Affiliated power producer: A generating company that is affiliated with a utility.
Aggregation: The process of organizing small groups, businesses or residential customers into a larger, more effective bargaining unit that strengthens their purchasing power with utilities.
Broadband communications: The result of utilities forming partnerships to offer consumers "one-stop shopping" for energy-related and high-tech telecommunications services.
Btu (British thermal unit): A generic measure of energy, regardless of type.
Captive Customer – A customer who does not have realistic alternatives to buying power from the local utility, even though the customer has the legal right to do so.
Circuit: The complete path of electric current, which includes the source of the current, the conductor, the load and a return path to the source.
Cogeneration: The process of producing electric energy and steam from one fuel source at the same time. Frequently used by large industrial companies to power their facilities.
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 Transition Charge (CTC) – A nonbypassable charge placed on distribution services to recover utility costs incurred as a result of restructuring that are not recoverable in other ways.
Current: The amount of electricity flowing in a circuit.
Demand side management (DSM): The management of demand for electricity so that the peak load can be reduced to anticipate the need for the generating capacity.
Department of Energy (DOE): A government agency that promotes energy efficiency by providing technical information and participating in legislation.
Deregulation: The act or process of removing government restrictions and regulations controlling an industry.
Direct access: When customers purchase electricity directly from any supplier in the competitive market, using the transmission and distribution lines of electric utilities to transport power.
Disaggregation – The functional separation of a vertically integrated utility into smaller, individually owned business units.
Disco: An abbreviated term for a distribution company that distributes electricity to customers, but does not provide generation or transmission services.
Distribution: The system of wires, switches and transformers that serve neighborhoods and businesses, 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 and businesses.
Electricity Consumers Resources Council (ELCON) – An association of 28 large industrial customers who account for more than five percent of all electricity consumed in the United States.
Electric pilot program: An experimental program that provides a model of a deregulated electricity marketplace. Also referred to as a customer choice pilot program.
Electric Reliability Council of Texas (ERCOT): A voluntary organization of electric power producers in Texas established to maintain reliable service through cooperative exchanges of power.
Electric Service Provider – A company, organization or entity that provides electricity from one of several generation sources.
Electric wholesale generator (ewg): A power producer who sells power at cost to a customer.
Embedded cost: A utilityfs average cost of doing business, which includes the costs of fuel, personnel, plants, poles, and wires. Used by the Public Utility Commission (PUC) when setting electric rates.
Energy Policy Act of 1992 (EPAct): A law passed by the U.S. Congress to open access to transmission lines for all utilities and create electric wholesale generators.
ESCOs: Energy service companies established as a result of organizational restructuring of utilities. ESCOs provide customers with a variety of price options and non-traditional energy services.
Federal Energy Regulatory Commission (FERC): A government body that regulates the price of the power and the rate that utilities can charge to move that power from seller to buyer over their transmission line. FERC also has the authority to require utilities to transmit power for other electric generators in the wholesale market.
Feebates – A strategy which imposes a fee on polluting resources and rebates those fees to cleaner technologies.
FERC Order 888 and 889: FERCfs rules to expand competition in the wholesale electric industry.
Fixed costs: Costs that are set based on an estimated amount of electricity, used or generated.
Genco: An abbreviated term for a company that is only engaged in the business of generating electricity.
Green pricing: A pricing option offered by an energy services company in which customers pay more for electricity generated from environmentally friendly sources, such as solar, windmills or geothermal generators.
Grid: The interconnected network of transmission lines and control equipment that carries electricity from the generation source to the distribution system.
Hedging Contracts – Contracts establishing future prices and quantities of electricity independent of the short-term market.
Independent Power Producers (IPPs): Nonregulated companies that develop generating plants to produce and sell electricity to utilities.
Independent System Operator (ISO): A voluntarily formed entity established to ensure comparable and equal access by electricity suppliers to regional electric transmission systems.
Interruptible Service – Service, which can be interrupted on short notice, offered at a lower level of cost and reliability.
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.
IOU: An abbreviated term for an investor-owned utility. IOUs are public utilities that are owned by shareholders, organized as corporations and regulated by FERC and PUCs.
Kilowatt (kW): A measure of electric energy equal to 1,000 watts. One kilowatt of electricity is required to light 10 100-watt light bulbs.
Kilowatt-hour (kWh): A measure of electric energy consumption equal to the use of 1,000 watts of power over a period of one hour.
Load: The consumption of power or electricity.
Load factor: The relationship between load and quantity of power consumed in a given time period expressed as a percentage.
Marginal costs: The cost of transmitting one unit of power.
Megawatt-hour (MWh): 1,000 kilowatts, or 1,000,000 watts, of power over a one-hour period.
Merchant Function – The wholesale purchasing and reselling of electricity.
Monopoly – Exclusive ownership through legal privilege or command of supply.
Municipalization – The process by which a municipality supplies power to customers by either generating and distributing the power itself, or purchasing wholesale power from other generators and distributing it.
Non-utility generator (NUG): Independent power producers, exempt wholesale generators and other companies in the power generation business that have been exempted from traditional utility regulation.
North American Electric Reliability Council (NERC): A non-profit organization formed by the electric utility industry to promote standards for the reliable operation of the nationfs electric utility industry. Formed in 1968, NERC is organized through 10 regional councils comprised of individual electric utilities in the U.S., Canada and Mexico.
Open access: Access to the electric transmission system by any legitimate market participant, including utilities, independent power producers, cogenerators, and power marketers.
Peak Load – The electric load that corresponds to a maximum level of electric demand in a specific time period.
POOLCO: An independent power pool company that operates an electric transmission grid and dispatches generating plants by buying and selling wholesale power.
Power Exchange (PX) – A model in which the spot price pool schedules generation and provides price bids to the independent system operator (ISO). The ISO then uses the bids to establish congestion prices, match actual demand to available supply and facilitate short-term operation of the integrated generation and transmission system.
Power marketer or broker: An individual or company that sells electricity to an end-user, but may not have generating capacity. Power marketers or brokers must be certified by FERC.
Power pool: An arrangement between two or more interconnected electric systems through which power is reliably and economically supplied to meet their combined load requirements.
Public Purpose Programs Charge – A regrouping of charges for social programs that support low-income consumers, energy-efficiency renewable energy sources and research.
Public Utility Commission (PUC): A state agency that regulates electric and telecommunication utilitiesf rates and practices. Also known in some states as the Department of Public Utilities (DPU) or Public Service Commission (PSC). Regulatory commissions exist in all 50 states.
Public Utility Holding Company Act of 1935 (PUHCA) – Federal legislation prohibiting acquisition of any wholesale or retail electric business through a holding company unless that business forms part of an integrated public utility system when combined with the utilityfs other electric business. PUHCA also restricts ownership of an electric business by non-utility corporations.
Public Utilities Regulatory Policies Act of 1978 (PURPA) - Federal legislation that requires a utility to buy electric power from private facilities at an avoided cost rate, or the cost the utility would have incurred to generate or purchase that power themselves. The utility must also provide those who generate their own electricity a back-up supply at a reasonable rate.
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.
Real-time pricing: Setting prices on a short-term basis to reflect a utilityfs current marginal costs; typically forecast one day in advance.
Regional Reliability Councils (RRC) – Regional organizations that maintain system reliability.
Regional Transmission Group (RTG) – A voluntary organization of transmission owners, users and other entities interested in coordinating transmission planning, expansion, operation, and use on a regional or inter-regional basis.
Regulation: The governing of an entity according to the law or constituted authority.
Regulatory Compact – An agreement between the utility and the regulatory agency by which the utility would have the opportunity to recover costs it incurred for the development of generation, transmission and distribution infrastructures.
Reliability: Uninterrupted electricity to customers on demand.
Renewable Energy Source – An energy source that is replenished naturally, such as biomass, hydro, geothermal, solar, or wind.
Reregulation – Regulation that will be applied to the remaining regulated entities after restructuring of the vertically integrated electric utility.
Reserve Margin – Reserve capacity maintained above the anticipated peak load to provide operational flexibility and system reliability.
Retail Company: A company that is authorized to sell electricity directly to industrial, commercial and residential end-users.
Retail transaction: The sale of electric power from a generating company or wholesale entity to the customer.
Retail wheeling: The transmission of electricity from an independent, non-utility generator or utility to a home or business through the transmission lines and distribution systems of the local utility.
Securitization: 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 electricity bill. That surcharge must be paid within the utilityfs original service territory, regardless of who supplies the electricity to customers.
Service drop: The power lines running from a pole to a customerfs house or business.
Service Territory – The geographical area served by a utility.
Slamming – The act of switching a customerfs electricity service provider without his or her permission.
Spinning reserve: An assigned amount of on-line generation not producing energy that electric utilities maintain to respond to unexpected problems at power plants.
Standard rate: The base rate customers would take service under if they were not on real-time pricing.
Stranded costs, investments or assets: Investments with high fixed costs that become non-competitive in a deregulated marketplace, causing a portion of the costs to be unrecoverable through the market price for electricity. Also referred to as transition charges or reliability costs.
Substation: A facility containing switches, transformers and other equipment. It is the location where voltage is decreased for distribution to commercial and residential customers.
Supply-side – Activities designed to supply electricity to customers that are conducted on the utilityfs side of the meter.
Tariff – The document listing the terms, conditions and schedule of prices under which utility services will be provided. Tariffs are filed to and approved by the Federal Energy Regulatory Commission or the state regulatory commission.
T&D Company: A company involved in the transmission and distribution of electrical power, as opposed to the generation of power. transmission involves moving electricity in large amounts (bulk power) at very high voltage between generating plants, from generating plants to power substations and between substations. Distribution involves moving smaller amounts of power at lower voltage from power substations to industrial, commercial and residential customers.
Transco: An abbreviated term for a company that is only engaged in the bulk transmission of electricity.
Transformer: A device that transforms electricity from one voltage to another.
Transmission: Large scale bulk power transferred at a very high voltage (69,000 to 345,000 volts) between generating plants and power substations.
Transmission access: The process of transporting bulk electricity from a source or sources of supply to other parts of the generating system or to other utility systems.
Transparent price: The most recent price contract available to any buyer or seller in the market.
Unbundling: The dividing of a utilityfs services into separate businesses, typically generation, transmission and distribution.
Wholesale bulk power: Very large electric sales for resale from generation sources to wholesale market participants and electricity marketers and brokers.
Wholesale transaction: The sale of electric power from an entity that generates electricity to a utility or other electric distribution company.
Wholesale wheeling: The exchange of power between utilities that is resold to the customer. The power is transmitted to the buyerfs distribution system through a utilityfs transmission lines.
Volt: A unit of measure of electric potential (pressure).
Voltage: The pressure at which electricity is transferred through power lines.
Zone pricing: Setting prices equal to all zones within a state when power is provided evenly across the state. When the distribution of power across zones is not equal, then zone prices will vary.
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