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Glossary

Electricity Terms

A

Aggregation: Is the process in which energy is sold to consumers who have joined together as a group to buy a product- in this case electricity or natural gas.

Aggregator: An entity that brings customers together to buy electricity in bulk in order to increase customers’ buying power. Aggregators facilitate the sale of power but usually are not sellers.


B

Base Load: The smallest energy level that an electric plant must give you on a continual basis.

Base Load Capacity: The generating equipment that is generally operated in order to provide loads around-the-clock.

Basic Services: The services that are typically needed for the physical delivery of service. This includes distribution, generation and transmission.

Broker: The agent or “middle man” during the selling and purchasing of electricity or natural gas.

Bundled: A sole utility that provides the generation, distribution and transmission to customers.


C

Capability: The maximum load that a generating station, generating unit or other electrical apparatus is able to hold under specified conditions without going over the permitted limit of stress and temperature.

Capacity: A long-term, slush fund mandated by FERC to obtain funds from consumers to increase generation capability to meet the generation demand.

Capacity Charge: Also called “demand charge,” it is a part of a two-part pricing technique that is used in capacity transactions. It is gauged on how much capacity is purchased and expressed in $/kW-month or $/MW-day.

Capacity Reserve Price: 25% more than the clearance price.

Clearance Price: A number in kilowatts, charged annually.

Cogeneration: Producing electricity along with a second form of energy, like steam or heat, for commercial, industrial, cooling or heating purposes.

Congestion: An approximate cost in crowded areas to get electricity through the grid.

Contract Price: A contract that marks the price of fuel for one or more years.

Cooperative (Co-Op): A rural electric cooperative will generate and/or purchase power at wholesale and will then set up the transmission of power and distribute it to their rural customers.

Current (Electric): Electrons that flow into an electrical conductor. This is measured in amperes.


D

Daily Peak: During a specified period, such as a day, hour, half-hour, the greatest amount of electricity that was used.

Day-Ahead Market: The forward market for ancillary and energy services to be provided through the settlement period of a certain trading day, led by the Independent System Operator, Scheduling Coordinator or the power exchange. The market will close with the Independent System operator accepting the final day-ahead schedule.

Delivering Party: The person who supplies the capacity and/or energy that is transmitted at the Point(s) of Receipt.

Demand: The highest amount of energy measured at a single time during a month.

Deregulation: The elimination or relaxation of guidelines that lead a business or service operation, like utilities.

Distribution: How electricity flows at lower voltages from the transmission facility to the customer. The transformers, local wires, substations or other equipment that is needed to deliver electricity from the distribution company to your business or home.

Distribution System: The part of the electric system that delivers electric energy to the user.


E

Electric Distribution Company (EDC): The company that owns the equipment and power lines that are needed to deliver electricity to their customers.

Electric Rate Schedule: A report of the electric rate and the terms/conditions of its application which includes any attendant contract terms/conditions that have been established by the proper oversight authority.

Electric Service Provider: The entity that is providing electrical service to a customer.

Electricity Generation: The process by which electric energy is produced or transformed along with other forms of energy into electric energy.

Energy: The capacity to do work. There are several forms of energy and some are easily converted to another useful form of work.

Energy Charge: The amount of the charge that is founded on the electric energy or natural gas that was billed or consumed.

Energy Consumption: Using energy as a power or heat source or as an input during the manufacturing process. This is determined by multiplying the demand by the time during which the energy was utilized.

Energy Source: The main source of providing power that is converted to electricity through mechanical, chemical or other means. Coal, gas, water, petroleum, wind, sunlight, uranium, geothermal and other sources are included under energy sources.


F

Federal Energy Regulatory Commission (FERC): The federal agency that has jurisdiction over wholesale electric rates, interstate electricity sales, natural gas pricing, hydroelectric licensing and oil pipelines rates.

Federal Power Act: Established in 1929 and later amended in 1935, this Act contains 3 parts. The 3 parts allow the Act to have jurisdiction over the regulation of interstate transmissions of electrical energy and rates for their sales as wholesale in interstate commerce.

Firm Power: Power or power-producing capacity that is always accessible under any condition.

Fixed Price: A price that never changes throughout the course of a contract.

Fossil-Fuel Plant: A plant that uses gas, coal or petroleum as an energy source.

Futures Market: A contract that contains an arrangement for having a commodity delivered at a future time and has a price that was stated when it was purchased. The price is based on market basis or an auction.


G

Gas: Fuel that is burned for electric generation, including natural, waste and manufactured gas.

Gas-Turbine Electric Power Plant: A plant that has a main mover as a gas turbine. Gas turbines usually contain an axial-flow air compressor and a combustion chamber(s) in which liquid or gaseous fuel is burned.

Generating Unit: A combination of physically connected generators, boilers, combustion turbines, reactors or other prime movers that operate together in order to create electric power.

Generation (Electricity): How electricity is produced.

Generation Company: A company that operates and preserves the existing generating plants.

Generator: A machine that changes mechanical energy into electrical energy.

Gigawatt (GW): One billion watts.

Gigawatt hour (GWh): One billion watt hours.

Greenhouse Effect: A heating phenomenon that is caused by atmospheric gases.

Grid: How electricity is able to travel from the supplier to the customer. Gris also refers to the layout of an electric distribution system.

Grid Operator: The overseer of the delivery of electricity over the grid to the customer. The grid operator is responsible for assuring high reliability and public and worker safety.

Gross Generation: How much electric energy is produced by the generating units at a generating station(s) and is measured at the generator terminals.


H

Hourly Metering or Time of Use Metering: Following or recording what you consume throughout a specified period of time.

Hydrocarbon: An organic chemical compound that is comprised of hydrogen and carbon in the liquid, gaseous or solid phase. Coal, oil, sugar, natural gas, plastics and starches are all made up of hydrocarbons. If hydrocarbons have incomplete combustion from fossil fuels, it adds to our global warming and pollution.


I

Illinois Commerce Commission (ICC): A quasi-judicial tribunal responsible for regulating public utility services in Illinois.

Interruptible Load: According to contractual arrangements, a program activity that is able to interrupt a consumer load at times of seasonal peak load by direct control of the utility system operator or by action of the consumer at the request of the system operator. Industrial and commercial consumers are generally involved with this.

Interruptible Rate: A special utility rate that certain industrial customers are given if they have agreed to have their service lessened or stopped temporarily as a part of their agreement with their electric provider.


J

K

Kilowatt (kW): A measure of electrical energy that is equal to one thousand watts.

Kilowatt-hour (kWh): The standard unit for measuring electricity. Your electricity usage determine how many kilowatt-hours are charged to your bill.


L

Load: How much electric power is needed to meet the customer’s demand in a certain amount of time.

Load Management: Adjusting electricity usage from periods of high demand to periods of lower demand during which electricity costs are generally lower.

Load Profile: The measuring of electrical usage by a customer over a period of time to show when and how much electricity is being used by the customer.


M

Market Clearing Price: The price of a good or service at which the amount supplied is equal to the amount demanded.

Market Participants: Any participant in the electrical energy marketplace who either buys or sells electrical energy or services.

Market Power: One company that owns a significantly large portion of generation, distribution or transmission capabilities in an area that allows them to influence the price of electricity by forcing the purchase of its own power.

Maximum Demand: The highest demand on the load that has occurred during a certain time period.

Megawatt (MW): One thousand kilowatts.

Megawatt-hour (mWh): One million watts used for an hour.

Monopoly: The exclusive possession or control over electricity or natural gas with market sales.

Municipal Utility: Utility service providers that are operated and owned by a municipal government. Municipal utilities are operated and owned by a village, town or city.

Municipally Owned Utility (Muni): A non-profit utility that is operated and owned by the municipality that it serves.


N

Non-Firm Power: A power or power-producing capacity that is available under a commitment that has limited or no assured availability.

Non-Firm Transmission Service: A point-to-point transmissions service that is scheduled on an as-available basis and could be interrupted.

Nuclear Electric Power: A form of electricity that is generated by an electric power plant that has turbines driven by steam that is produced in a reactor by heat from the fissioning of nuclear fuel.

Nuclear Energy: The energy that is released during nuclear fusion or nuclear fission, particularly when used to produce electricity.


O

Off-Peak/On-Peak: A chunk of time when the demand for energy and price is low (off-peak) or high (on-peak).

Open Access: Provides an equal opportunity to the grid for all customers.

Outage: A time when a transmission line, generating unit or other facility is out of service.


P

Pancaking: The result from adding on charges as power travels through multiple transmission systems.

Pass-Through Charges: Non-profit fees that are “passed-though” to the customer, such as Capacity, RMR, Congestion, Ancillary Services, Renewable Resources, and other charges. If a supplier contract includes pass-through charges, you will not see these charges on your utility bill. If you decide to have some of the pass-through charges not included in your supplier contract, you will see them as line items on your utility bill.

Peak Demand: The maximum load throughout a certain time period.

Peaking Capacity: The capacity of the generating equipment that is typically set aside for operation for the hours of the highest daily, weekly or seasonal loads.

Potential Peak Load Reduction: How much of the annual load reduction capability that is able to be deployed from Direct Load Control, Other Load Management, Interruptible Load and Other DSM Program activities. This embodies the load that is able to be reduced either by the direct control of the utility system operator or by the consumer in response to a utility request to curtail the load.

Power: The rate at which work is done or how much work is completed, divided by the amount of time it took to do the work. The unit of power is watt (W) or joule per second.

Power Generation Company: A company that runs and maintains generation plants.

Price Cap: A level at which regulated prices may not rise above.

Price Transparency: The accessibility of information to the public of market prices for generation and transmission service so customers understand how much they will pay for power supply and transportation in a deregulated market.

Public Utility Holding Company Act of 1935 (PUHCA): An act that was accepted by the federal government that enforces restrictions on the large interstate holding companies that controlled the nation’s private utilities by restricting the activities of the holding companies to utility operations in defined geographic areas.

Public Utilities Commission: A regulatory agency that regulates privately owned public utilities including electric power.


Q

R

Real-time Pricing: A rate that mirrors that actual moment cost of providing electricity.

Receiving Party: The receiver of capacity and/or energy that was transmitted by the Transmission Provider to the Point(s) of Delivery.

Reciprocity: A guarantee that utilities will be allowed to compete in the markets of their competitors if their market no longer is protected.

Regional Transmission Group: A group of voluntary organizations comprised of providers and transmission users that streamline the use of existing transmission facilities, resolve problems and cording any planning and expansion.

Regulation: Rules or laws that were created by the state or federal government that establishes procedures to be followed.

Reliability: Adequacy and security are the two components of electric system reliability.

Renewable Energy: Energy that is derived from sources that are virtually inexhaustible.

Retail: The sales of electrical energy that are supplied for commercial, industrial and residential purposes.

Retail Competition: Several sellers of electric power being able to directly sell to end-use customers and any process and responsibility associated with making this happen.

Retail Customers: Any residential or business customer who uses purchased electricity or natural gas. Also called end-use customers.

Retail Market: A market where electricity and other energy services are directly sold to the retail customer.

Reliability: Being able to deliver uninterrupted electricity to customers at will and being able to withstand any disturbance.

Renewable Energy: Electricity that comes from wind, geothermal or solar power instead of fossil fuels.

Renewable Energy Credits (RECs): REC’s are tradable, non-tangible energy commodities representing proof that 1megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource (renewable electricity). The owner of the REC can claim to have purchased renewable energy. It is important to understand that the energy associated with an REC is sold separately and used by another party, while the consumer only gets a certificate. A green energy provider receives credit with one REC for every 1,000 kWh or 1 MWh of electricity it produces. A certifying agency gives each REC a unique identification number to make sure it doesn’t get double-counted. The green energy is then fed into the electrical grid (by mandate), and the accompanying REC can then be sold on the open market.

Once in the grid, renewable energy is impossible to separate from the conventionally generated energy. This makes purchasing of a REC equal to purchasing a claim, that the REC owner consumed energy from the renewable portion of the whole energy in the grid. Therefore REC purchase does not affect how much renewable energy was actually generated – only how it was distributed.

Renewable Portfolio Standard: A guideline that requires sellers of electricity to have a percentage of renewable power in their portfolio.

RMR: The Reliability Must Run free was established in order to meet the grid demands that may only be used in energy emergencies, such as hot weather or if another regular power plant stops generating electricity. As a result, there are generators that remain inactive and waiting for these periods, so when they do run, their cost is vastly higher than normal generation. RMR varies by your location.


S

Scheduled Outage: A prearranged shutdown of a transmission line, generating unit or other facility for maintenance or an inspection.

Service Agreement: The original agreement and any amendment entered into by the Transmission Customer and the Transmission Provider for service.

Service Area: The region served by a utility.

Slamming: Changing the electric provider of a customer without the necessary authorization.

Smart Metering: A device that is used to communicate or record electrical usage.

Spot Purchases: A year’s supply of fuel or volumes of fuel contained in a single shipment.

Spot Market: A short-term purchase of electricity or natural gas available from a surplus for a short period.

Substation: Facility equipment that regulates, changes or switches electric voltage.

Sustainability: The endurance of systems or processes.


T

Terms of Service: The content of the agreement between a REP and the customer.

Transformer: An electrical device that reduces or increases the voltage of an alternating current.

Transmission: Electricity that flows over high voltage wires from the power plant to the local distribution line.

Transmission Charge: Charges for moving high voltage electricity from a generation facility to the distribution lines to the distribution lines of an electric distribution company.

Transmission Charges: A charge on each customer’s bill for transporting electricity from the generating facility over the transmission lines.

Transmission and Distribution Company: An affiliate that is regulated by the Public Utility Commission that owns and may construct and maintain wires used to transmit wholesale electric power.

Transmission Losses: Losses that occur on the transmission system as electricity is carried from the generator to the transmission/distribution interface.

Transmission System (Electric): An organized group of electric transmission lines and equipment that move or transfer electric energy in bulk between the point of supply and point that it will be changed for delivery over the distribution system lines for consumers or delivered to another electric system.

Transmitting Utility: A regulated entity that owns and can maintain wired that are utilized in transmitting wholesale power.


U

Unbundled Service: An electric service that has its basic components broken down and each component is priced and sold independently.

Unbundling: Separating the complete process of electric power service from generation to metering into component parts to have separate pricing and service offerings.

Utility Distribution Companies: The companies that deliver regulated services for distributing electricity to customers and serve the customers who do not want direct access.


V

Variable Price: A price that can vary by the hour, day or month.


W

Watt: A unit of power that is equivalent to one joule per second and equal to the amount of power in a circuit where a current of one ampere flows with a potential of one volt.

Watt-hour (Wh): A unit of electrical energy equivalent to one watt of power that is supplied to, or taken from an electric circuit consistently for one hour.

Wholesale Competition: A structured market where wholesale electricity suppliers are competing to sell electricity to retail provides through a regulated transmission and distribution system.

Wholesale Customer: A customer that buys electricity at wholesale, including private utilities, municipal utilities, rural electric cooperatives or a government-owned utility district. A wholesale customer buys electricity from a wholesale supplier in order to resell it to their own retail customers.

Wholesale Power Market: Buying and selling electricity from generators to resellers in addition to the ancillary services that are required to preserve reliability and power quality at the transmission level.

Wires Charge: A charge that consumers have in order to use the transmission and distribution system. This is also known as the “transmission and distribution charge”.


X – Z

Natural Gas Terms

A

B

Basis: An amount of money added to the NYMEX natural gas price to account for the pipeline and delivery costs of getting gas from the well-head to the local distribution center.

BCF: Billion Cubic Feet.

British Thermal Unit (BTU): How energy is measured in the English system of measurement. It is
an approximation of how much heat is necessary to elevate one pound of water one degree Fahrenheit at or close to 39.2 F

Broker: The agent or “middle man” during the selling and purchasing of electricity or natural gas.


C

CCF: Hundred Cubic Feet. Roughly equal to 1 Therm +- 5%. Each month, the conversion factor from CCF to therms varies. This value is typically listed on your bill.

Contract Price: A contract that marks the price of fuel for one or more years.

Conversion Factor: A factor used to change CCF or MCF to Therms, DTH, BTU or MMBTU.


D

Day-Ahead Market: The forward market for ancillary and energy services to be provided through the settlement period of a certain trading day, led by the Independent System Operator, Scheduling Coordinator or the power exchange. The market will close with the Independent System operator accepting the final day-ahead schedule.

Dekatherm or DTH: One million BTU of energy, or ten therms.

Delivering Party: The person who supplies the capacity and/or energy that is transmitted at the Point(s) of Receipt.

Deregulation: The elimination or relaxation of guidelines that lead a business or service operation, like utilities.


E

Energy: The capacity to do work. There are several forms of energy and some are easily converted to another useful form of work.

Energy Charge: The amount of the charge that is founded on the electric energy or natural gas that was billed or consumed.

Energy Consumption: Using energy as a power or heat source or as an input during the manufacturing process. This is determined by multiplying the demand by the time during which the energy was utilized.

Energy Source: The main source of providing power that is converted to electricity through mechanical, chemical or other means. Coal, gas, water, petroleum, wind, sunlight, uranium, geothermal and other sources are included under energy sources.


F

Federal Energy Regulatory Commission (FERC): The federal agency that has jurisdiction over wholesale electric rates, interstate electricity sales, natural gas pricing, hydroelectric licensing and oil pipelines rates.

Firm Gas: Gas that is sold continuously and usually on a long-term contract.

Firm Power: Power or power-producing capacity that is always accessible under any condition.

Fixed Price: A price that never changes throughout the course of a contract.

Fuel: Any substance that will product heat when it is burned.

Futures Market: A contract that contains an arrangement for having a commodity delivered at a future time and has a price that was stated when it was purchased. The price is based on market basis or an auction.


G

Green Power: Power that comes from renewable energy sources. Sources of green power include solar, wind and bio-mass fuels.

Greenhouse Effect: A heating phenomenon that is caused by atmospheric gases.


H

Hydrocarbon: An organic chemical compound that is comprised of hydrogen and carbon in the liquid, gaseous or solid phase. Coal, oil, sugar, natural gas, plastics and starches are all made up of hydrocarbons. If hydrocarbons have incomplete combustion from fossil fuels, it adds to our global warming and pollution.


I

Illinois Commerce Commission (ICC): A quasi-judicial tribunal responsible for regulating public utility services in Illinois.

Interruptible Gas: Gas that is sold with a provision that allows cessation or curtailment of service at the discretion of the distributing company under specific conditions that is detailed in the service contract.

Interruptible Load: According to contractual arrangements, a program activity that is able to interrupt a consumer load at times of seasonal peak load by direct control of the utility system operator or by action of the consumer at the request of the system operator. Industrial and commercial consumers are generally involved with this.


J

K

L

LDC: A Local Distribution Company, usually a regulated utility, which owns and operates the local pipeline system and metering that delivers gas to consumers and business users.


M

MCF: Thousand Cubic Feet.

MMcf: One million cubic feet.

Monopoly: The exclusive possession or control over electricity or natural gas with market sales.

Municipal Utility: Utility service providers that are operated and owned by a municipal government. Municipal utilities are operated and owned by a village, town or city.

Municipally Owned Utility (Muni): A non-profit utility that is operated and owned by the municipality that it serves.


N

Natural Gas:  A flammable gas that consists mostly of methane and other hydrocarbons that is used for fuel.

NYMEX Plus Basis: A method of contracting gas where the contract specifies a fixed basis number that is added to the NYMEX market price. This approach makes sense for customers who expect energy prices to remain stable or go down.


O

P

Pipeline, Natural Gas:  A comprehensive pipe conduit that is continuous, containing equipment such as valves, communication systems, and compressor stations and meters for transporting natural gas and/or supplemental gaseous fuels from point a to point b.

Price Cap: A level at which regulated prices may not rise above.

Price Transparency: The accessibility of information to the public of market prices for generation and transmission service so customers understand how much they will pay for power supply and transportation in a deregulated market.

Public Utility Holding Company Act of 1935 (PUHCA): An act that was accepted by the federal government that enforces restrictions on the large interstate holding companies that controlled the nation’s private utilities by restricting the activities of the holding companies to utility operations in defined geographic areas.

Public Utilities Commission: A regulatory agency that regulates privately owned public utilities including electric power.


Q

R

Receiving Party: The receiver of capacity and/or energy that was transmitted by the Transmission Provider to the Point(s) of Delivery.

Reciprocity: A guarantee that utilities will be allowed to compete in the markets of their competitors if their market no longer is protected.

Regulation: Rules or laws that were created by the state or federal government that establishes procedures to be followed.

Retail Customers: Any residential or business customer who uses purchased electricity or natural gas. Also called end-use customers.

Retail Market: A market where electricity and other energy services are directly sold to the retail customer.

Retainage or Shrinkage: Natural gas kept by a utility or pipeline to recover “lost” or unaccounted for natural gas. Includes pipeline fuel consumed by compressor stations used to pressurize pipeline system.


S

Service Area: The region served by a utility.

Spot Purchases: A year’s supply of fuel or volumes of fuel contained in a single shipment.

Spot Market: A short-term purchase of electricity or natural gas available from a surplus for a short period.

Sustainability: The endurance of systems or processes.

Swing Commodity Credit: A term used on some gas contracts where the customer gets charged for a contracted amount of natural gas, and if they don’t use the contracted amount, a credit is applied to the account for a portion of the unused, but contracted gas.


T

Terms of Service: The content of the agreement between a REP and the customer.

Therm: A unit of measurement for natural gas equal to 100,000 BTU of energy.

Transition Costs: Costs which are being passed on to utilities from interstate pipeline companies as a result of federally-mandated restructuring of the natural gas pipeline industry.


U – Z

Variable Price:  A price that can vary by the hour, day or month.


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