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Glossary of Electric Terms

Following is a glossary of terms used in the electric industry that the Commission believes will help you better understand this complex industry.
For a more detailed glossary of electrical terms click here, to visit the Department of Energy, Energy Information Administration's website.
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Account Establishment Charge -

A one-time fee that helps recover the cost of placing an account in a customer's name for billing.

Affiliate -

An entity which is directly or indirectly owned, operated, or controlled by another entity.

Alternative-Rate DSM Program Assistance -

A program that offers special rate structures or discounts on the consumer's monthly electric bill in exchange for participation in demand side management (DSM) programs aimed at cutting peak demands or changing load shape. These rates are intended to reduce consumer bills and shift hours of operation of equipment from on-peak to off-peak periods through the application of time-differentiated rates.

Block of Green Power -

The equivalent of 100 kilowatt hours of electricity. Equivalent to 1/12 of a residential customer's average monthly usage.

Benefit of Service -

Consuming electricity without any legal obligations to pay. As an example, a roommate whose name is not on the power bill uses electricity, but has no legal obligation to pay in the event the accountholder fails to pay the bill.

Budget Billing -

A plan that allows customers to make averaged monthly payments for a specified period of time. The amount of each bill is based on the customer's actual energy usage for the current and previous 11 months. At the end of the period, the account is "trued up."

Cogeneration -

The production of electrical energy and another form of useful energy (such as heat or steam) through the sequential use of energy.

Cogeneration System -

A system using a common energy source to produce both electricity and steam for other uses, resulting in increased fuel efficiency.

Cogenerator -

A generating facility that produces electricity and another form of useful thermal energy (such as heat or steam), used for industrial, commercial, heating, or cooling purposes. To receive status as a qualifying facility (QF) under the Public Utility Regulatory Policies Act (PURPA), the facility must produce electric energy and "another form of useful thermal energy through the sequential use of energy" and meet certain ownership, operating, and efficiency criteria established by the Federal Energy Regulatory Commission (FERC).

Demand-Side Management (DSM) -

The planning, implementation, and monitoring of utility activities designed to encourage consumers to modify patterns of electricity usage, including the timing and level of electricity demand. It refers to only energy and load-shape modifying activities that are undertaken in response to utility-administered programs. It does not refer to energy and load-shaped changes arising from the normal operation of the marketplace or from government-mandated energy-efficiency standards. Demand-Side Management covers the complete range of load-shape objectives, including strategic conservation and load management, as well as strategic load growth.

Electric Power Grid -

A system of synchronized power providers and consumers connected by transmission and distribution lines and operated by one or more control centers. In the continental United States, the electric power grid consists of three systems: the Eastern Interconnect, the Western Interconnect, and the Texas Interconnect. In Alaska and Hawaii, several systems encompass areas smaller than the State (e.g., the interconnect serving Anchorage, Fairbanks, and the Kenai Peninsula; individual islands).

Federal Energy Regulatory Commission (FERC) -

The Federal agency with jurisdiction over interstate electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, oil pipeline rates, and gas pipeline certification. FERC is an independent regulatory agency within the Department of Energy and is the successor to the Federal Power Commission.

Firm Power -

Power or power-producing capacity intended to be available at all times during the period covered by a guaranteed commitment to deliver, even under adverse conditions.

Flat Bill -

A plan that allows a customer to pay the same amount each month for service (includes a risk adder) for a specified period of time. No true up at the end of the contracted period.

Forced Outage -

The shutdown of a generating unit, transmission line or other facility for emergency reasons.

Generation -

The process of producing electric energy by transforming other forms of energy; also, the amount of electric energy produced, expressed in kilowatthours.

Generation Company -

An entity that owns or operates generating plants. The generation company may own the generation plants or interact with the short-term market on behalf of plant owners.

Generator Capacity -

The maximum output, commonly expressed in megawatts (MW), that generating equipment can supply to system load, adjusted for ambient conditions.

Green Power -

Electricity that is produced using a renewable resource.

Independent Power Producer (IPP) -

A corporation, person, agency, authority, or other legal entity or instrumentality that owns or operates facilities for the generation of electricity for use primarily by the public, and that is not an electric utility.

Independent System Operator (ISO) -

An independent, Federally-regulated entity established to coordinate regional transmission in a non-discriminatory manner and ensure the safety and reliability of the electric system.

Integrated Resource Plan (IRP) -

The utility's fuel mix plan for the generation of electricity.

Interruptible Load -

This DSM category represents the consumer load that, in accordance with contractual arrangements, can be interrupted at the time of annual peak load by the action of the consumer at the direct request of the system operator. This type of control usually involves large-volume commercial and industrial consumers. Interruptible Load does not include Direct Load Control.

Interruptible or Curtailable Rate -

A special electricity or natural gas arrangement under which, in return for lower rates, the customer must either reduce energy demand on short notice or allow the electric or natural gas utility to temporarily cut off the energy supply for the utility to maintain service for higher priority users. This interruption or reduction in demand typically occurs during periods of high demand for the energy (summer for electricity and winter for natural gas).

Interruptible Power -

Power and usually the associated energy made available by one utility to another. This transaction is subject to curtailment or cessation of delivery by the supplier in accordance with a prior agreement with the other party or under specified conditions.

Kilowatt Hour (kWh) -

One thousand watt hours of usage.

Line Loss -

Electric energy lost because of the transmission of electricity. Much of the loss is thermal in nature.

Master Metering -

Measurement of electricity or natural gas consumption of several tenants or housing units using a single meter. That is, one meter measures the energy usage for several households collectively.

Megawatts (mW) -

One million watts.

Peaking Capacity -

Capacity of generating equipment normally reserved for operation during the hours of highest daily, weekly, or seasonal loads. Some generating equipment may be operated at certain times as peaking capacity and at other times to serve loads on an around-the-clock basis.

Public Utility Regulatory Policies Act of 1978 (PURPA) -

This statute requires States to implement utility conservation programs and create special markets for co-generators and small producers who meet certain standards, including the requirement that States set the prices and quantities of power the utilities must buy from such facilities.

Purchased Power -

Power purchased or available for purchase from a source outside the system.

Purchased Power Adjustment -

A clause in a rate schedule that provides for adjustments to the bill when energy from another electric system is acquired and its cost varies from a specified unit base amount.

Rate Base -

The value of property upon which a utility is permitted to earn a specified rate of return as established by a regulatory authority. The rate base generally represents the value of property used by the utility in providing service and may be calculated by any one or a combination of the following accounting methods: fair value, prudent investment, reproduction cost, or original cost. Depending on which method is used, the rate base includes cash, working capital, materials and supplies, deductions for accumulated provisions for depreciation, contributions in aid of construction, customer advances for construction, accumulated deferred income taxes, and accumulated deferred investment tax credits.

Real Time Pricing (RTP) -

A tariff that allows customers to make consumption decisions based upon hourly forecasted prices.

Renewable Resource -

A resource that is naturally replenished. Examples of renewable resources are: solar electric, wind, geothermal, biomass and hydroelectric. Generally have lower environmental impacts.

Tariff -

A schedule that contains the company's rules and regulations, as well as the fees and rates for services offered.

Time of Use (TOU) -

A rate schedule (tariff) based upon the time of day that service is used.

Transmission Line -

A set of conductors, insulators, supporting structures, and associated equipment used to move large quantities of power at high voltage, usually over long distances between a generating or receiving point and major substations or delivery points.

True Up -

The difference between what a customer actually paid on a budget billing plan and the actual cost for services used. A settling of the account prior to the new budget billing plan going into effect.

Voltage -

The difference in electrical potential between any two conductors or between a conductor and ground. It is a measure of the electric energy per electron that electrons can acquire and/or give up as they move between the two conductors.

Watthour (Wh) -

The electrical energy unit of measure equal to one watt of power supplied to, or taken from, an electric circuit steadily for one hour.

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