in percent, also may be derived by multiplying the kWh in a given period by 100, and dividing by the product of the maximum demand in kW and the number of hours in the same period.
Load Forecast   Estimate of electrical demand or energy consumption at some future time.
Load Management  Influencing the level and shape of demand for electrical energy so that demand conforms to present supply situations and long-run objectives and constraints.
Load Profile  Information on a customer’s usage over a period of time, sometimes shown as a graph
Load Ratio Share  Ratio of a transmission customer’s network load to the provider’s total load calculated on a rolling twelve-month basis.
Load Serving Entities (LSE)  Utilities, marketers or aggregators who provide electric power to a large number of end-use customers.
Load Shape  A curve on a chart showing power (kW) supplied (on the horizontal axis) plotted against time of occurrence (on the vertical axis), and illustrating the varying magnitude of the load during the period covered.
Load Shifting  A load shape objective that involves moving loads from peak periods to off-peak periods.  If a utility does not expect to meet its demand during peak periods but has excess capacity in the off-peak periods, this strategy might be considered.
Local Publicly Owned Electric Utilities  A municipal corporation, a municipal utility district, an irrigation district, or a joint power authority (which can include one or more of the agencies mentioned above) furnishing electric services over its own transmission facilities, or furnishing electric service over its own or its members’ distribution system.
Long-Term Fixed  A bilateral transaction often for an extended period of time at a set amount.  For example, these contracts may be 1-year, 5-years, 10-years, and could be a peak (hours ending 7-22) or off-peak (hours ending 1-6, 23 & 24) hours or a full day contract.
Loss of Load Probability (LOLP)  A measure of the probability that system demand will exceed capacity during a given period; this period is often expressed as the expected number of days per year over a long period, frequently taken as ten consecutive years.  An example of LOLP is one day in ten years.
Losses  The general term applied to energy (kWh) and capacity (kW) lost in the operation of an electric system.  Losses occur principally as energy transformations from kWh to waste-heat in electrical conductors and apparatus.  This waste-heat in electrical conductors and apparatus.  This power expended without accomplishing useful work occurs primarily on the transmission and distribution system.
Low Heat Value (LHV)   The low or net heat of combustion for a fuel assumes that all products of combustion, including water vapor, are in a gaseous state.
Marginal Cost  The cost to the utility or providing the next (marginal) kilowatt-hour of electricity, irrespective of sunk costs.
Marginal Cost  The sum that has to be paid the next increment of product of service.  The marginal cost of electricity is the price to be paid for kilowatt-hours above and beyond those supplied by presently available generating capacity.
Market Clearing Price  The price at a location at which supply equals demand — all demand at or above this price has been satisfied, and all supply at or below this price has been purchased.
Market Eligibility  The percentage of equipment still available for retrofit to the demand-side management measure.  For example, if 20 percent of customers where demand controllers are feasible have already purchased demand controllers, then the eligible market eligibility factor is 80 percent.
Market-Based Price  A price set by the mutual decisions of many buyers and sellers in a competitive market.
Marketer  An agent for generation projects who markets power on behalf of the generator.  The marketer may also arrange transmission, firming or other ancillary services as needed.  Though a marketer may perform many of the same functions as a broker, the difference is that a marketer represents the generator while a broker acts as a middleman.
Maximum Demand  Highest demand of the load occurring within a specified period of time.
Measure Life  The length of time that the demand-side management technology will last before requiring replacement.  The measure life equals the technology life.  These terms are used synonymously.
Megawatt  One million watts.
Megawatt-hour  One thousand kilowatt-hours or one million-watt hours.
Member System  An eligible customer operating as part of an agency composed exclusively of other eligible customers.
Meter Constant  This represents the ratio between instrument transformers (CTs, PTs) and the meter.  It is used as a multiplier of the difference between meter readings to determine the kWh used.  The meter constant is also used as a multiplier of the demand reading to determine the actual demand.
Mid-America Interconnected Network (MAIN)  One of the ten regional reliability councils that make up the North American Electric Reliability Council (NERC).
Mid-Atlantic Area Council (MAAC)  One of the ten regional reliability councils that make up the North American Electric Reliability Council (NERC).
Mid-Continent Area Power Pool (MAPP)  One of the ten regional reliability councils that make up the North American Electric Reliability Council (NERC).
Mill  One mill is equal to one-thousandth of a dollar.
Mobile Substation  This is a movable substation which is used when a substation is not working or additional power is needed.
Monopoly  The only seller with control over market sales.
Monopsony  The only buyer with control over market purchases.
Municipal Electric Utility  A power utility system owned and operated by a local jurisdiction.
Municipal Solid Waste  A Biomass resource that can be used to produce energy by the process of incineration.
Municipalization  The process by which a municipal entity assumes responsibility for supplying utility service to its constituents.  In supplying electricity, the municipality may generate and distribute the power or purchase wholesale power from other generators and distribute it.
Must Take Resources  Generation resources including QF generating units, nuclear units, and pre-existing power purchase contracts with minimum energy take requirements that are dispatched by the ISO before PX or Direct Access Generation.
Native Load Customers  Wholesale and retail customers that the transmission provider constructs and operates a system to provide electric needs.
Net Capability  Maximum load carrying ability of the equipment,
Net Generation  Gross generation minus the energy consumed at the generating station for its use.
Net Power  Remaining amounts of unclaimed supplies.
Network  A system of transmission and distribution lines cross-connected and operated to permit multiple power supply to any principal point on it.  A network is usually installed in urban areas.  It makes it possible to restore power quickly to customers by switching them to another circuit.
Network Customers  Customers receiving service under the terms of the Transmission Provider’s Network Integration Tariff.
Network Integration Transmission Service  A service that allows the customer to integrate, plan, dispatch, and regulate its Network Resources.
Network Load  Designated load of a transmission customer.
New England Power Exchange (NEPEX)  This is the operating arm of the New England Power Pool.
New England Power Pool (NEPOOL)  A regional consortium of 98 utilities who coordinate, monitor and direct the operations of major generation and transmission facilities in New England.
Non-basic Service  Any category of service not related to basic services (generation, transmission, distribution and transition charges).
Non-bypassable Wires Charge  A charge generally placed on distribution services to recover utility costs incurred as a result of restructuring (stranded costs – usually associated with generation facilities and services) and not recoverable in other ways.
Non-Firm Power  Power supplied or available under terms with limited or no assured availability.
Non-Firm Transmission Service  Point-to-point service reserved and/or scheduled on an as-available basis.
Non-Jurisdictional  Utilities, ratepayers and regulators (and impacts on those parties) other than state-regulated utilities, regulators and ratepayers in a jurisdiction considering restructuring.  Examples include utilities in adjacent state and non-state regulated, publicly owned utilities within restructuring states.
Non-utility Generator  Independent power producers, exempt wholesale generators and other companies in the power generation business that have been exempted from traditional utility regulation.
Noncoincidental Peak Load  The sum of two or more peak loads on individual systems, not occurring in the same time period.
Nonutility Power Producer  A legal entity that owns electric generating capacity, but it not an electric utility.
North American Electric Reliability Council (NERC)  Council formed by electric utility industry in 1968 to promote the reliability and adequacy of bulk power supply in utility systems of North America.  NERC consists of ten regional reliability councils: Alaskan System Coordination Council (ASCC); East Central Area Reliability Coordination Agreement (ECAR); Electric Reliability Council of Texas (ERCOT); Mid-America Interconnected Network (MAIN); Mid-Atlantic Area Council (MAAC); Mid-Continent Area Power Pool (MAPP); Northeast Power Coordinating Council (NPCC); Southeastern Electric Reliability Council (SERC); Southwest Power Pool (SPP); Western systems Coordinating Council (WSCC).
North/South  Technology factors are provided for North and South because some equipment and technologies are temperature sensitive.  A North designation generally represents a utility that experiences cold winters and has average annual heating degree days of at least 5,000 (based on a 65 degree base).  A South designation has relatively mild winters but a significant saturation of air conditioning.  This geographical designation is very general, but it is intended to separate out areas that are warmer than others.
Northeast Power Coordinating Council (NPCC)  One of the ten regional reliability councils that make up the North American Electric Reliability Council (NERC).
Notice of Proposed Rulemaking  A designation used by the Federal Energy Regulatory Commission for some of its dockets.
Nuclear Regulatory Commission  This is the federal agency responsible for the licensing of nuclear facilities.  They oversee these facilities and make sure regulations and standards are followed.
Obligation to Serve  A regulatory obligation of a utility to provide electric planning services for all customers and to assure adequate supply of electricity now and in the future.
Off-Peak  Periods of relatively low system demands
Ohm  Unit of measure of electrical resistance.
On-Peak Energy   Energy supplied during periods of relatively high system demand as specified by the supplier.
Open Access  Access to the electric transmission system by any legitimate market participant, including utilities, independent power producers, cogenerators, and power marketers.
Operation and Maintenance Expenses   Costs that relate to the normal operating, maintenance and administrative activities of a business.
Options  Options are potential decisions over which a utility has a reasonable degree of control.  One option might be to build a new coal-fired power plant; another option might be to refurbish an old power plant.  Each option has one of more values to be specified.  A specified option has a specified value such as year of implementation or size of plant.  A plan is a set of specified options.  A plan contains a set of decisions or commitments the utility can make, given the options available.
Outage  Time during which service is unavailable from a generating unit, transmission line, or other facility.
Overload  The flow of electricity into conductors or devices when normal load exceeds capacity.
Parallel Path Flow  This refers to the flow of electric power on an electric system’s transmission facilities resulting from scheduled electric power transfers between two other electric systems.  (Electric power flows on all interconnected parallel paths in amounts inversely proportional to each path’s resistance.)
Partial Load  An electrical demand that uses only part of the electrical power available.
Payback  The length of time it takes for the savings received to cover the cost of implementing the technology.
Peak  Periods of relatively high system demands.
Peak Clipping  Peak clipping reduces a utility’s system peak, reducing the need to operate peaking units with relatively high fuel costs.  Peak clipping is typically pursued only for the days the system peak is likely to occur, and the resources
Peak Demand  Maximum power used in a given period of time.
Peak Load Power Plant  A power generating station that is normally used to produce extra electricity during peak load times.
Peaking Capacity  Generating equipment normally operated only during the hours of highest daily, weekly, or seasonal loads; this equipment is usually designed to meet the portion of load that is above base load.
Peaking Unit  A power generator used by a utility to produce extra electricity during peak load times.
Performance Attributes  Performance attributes measure the quality of service and operating efficiency.  Loss of load probability, expected energy curtailment, and reserve margin are all performance attributes.
Performance Based Ratemaking (PBR)  Regulated rates based on performances objectives, not actual costs.
Period of Analysis  The number of years considered in the study.
Phase  One of the characteristics of the electric service supplied or the equipment used.  Practically all residential customers have single-phase service.  Large commercial and industrial customers have either two-phase or three-phase service.
Photovoltaic  A technology that directly converts light into electricity.  The process uses modules, which are usually made up of many cells (thin layers of semiconductors).
Pilot  A utility program offering a limited group of customers their choice of certified or licensed energy suppliers on a one year minimum trial basis.
Planned Generator  Proposal to install generating equipment at an existing or planned facility or site.
Plant  A facility containing prime movers, electric generators, and other equipment for producing electric energy.
Point(s) of Delivery  Point(s) for interconnection on the Transmission Provider’s System where capacity and/or energy are made available to the end user.
Point(s) of Receipt  Point(s) of connection to the transmission system where capacity and/or energy will be made available to the transmission providers.
Point-to-Point Transmission Service  Reservation and/or transmission of energy from point(s) of receipt to point(s) of delivery.
PoolCo  This will serve as a model for the restructured electric industry that combines the functions of an ISO and a Power Exchange.  In its least flexible form, a PoolCo also prohibits direct transactions between buyers and sellers (I.e.  all producers selling to the Pool and all consumers buy from the Pool.)
Power  The rate at which energy is transferred
Power Broker  An entity authorized by the Federal Energy Regulatory Commission (FERC) to engage in market-based wholesale electricity transactions.
Power Exchange (PX)  An independent agency responsible for conducting an auction for the generators seeking to sell energy and for loads, which are not otherwise being served by bilateral contracts.  The Power Exchange will be responsible for scheduling generation in its scheduling (e.g., day-ahead, hour-ahead) markets, for determining hourly market clearing prices for its market, and for settlement and billing for suppliers and Utility Distribution Companies (UDCs) using its market.
Power Grid  A network of power lines and associated equipment used to transmit and distribute electricity over a geographic area.
Power Marketers  Entities engaged in buying and selling electricity.
Power Plant  A generating station where electricity is produced.
Power Pool  Two or more interconnected electric systems that agree to coordinate operations.
Power Purchase Agreement  This refers to a contract entered into by an independent power producer and an electric utility.  The power purchase agreement specifies the terms and conditions under which electric power will be generated and purchased.  Power purchase agreements require the independent power producer to supply power at a specified price for the life of the agreement.  While power purchase agreements vary, their common elements include: specification of the size and operating parameters of the generation facility; milestones in-service dates, and contract terms; price mechanisms; service and performance obligations; dispatchability options; and conditions of termination or default.
Present Value  The amount of money required to secure a specified cash flow on a future date at a given rate of return.
Present Worth Factor  The adjustment factor that discounts a sum of future dollars back to the current year.
Price Cap   Situation where a price has been determined and fixed.
Primary Circuit  This is the distribution circuit (less than 69,000 volts) on the high voltage side of the transformer.
Prime Mover  A device such as an engine or water wheel that drives an electric generator.
Production  The act or process of generating electric energy.
Production Costing  A method used to determine the most economical way to operate a given system of power resources under given load conditions.
Program Life  The length of time that the utility will be actively involved in promoting a demand-side management program (I.e.  financing the marketing activities and the incentives of the program.)
Program Maturity   The time it takes for the full benefits of a demand-side management measure or program to be realized.
Project Financing  This is the most commonly used method to finance the construction of independent power facilities.  Typically, the developer pledges the value of the plant and part or all of its expected revenues as collateral to secure financing from private lenders.
Prorated Bills  The computation of a bill based upon proportionate distribution of the applicable billing schedule.  A prorated bill is less than 25 days ore more than 38 days.
Provider of Last Resort  A legal obligation (traditionally given to utilities) to provide service to a customer where competitors have decided they do not want that customer’s business.
Public Authority Service to Public Authorities  Electric services supplied to public entities such as municipalities or divisions of state or federal governments.
Public Utility  A utility operated by a non-profit governmental or quasi-governmental entity.  Public utilities include municipal utilities, cooperatives, and power marketing authorities.
Public Utility Holding Company Act of 1935 (PUHCA)  PUHCA was enacted by the U.S. Congress to regulate the large interstate holding companies that monopolized the electric utility industry during the early 20th century.
Public Utility Regulators Policy Act of 1978 (PURPA)  PURPA promotes energy efficiency and increased use of alternative energy sources by encouraging companies to build cogeneration facilities and renewable energy projects using wind power, solar energy, geothermal energy, hydropower, biomass, and waste fuels.
Publicly Owned Utilities  Municipal utilities (utilities owned by branches of local government) and/or co-ops (utilities owned cooperatively by customers).
Pumped Storage  A facility designed to generate electric power during peak load periods with a hydroelectric plant using water pumped into a storage reservoir during off-peak periods.
Purchased Power Adjustment  A clause in a rate schedule that provides for adjustments to a bill when energy from another system is acquired.
Qualifying Facilities  An individual (or corporation) who owns and/or operates a generation facility, but is not primarily engaged in the generation or sale of electric power.  QFs are either renewable power production or cogeneration facilities that qualify under Section 201 of Public Utility Regulators Policy Act of 1978 (PURPA).
Ramp Rate  The rate at which you can increase load on a power plant.  The ramp rate for a hydroelectric facility may be dependent on how rapidly water surface elevation on the river changes.
Ramp Up (Demand-Side)  Implementing a demand-side management program over time until the program is considered fully installed.
Ramp Up (Supply-Side)   Increasing load on a generating unit at a rate called the ramp rate.
Rate Base  Value of property upon which a utility is permitted to earn a specific rate of return.
Rate Class  A group of customers identified as a class and subject to a rate different from the rates of other groups.
Rate Structure  The design and organization of billing charges by customer class to distribute the revenue requirement among customer classes and rating period.
Rate-Basing  The practice by utilities of allotting funds invested in utility Research Development Demonstration and Commercialization and other programs from ratepayers, as opposed to allocating these costs to shareholders.
Rate-of-Return Rates   Rates set to the average cost of electricity as an incentive for regulated utilities to operate more efficiently at lower rates where costs are minimized.
Ratemaking Authority  The utility commission’s authority as designated by a State or Federal legislature to fix, modify, and/or approve rates.
Ratepayer  This is a retail consumer of the electricity distributed by an electric utility.  This includes residential, commercial and industrial users of electricity.
Real-Time Market  The competitive generation market controlled and coordinated by the ISO for arranging real-time imbalance power.
Real-Time Pricing  The instantaneous pricing of electricity based on the cost of the electricity available for use at the time the electricity is demanded by the customer.
Receiving Parts  Entity receiving the capacity and/or energy transmitted by the transmission provider to the point(s) of delivery.
Recovered Energy  Reused heat or energy that otherwise would be lost.  For example, a combined cycle power plant recaptures some of its own waste heat and reuses it to make extra electric power.
Regional Power Exchange  An entity established to coordinate short-term operations to maintain system stability and achieve least-cost dispatch.  The dispatch provides back-up supplies, short-term excess sales, reactive power support, and spinning reserve.  The pool may own, manager and/or operate the transmission lines or be an independent entity that manages the transactions between entities.
Regional Reliability Councils  Regional organizations charged with maintaining system reliability even during abnormal bulk power conditions such as outages and unexpectedly high loads.
Regional Transmission Group  An organization approved by a Commission to coordinate transmission planning (and expansion), operation, and use on a regional basis.
Regional Transmission Organization (RTO)  A regional transmission organization established to operate the high-voltage interstate transmission system in a reliable, non-discriminatory manner, and to coordinate with other critical entities, such as participating utilities and generators, neighboring RTO’s and power exchanges.
Regulation  An activity of government to control or direct economic entities by rulemaking and adjudication.
Regulators Compact  Under this compact, utilities are granted service territories in which they have the exclusive right to serve retail customers.  In exchange for this right, utilities have an obligation to serve all consumers in that territory on demand.
Reliability   Electric system reliability has two components – adequacy and security.  Adequacy is the ability of the electric system to supply the aggregate electric 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.
Renewable Energy  Energy that is capable of being renewed by the natural ecological cycle.
Replacements  The substitution of a unit for another unit generally of a like or improved character.
Repowered Plant  This is an existing power facility that has been substantially rebuilt to extend its useful life.
Reregulation  The design and implementation of regulatory practices to be applied to the remaining regulated entities after restructuring of the vertically-integrated electric utility.  The remaining Regulated entities would be those that continue to exhibit characteristics of a natural monopoly, where imperfections in the market prevent the realization of more competitive results, and where, in light of other policy considerations, competitive results are unsatisfactory in one or more respects.  Reregulation could employ the same or different regulatory practices as those used before restructuring.
Resellers  Companies that purchase utility service from a wholesaler and resell it to consumers.
Reserve Capacity  Capacity in excess of that required to carry peak load.
Reserve Generating Capacity  The amount of power that can be produced at a given point in time by generating units that are kept available in case of special need.  This capacity may e used when unusually high power demand occurs, or when other generating units are off-line for maintenance, repair or refueling.
Reserve Margin  The percentage of installed capacity exceeding the expected peak demand during a specified period.
Restructuring  The reconfiguration of the vertically-integrated electric utility.  Restructuring usually refers to separation of the various utility functions into individually-operated and-owned entities.
Retail   Sales of electric energy to the ultimate customer.
Retail Competition  A system under which more than one electric provider can offer to sell to retail customers, and retail customers are allowed to choose more than one provider from whom to purchase their electricity.
Retail Transaction  The sale of electric power from a generating company or wholesale entity to the customer.
Retail Wheeling  This refers to the ability of end-use customers of any size to purchase electric capacity, energy or both from anyone other than the local electric utility by moving or wheeling such power over the local utility’s transmission and/or distribution lines.
Rolling Blackouts  A controlled and temporary interruption of electrical service.  These are necessary when a utility is unable to meet heavy peak demands because of an extreme deficiency in power supply.
Running and Quick-Start Capability  Generally refers to generating units that can be available for load within a 30-minute period.
Rural Electric Cooperative  A nonprofit, customer-owned electric utility that distributes power in a rural area.
Sales for Resale  Energy supplied to other utilities and agencies for resale.
Savings Fraction  The percentage of consumption from using the old technology that can be saved by replacing it with the new, more efficient demand-side management technology.  For example, if a 60-watt incandescent lamp were replaced with a 15-watt compact fluorescent lamp, the savings fraction would be 75 percent because the compact fluorescent lamp uses only 25 percent of the energy used by the incandescent lamp.
Scheduled Outage  An outage that results when a component is deliberately taken out of service at a selected time, usually for the purposes of construction, maintenance, or testing.
Scheduling Coordinator  An entity authorized to submit to the ISO a balanced generation or demand schedule on behalf of one or more generators, and one or more end-users customers.
Securitization  The act of pledging assets to a creditor through a note, lien or bond.  This is a mechanism to allow a utility to recover stranded costs up front in a single lump sum payment.  Under a securitization scheme, the legislature or utility commission orders customers to pay a surcharge as part of their electric bill.  That surcharge must be paid within the utility’s original service territory, regardless of who supplies the electricity to customers.
Self-Generation  A generation facility dedicated to serving a particular retail customer, usually located on the customer’s premises.  The facility may either be owned directly by the retail customer or owned by a third party with a contractual arrangement to provide electricity to meet some or all of the customer’s load.
Service Agreement  An agreement entered into by the transmission customer and transmission provider.
Service Area  The territory a utility system is required or has the right to supply electric service to ultimate customers.
Service Drop  The lines running to a customer’s house.  Usually a service drop is made up of two 120 volt lines and a neutral line, from which the customer can obtain either 120 or 240 volts of power.  When these lines are insulated and twisted together, the installation is called triplex cable.
Service Life  The length of time a piece of equipment can be expected to perform at its full capacity.
Service Territory  This is the state, area or region served exclusively by a single electric utility.
Single Phase Line  This carriers electrical loads capable of serving the needs of residential customers, small commercial customers, and streetlights.  It carrier a relatively light load as compared to heavy duty three phrase constructs.
Small Power Producer  Refers to a producer that generates at least 75% of its energy from renewable sources.
Solar Thermal Electric  A process that generates electricity by converting incoming solar radiation to thermal energy.
Source Energy  All the energy used in delivering energy to a site, including power generation and transmission and distribution losses, to perform a specific function, such as space conditioning, lighting, or water heating.  Approximately three watts (or 10.239 Btus) of energy is consumed to deliver one watt of usable electricity.
Southeastern Electric Reliability Council (SERC)  One of the ten regional reliability councils that make up the North American Electric Reliability Council (NERC).
Southwest Power Pool (SPP)  One of the ten regional reliability councils that make up the North American Electric Reliability Council (NERC).
Spinning Reserve  Reserve generating capacity running at zero load.
Split-the-Savings  The basis for settling economy-energy transactions between utilities.  The added cost of the supplier are subtracted from the avoided costs of the buyer, and the difference is evenly divided.
Spot Market  Refer to Real-Time Market
Spot Purchases  Single shipment of fuel purchased for delivery within 1 year.
Stable Prices  Prices that do not vary greatly over short time periods.
Standard Rate  The basic rate customers would take service under if they were not on real-time pricing.
Standby Facility  A facility that supports a system and generally running under no load.
Stocks  A supply of fuel accumulated for future use.
Stranded Benefits  Special collection programs, renewable energy and demand side management programs, lifeline rates and other utility resources funded by a monopoly utility that may not be funded if the utility’s competition does not have smaller costs.
Stranded Commitment  Assets and contracts associated with shifting to competition which are above market prices and result in non-competitive conditions for the utility.
Stranded Investments/Costs  Utility investments in facilities built to serve customers under traditional regulation may become unrecoverable or “stranded” if those assets are deregulated and their cost of generation exceeds the actual price of power in a competitive market.  These include prior investments allowed by regulators that are currently being recovered through regulated rates.
Stranded/Strandable Costs  These are costs inherent in the existing electric utility industry rendered potentially unrecoverable in a competitive market.
Strategic Conservation  Strategic conservation results from load reductions occurring in all or nearly all time periods.  This strategy can be induced by price of electricity, energy-efficient equipment, or decreasing usage of equipment.
Strategic Load Growth  A form of load building designed to increase efficiency in a power system.  This load shape objective can be induced by the price of electricity and by the switching of fuel technologies (from gas to electric).
Substation  A facility used for switching and/or changing or regulating the voltage of electricity.  Service equipment, line transformer installations, or minor distribution or transmission equipment are not classified as substations.
Summer Peak  The greatest load on an electric system during any prescribed demand interval in the summer.
Supplier  A person or corporation, generator, broker, marketer, aggregator or any other entity, that sells electricity to customers, using the transmission or distribution facilities of an electric distribution company.
Supply-Side  Technologies that pertain to the generation of electricity
Surplus  Excess firm energy available from a utility or region for which there is no market at the established rates.
Switching Station  Facility used to connect two or more electric circuits through switches.
System (Electric)  Physically connected generation, transmission, and distribution facilities operating as a single unit.
System Peak Demand  The highest demand value that has occurred during a specified period for the utility system.
Systems Benefits Charge  This is a per-customer charge intended to recover the costs of utility demand-side management reach and development, renewable resources or low-income programs.
Target Market  A specific group of people or geographical area that has been identified as the primary buyers of a product or service.
Tariff  A document, approved by the responsible regulatory agency, listing the terms and conditions, including a schedule or prices, under which utility services will be provided.
Tax Credits  Credits established by the federal and state government to assist the development of the alternative energy industry.
Three Phase Line  This is capable of carrying heavy loads of electricity, usually to larger commercial customers.
Time-of-Use Rates  Electricity prices that vary depending on the time periods in which the energy is consumed.  In a time-of-use rate structure, higher prices are charged during utility peak-load times.  Such rates can provide an incentive for consumers to curb power use during peak times.
Tipping Fee  A credit received by municipal solid waste companies for accepting and disposing of solid waste.
Total Incentives  The incentive a utility offers is expressed as a percentage of the technology cost.  The utility can assume any level between 0 and 100 percent.  A value greater than 100 percent is possible if the utility decides to pay for all the equipment and give a rebate as an additional incentive.  You can calculate the required incentive by setting the participant test to one by using the following formula: Total Incentives = (Technology Costs – Bill Reductions)/2.
Total Nonutility Costs  Cash expenditures incurred through participation in a DSM program that are not reimbursed by the utility.
Total Resource Cost (TRC) Test  A ratio used to assess the cost effectiveness of a demand-side management program.  Although this economic desirability test provides information about the relative merits of different DSM programs, several important issues are not addressed in this analysis.  First, this cost-effectiveness test does not indicate the level of program participation that will be achieved.  Second, the most cost-effective mix of DSM technologies is not determined by this test because this methodology only evaluates one specific measure at a time.  Finally, these tests are static; they do not include a feedback mechanism to account for changes in demand due to the DSM program.  The TRC Test measures the ratio of total benefits to the costs incurred by both the utility and the participant.  The TRC test is applicable to conservation, load management, and fuel substitution technologies.  For fuel substitution technologies, the test compares the impact from the fuel not selected to the impact of the fuel that is chosen as a result of implementing the technologies.  The TRC Test includes benefits occurring to both participants and nonparticipants.  Benefits include avoided supply costs (I.e.  transmission, distribution, generation, and capacity costs).  Costs include those incurred by both the utility and program participant.
Total Utility Costs  Total direct and indirect utility costs
Tower  A steel structure found along transmission lines which is used to support conductors
Transfer  To move electric energy from one utility system to another over transmission lines.
Transformer  A device for changing the voltage of alternating current
Transition Charge  A charge on every customer’s bill designed to recover an electric utility’s transition or stranded costs as determined by a Public Utility Commission.
Transition Costs  Costs incurred by electric utilities to meet obligations, which required the utilities to meet current and future load demand.  The utilities ensured sufficient power generating capacity by building additional power plants, whose debts are currently recovered through a regulated rate of return that would not continue in a competitive marketplace.  They could be recovered with a special charge during the transition to competition.
Transmission  The act or process of transporting electric energy in bulk.
Transmission & Distribution (T&D) Losses  Losses the result from the friction that energy must overcome as it moves through wires to travel from the generation facility to the customer.  Because of losses, the demand produced by the utility is greater than the demand that shows up on the customer bills.
Transmission & Distribution (T&D) System  An interconnected group of electric transmission lines and associated equipment for the movement or transfer or electric energy in bulk between points of supply and points at which it is transformed for delivery to the ultimate customers.
Transmission Charge  Part of the basic service charges on every customer’s bill for transporting electricity from the source of supply to the electric distribution company.  Public Utility Commissions regulate retail transmission prices and services.  The charge will vary with source of supply.
Transmission Lines  Heavy wires that carry large amounts of electricity over long distances from a generating station to places where electricity is needed.  Transmission lines are held high above the ground on tall towers called transmission towers.
Transmitting Utility  This is a regulated entity which owns, and may construct and maintain, wire 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.  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.
Transparent Price  The most recent price contract available to any buyer or seller in the market.
U.S. Department of Energy (DOE)  The DOE managers programs of research, development and commercialization for various energy technologies, and associated environmental, regulatory and defense programs.  DOE announces energy policies and acts as a principal advisor to the President on energy matters.
U.S. Environmental Protection Agency (EPA)  The EPA administers federal environmental policies, enforces environmental laws and regulations, performs research, and provides information on environmental subjects.  The agency also acts as chief advisor to the President on U.S. environmental policy and issues.
Ultrahigh Voltage Transmission  Transporting electricity over bulk-power lines at voltage greater than 800 kilovolts.
Unbundled Services  Separating and itemizing the costs of generation, transmission and distribution of a customer’s bill.
Unbundling  Disaggregating electric utility service into its basic components and offering each component separately for sale with separate rates for each component.  For example, generation, transmission and distribution could be unbundled and offered as discrete services.
Uncertainties  Uncertainties are factors over which the utility has little or no foreknowledge, and include load growth, fuel prices, or regulatory changes.  Uncertainties are modeled in a probabilistic manner.  However, in the Detailed Workbook, you may find it is more convenient to treat uncertainties as “unknown but bounded” variables without assuming a probabilistic structure.  A specified uncertainty is a specific value taken on by an uncertainty factor (e.g.  3 percent per year for load growth).  A future uncertainty is a combination of specified uncertainties (e.g.  3 percent per year load growth, 1 percent per year real coal and oil price escalation, and 2.5 percent increase in housing starts).
Unit Energy Consumption (UEC)  The annual amount of energy that is used by the electrical device or appliance.
Universal Service  Electric service sufficient for basic needs (an evolving bundle of basic services) available to virtually all members of the population regardless of income.
Unserved or Unmet Energy  The average energy that will be demanded but not served during a specified period due to inadequate available generating capacity.
Upgrade  Replacement or addition of electrical equipment resulting in increased generation or transmission capability.
Utility  A regulated entity which exhibits the characteristics of a natural monopoly.  For the purposes of electric industry restructuring “utility” refers to the regulated, vertically-integrated electric company.  “Transmission utility” refers to the regulated owner/operator of the transmission system only.  “Distribution utility” refers to the regulated owner/operator of the distribution system which serves retail customers.
Utility Distribution Company (UDC)  A distribution wires business and a regulated retailer who serves end-use customers.
Utility-Earned Incentives  Costs paid to a utility for achieving consumer participation in DSM programs.
Utilization Factor  The ratio of the maximum demand of a system or part of a system to the rated capacity of the system or part of the system.
Valley Filling  Valley filling is a form of load management that increases or builds, off-peak loads.  This load shape objective is desirable if a utility has surplus capacity in the off-peak hours.  If this strategy is combined with time-or-use rates, the average rate for electricity can be lowered.
Variable Costs  Costs, such as fuel costs, that depend upon the amount of electric energy supplied.
Variable Prices  Prices that vary frequently.  Prices that are not stable.
Vertical Integration  An arrangement whereby the same company owns all the different aspects of making, selling, and delivering a product or service.  In the electric industry, it refers to the historically common arrangement whereby a utility would own its own generating plants, transmission system, and distribution lines to provide all aspects of electric service.
Volt  A unit of electrical pressure.  It measures the force or push of electricity.  Volts represent pressure, correspondent to the pressure of water in a pipe.  A volt is the unit of electromotive force or electric pressure analogous to water pressure in pounds per square inch.  It is the electromotive force which, if steadily applied to a circuit having a resistance of one ohm, will produce a current one ampere.
Volt-amperes  The volt-amperes of an electric circuit are the mathematical products of the volts and amperes of the client.
Voltage  Measure of the force of moving energy.
Waste-to-Energy  This is a technology that uses refuse to generate electricity.  In mass burn plants, untreated waste is burned to produce steam, which is used to drive a steam turbine generator.  In refuse-derived fuel plants, refuse is pre-treated, partially to enhance its energy content prior to burning.
Watt  The electric unit of power or rate of doing work.  One horsepower is equivalent to approximately 746 watts.
Watt-Hour  One watt of power expended for one hour.
Western Systems Coordinating Council (WSCC)  One of the ten regional reliability councils that make up the North American Electric Reliability Council (NERC).
Wheeling  The use of the transmission facilities of one system to transmit power for another system.
Wholesale Bulk Power  Very large electric sales for resale from generation sources to wholesale market participants and electricity marketers and brokers.
Wholesale Competition  A system whereby a distributor of power would have the option to buy its power from a variety of power producers, and the power producers would be able to compete to sell their power to a variety of distribution 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.
Wholesale Transition  The sale of electric power from an entity that generates electricity to a utility or other electric distribution system through a utility’s transmission lines.
Wholesale Transmission Services  The transmission of electric energy sod, or to be sold, at wholesale in interstate commerce.
Wind Energy Conversion   A process that uses energy from the wind and converts it into mechanical energy and then electricity.
Winter Peak  The greatest load on an electric system during any prescribed demand interval in the winter season or months.
Wires Charge  A broad term which refers to charges levied on power suppliers or their customers for the use of the transmission or distribution wires.



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