| Posted 30/Jan/2017

Aggregator - A company or organization that hopes to gain a price advantage for its members by buying in bulk. In electricity markets, it means grouping the demand of many small retail customers together in order to buy power at the wholesale level.

BioMass Energy - Essentially, a decomposing landfill of waste or garbage, that gives off heat. This heat energy can be used to heat buildings or create electricity.

BTU (British Thermal Unit) [Measurement] - The amount of heat energy required to raise one pound of water by one degree Fahrenheit at sea level. It is used as the basic unit of energy measurement.

Capacity - The amount a power plant can produce in output, usually measured in Megawatts. When a plant is operating at maximum capacity, it is operating at maximum output. see also: Transmission Capacity

Clean Power - same as Green Power, see also: Green Power

Cogeneration Plant - A power plant that produces both electricity and steam for a host industrial facility.

Congestion - The bottle neck that occurs on transmission or distribution lines when the demand for electricity on that section of the grid exceeds the capacity to send it.

Customer Choice - The choice that allows all level of electricity consumers to choose their supplier for electric generation.

Default Service - Electricity supply that by law must be offered by the local utility or the LDC to all consumers. The rate for default service is still regulated by the state PUC, and in most cases equates to the Standard Offer Rate. see also: Standard Offer Rate

Delivery Charge - The charge on your utility bill representing the cost of moving power from the generation source to your home or business. This portion of your electric bill is not open to competition, but is regulated by your state's PUC.

Demand - The amount of power required by all of the customers in a given service territory at a given point in time. It is usually measured in aggregate for a utility. see also: Load Profile

DSM (Demand Side Management) - The education of consumers by the utilities on how to manage their electricity demand and load. Can also take the form of energy saving appliances or incentives to consumers to use less electricity at given peak hours.

Deregulation - The process of unbundling or breaking apart the electric utility monopolies into four distinct functions: Power Generation, Transmission, Distribution and Metering.

Distribution - The act of moving power across low voltage power lines, as opposed to high voltage transmission lines. The final leg that electricity has to travel before reaching a home or business. Electric Cooperative - Usually a rural municipality or utility that has been formed by the community in order to buy bulk power on the wholesale market and then pass on these savings to consumers at the retail level. They sometimes own generation, transmission and distribution assets, but often times not.

ESP (Energy Service Provider) - A company, sometimes referred to as a 'generation supplier', that markets and sells power directly to homes and businesses. They can produce their own power (IPP) or they can obtain power on the wholesale market through trading operations. see also: ESCO, IPP


FERC (Federal Energy Regulatory Commission) - The independent federal agency within the Department of Energy that regulates transmission rates, and interstate wholesale electricity transactions.

Firm Service - An electric service contract where the supply of electricity cannot be interrupted, except during rolling blackout situations. This is the type of service that governs almost all residential and small business customers. see also: Types of Electric Service

Fossil Fuels - Fuels that are derived from decayed plant and animal matter, that over millions of years, under pressure and heat, have become petroleum, coal, natural gas, etc.. There is a finite amount of such resources, and therefore they are called non-renewable fuels.

Generation - The process in which fossil fuels, as well as wind power, solar energy, etc., are converted into electricity.

Generation Charge - The fee charged to the consumer for the generation of electricity. It represents nearly one third of your overall utility bill. You are choosing a new ESP in order to save money on this portion of the bill. This is the section that reflects the competitive, deregulated segment of the electricity market.

Geothermal Power - Electricity derived from the heat trapped under the earth's surface. The most imaginable example of this form of power are geysers. Almost all of Iceland is heated and powered by geothermal energy.

Green Power - Also known as Clean Power or Renewable Power. Electricity derived from Solar, Wind, Hydro, Biomass and Geothermal sources that are viewed as an environmentally friendly means of creating power. What qualifies them as environmentally friendly sources is that they do not produce any emissions like carbon dioxide or nitrogen oxide.

Grid - The combination of transmission and distribution lines that make up a "grid" of power. This infrastructure moves electricity from a source-of-power to a consumption point (sink). A grid is usually managed by an ISO or an RTO.

Grid Power - The combined pool of electricity that is created by all of the power plants connected to a particular grid, regardless of the type of fuel used to create that electricity.

Hydro Power - Electricity generated by the flow of falling water, for example, dams. It is considered a Green Power, as this process does not emit carbon dioxide or nitrogen oxide.

Interruptible Service - An electric service contract where the supply of electricity can be interrupted by the utility during times of congestion and capacity limitations. Generally, these contracts only apply to large commercial and industrial accounts, which receive a lower rate because the service is a little bit less reliable.

IPP (Independent Power Producer) - A company other than a utility that generates power. As deregulation progresses, all utilities will be forced by law to sell or transfer their power plants to unregulated IPPs, many of these will end up being an affiliate of the utility.

ISO (Independent System Operator) - An agency created to oversee the operations of a particular section of the power grid. It ensures reliability, schedules the flow of power and establishes a clearing price mechanism. see also: RTO

kW (Kilowatt) [Measurement] - 1000 watts.

kWh (Kilowatt hour) [Measurement] - The amount of kilowatts used over a one hour span to power lights, appliances, etc.. It is used as the basic unit of measure for residential and commercial electric accounts.

Load - The demand for or use of electricity.

Load Management - The utility or ISO's attempts to get consumers to alter their use or time of use. see also: DSM

Load Profile - Data collected over a period of time that approximates when and how much a customer, or class of customers, uses electricity. It is usually broken down hourly over a one-day period.

Load Shifting - Load Management technique that shifts usage from on-peak to off-peak hours.

Local Distribution Company (LDC) - Your local utility, which is still regulated and provides the transportation of electricity and natural gas to your home or business, along with infrastructure maintenance and metering. It is also your default service provider. see also: Default Service

mW (Megawatt) [Measurement] - 1 million watts or 1000 kilowatts. Used as the wholesale unit of measure.

Metering - LDC function where a utility employee comes and reads your meter to see exactly how many kWh have been used over a given period of time, usually a month.

Muni (Municipal Electric Company) - Usually, a rural utility associated with a specific town that has been chosen by the community to buy power on the wholesale market and resell it to consumers at the retail level. In some instances, they own generation, transmission and distribution assets, but this is unusual.

Obligation to Serve - The obligation of the utility to provide electricity service to any customer that requests it. By law, this falls to your local utility (LDC). The rate for this service is regulated by the state PUC.

Off-Peak - Generally, the hours from 11:00PM to 6:00AM, when demand for electricity is low.

On-Peak - Generally, the hours from 6:00AM to 11:00PM, when demand for electricity is high.

PX (Power Exchange) - An organization established to create liquidity for electricity trading. Often times this function is performed by an ISO.

PUC (Public Utility Commission) - Ultimate state regulatory body for electricity and natural gas. Establishes rates for service, determines stranded cost recovery, plant divestitures, etc.. Operates in the public's interest.

Renewable Energy - Energy sources that cannot be depleted, such as solar power, wind, hydro, biomass, etc. The opposite of fossil fuel energy sources.

Renewable Power - same as Green Power. see also: Green Power

RTO (Regional Transmission Organization) - An organization that generally integrates the ISOs, which tend to be state-specific, into larger, regional operations and oversight organizations.

RTO Initiative - A push by the FERC, under order 2000, to create RTOs to oversee more of the electric grid, in order to increase reliability and reduce price spikes.

Retail Competition - The ability of small business and residential customers to choose an ESP or ESCO. By selecting a new supplier you are participating in retail competition. Deregulation aims at creating competition amongst suppliers by allowing the consumer to choose the lowest cost, best service supplier. This competition in the generation section of the electricity market will, over time, drive down costs.


Sink - The consumption point of electricity.

Solar Power - Electricity produced by harnessing the sun's radiation through either photovoltaic or solar thermal devices.

Standard Offer Rate - The rate set by regulators for an LDC for generation supply. This is also known as the default service rate, if you do not switch suppliers. This is the rate to compare when choosing a new electric supplier.

Stranded Costs - Costs that the old utility monopolies are allowed to recover during the transition period to a truly competitive market. Essentially, they were poor investment decisions made by utilities under the old regulated system. However, since they were made in an effort to help the public, they are allowed to recover these costs from the public. Without this provision, many utilities would go out of business. They appear on your bill under the term "transition charge." see also: Transition Charge

Substation - The point where electricity is transformed from high voltage transmission to low voltage distribution.

Time of Use Service - Differing rates for electricity supply depending on what time of day or year that the power is consumed. Generally, the rate distinctions are on-peak and off-peak, and winter and summer.

Transition Charge - The line item on your utility bill that represents the recovery of stranded costs. see also: Stranded Costs

Transmission - The act of moving power from the generation facilities across high voltage, long distance power lines to substations, where the electricity is reduced in voltage and fed into distribution lines.

Transmission Capacity - The amount of electricity that can flow on a given transmission line.

Types of Electric Service - Firm and Interruptible Service. see also: Firm Service, Interruptible Service

Unbundling - The breaking apart of the electric utility monopolies into their respective components: Generation, Transmission, Distribution and Metering. Generation is now a competitive market, transmission is managed by an ISO or RTO, and your old utility retains distribution, metering and maintenance functions.

Watt [Measurement] - The rate of work represented by a current of one ampere under a pressure of one volt; the equivalent of 1 / 746 horsepower. It is the smallest unit of measure in the electricity industry.

Wheeling - The process of trading and moving electricity across the grid by companies who do not generate or use the power. For example, when an ESP or ESCO who buys power from an IPP in Pennsylvania buys transmission rights and then transports the power in order to sell it to Ohio consumers.

Wholesale Market - The bulk electricity trading market where large blocks of spot and forward power are traded in 25 and 50 MW increments. Participants are IPPs, ESPs and ESCOs, utilities and distribution companies, and pure traders or speculators.

Wind Power - The original form of wind power was the windmill, but today wind power is generated from large fans or propellers that when spun by the wind, drive turbines that in turn create electricity.