Energy Glossary

The following is a glossary of terms helpful for energy shoppers as compiled by the U.S. Energy Information Administration and other sources:



Any marketer, broker, public agency, city, county, or special district that combines the loads of multiple end-use customers in facilitating the sale and purchase of electric energy, transmission, and other services on behalf of these customers.

Ancillary Services

Necessary services that must be provided in the generation and delivery of electricity. As defined by the Federal Energy Regulatory Commission, they include: coordination and scheduling services (load following, energy imbalance service, control of transmission congestion); automatic generation control (load frequency control and the economic dispatch of plants); contractual agreements (loss compensation service); and support of system integrity and security (reactive power, or spinning and operating reserves).



The minimum amount of electric power delivered or required over a given period of time at a steady rate.

Baseload Capacity

The generating equipment normally operated to serve loads on an around-the-clock basis.


The abbreviation for 1 billion cubic feet of natural gas.


An entity that arranges the sale and purchase of electric energy, transmission, and other services between buyers and sellers, but does not take title to any of the power sold.

Btu (British Thermal Unit)

A standard unit for measuring the quantity of heat energy equal to the quantity of heat required to raise the temperature of 1 pound of water by 1 degree Fahrenheit.

Bundled Utility Service

All generation, transmission, and distribution services provided by one entity for a single charge. This would include ancillary services and retail services.


Capacity (Purchased)

The amount of energy and capacity available for purchase from outside the system.

Capacity Charge

An element in a two-part pricing method used in capacity transactions (energy charge is the other element). The capacity charge, sometimes called Demand Charge, is assessed on the amount of capacity being purchased.

Competitive Transition Charge

A non-bypassable charge levied on each customer of a distribution utility, including those who are served under contracts with nonutility suppliers, for recovery of a utility's transition costs.


A condition that occurs when insufficient transfer capacity is available to implement all of the preferred schedules for electricity transmission simultaneously.

Cost-of-Service Regulation

Traditional electric utility regulation under which a utility is allowed to set rates based on the cost of providing service to customers and the right to earn a guaranteed profit.

Customer Choice

Allowing all customers to purchase kilowatthours of electricity from any of a number of companies that compete with each other.


Day-Ahead Market

The forward market for energy and ancillary services to be supplied during the settlement period of a particular trading day that is conducted by the Independent System Operator, the power exchange, and other Scheduling Coordinators. This market closes with the Independent System Operator's acceptance of the final day-ahead schedule.

Day-Ahead Schedule

A schedule prepared by a Scheduling Coordinator or the Independent System Operator before the beginning of a trading day. This schedule indicates the levels of generation and demand scheduled for each settlement period that trading day.

Delivery Only Providers

Owners and/or operators of transmission and distribution system equipment who provide billing and related energy services for the transmission and delivery of electricity.


The rate at which energy is delivered to loads and scheduling points by generation, transmission, and distribution facilities.

Demand (Electric)

The rate at which electric energy is delivered to or by a system, part of a system, or piece of equipment, at a given instant or averaged over any designated period of time.

Demand Bid

A bid into the power exchange indicating a quantity of energy or an ancillary service that an eligible customer is willing to purchase and, if relevant, the maximum price that the customer is willing to pay.

Demand-Side Management

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 only to energy and load-shape modifying activities that are undertaken in response to utility-administered programs. It does not refer to energy and load-shape changes arising from the normal operation of the marketplace or from government-mandated energy-efficiency standards. Demand-Side Management (DSM) covers the complete range of load-shape objectives, including strategic conservation and load management, as well as strategic load growth.

Direct Access

The ability of a retail customer to purchase commodity electricity directly from the wholesale market rather than through a local distribution utility.


The delivery of electricity to retail customers (including homes, businesses, etc.).

Distribution System

The portion of an electric system that is dedicated to delivering electric energy to an end user.


Electric Rate Schedule

A statement of the electric rate and the terms and conditions governing its application, including attendant contract terms and conditions that have been accepted by a regulatory body with appropriate oversite authority.

Electric Service Provider

An entity that provides electric service to a retail or end-use customer.

Electric Utility

A corporation, person, agency, authority, or other legal entity or instrumentality that owns and/or operates facilities within the United States, its territories, or Puerto Rico for the generation, transmission, distribution, or sale of electric energy primarily for use by the public and files forms listed in the Code of Federal Regulations, Title 18, Part 141. Facilities that qualify as cogenerators or small power producers under the Public Utility Regulatory Policies Act (PURPA) are not considered electric utilities.


The capacity for doing work as measured by the capability of doing work (potential energy) or the conversion of this capability to motion (kinetic energy). Energy has several forms, some of which are easily convertible and can be changed to another form useful for work. Most of the world's convertible energy comes from fossil fuels that are burned to produce heat that is then used as a transfer medium to mechanical or other means in order to accomplish tasks. Electrical energy is usually measured in kilowatthours, while heat energy is usually measured in British thermal units.

Energy Charge

That portion of the charge for electric service based upon the electric energy (kWh) consumed or billed.

Energy Only Providers

Power marketers or other electricity vendors who provide an unbundled service and bill for only the energy component of the electricity consumed by the end-use customer.


Firm Gas

Gas sold on a continuous and generally long-term contract.

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.




Interruptible Gas

Gas sold to customers with a provision that permits curtailment or cessation of service at the discretion of the distributing company under certain circumstances, as specified in the service contract.

Interruptible Load

Refers to program activities that, in accordance with contractual arrangements, can interrupt consumer load at times of seasonal peak load by direct control of the utility system operator or by action of the consumer at the direct request of the system operator. It usually involves commercial and industrial consumers. In some instances the load reduction may be affected by direct action of the system operator (remote tripping) after notice to the consumer in accordance with contractual provisions. For example, loads that can be interrupted to fulfill planning or operation reserve requirements should be reported as Interruptible Load. Interruptible Load as defined here excludes Direct Load Control and Other Load Management. (Interruptible Load, as reported here, is synonymous with Interruptible Demand reported to the North American Electric Reliability Council on the voluntary Form EIA-411, "Coordinated Regional Bulk Power Supply Program Report," with the exception that annual peakload effects are reported on the Form EIA-861 and seasonal (i.e., summer and winter) peakload effects are reported on the EIA-411).



Kilowatt (kW)

One thousand watts.

Kilowatthour (kWh)

One thousand watthours.


Load (Electric)

The amount of electric power delivered or required at any specific point or points on a system. The requirement originates at the energy-consuming equipment of the consumers.


Market-Based Pricing

Electric service prices determined in an open market system of supply and demand under which the price is set solely by agreement as to what a buyer will pay and a seller will accept. Such prices could recover less or more than full costs, depending upon what the buyer and seller see as their relevant opportunities and risks.

Market Clearing Price

The price at which supply equals demand for the Day Ahead and/or Hour Ahead Markets.

Maximum Demand

The greatest of all demands of the load that has occurred within a specified period of time.


One thousand cubic feet.

Megawatt (MW)

One million watts.

Megawatthour (MWh)

One million watthours.


One million cubic feet.


One seller of electricity with control over market sales.



Open Access

A regulatory mandate to allow others to use a utility's transmission and distribution facilities to move bulk power from one point to another on a nondiscriminatory basis for a cost-based fee.


Peak Demand

The maximum load during a specified period of time.

Power Marketers

Business entities engaged in buying, selling, and marketing electricity. Power marketers do not usually own generating or transmission facilities. Power marketers, as opposed to brokers, take ownership of the electricity and are involved in interstate trade. These entities file with the Federal Energy Regulatory Commission for status as a power marketer.

Power Pool

An association of two or more interconnected electric systems having an agreement to coordinate operations and planning for improved reliability and efficiencies.

Purchase of Receivables

When a customer fails to pay an alternative retail electric supplier (ARES), the ARES eventually returns the customer to the electric utility, the customer continues to receive electric service, and the ARES may have to initiate ocstly litigation to recover its uncollectibles. In a purchase of receivables (“POR”) program, the utility purchases the receivables of an ARES at a discount rate equal to the utility’s actual uncollectible rate. This discount rate is then offset from the monthly payments the utility makes to the ARES and is subject to a periodic reconciliation process.



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, and 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.

Ratemaking Authority

A utility commission's legal authority to fix, modify, approve, or disapprove rates, as determined by the powers given the commission by a State or Federal legislature.

Regional Transmission Organization

A utility industry concept that the Federal Energy Regulatory Commission embraced for the certification of voluntary groups that would be responsible for transmission planning and use on a regional basis.


The governmental function of controlling or directing economic entities through the process of rulemaking and adjudication.


Electric system reliability has two components--adequacy and security. Adequacy is the ability of the electric system to supply to aggregate electrical 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. The degree of reliability may be measured by the frequency, duration, and magnitude of adverse effects on consumer services.


The process of replacing a monopoly system of electric utilities with competing sellers, allowing individual retail customers to choose their electricity supplier but still receive delivery over the power lines of the local utility. It includes the reconfiguration of the vertically-integrated electric utility.


Sales covering electrical energy supplied for residential, commercial, and industrial end-use purposes. Other small classes, such as agriculture and street lighting, also are included in this category.

Retail Competition

The concept under which multiple sellers of electric power can sell directly to end-use customers and the process and responsibilities necessary to make it occur.

Retail Market

A market in which electricity and other energy services are sold directly to the end-use customer.




The movement or transfer of electric energy over an interconnected group of lines and associated equipment between points of supply and points at which it is transformed for delivery to consumers, or is delivered to other electric systems. Transmission is considered to end when the energy is transformed for distribution to the consumer.

Transmission System (Electric)

An interconnected group of electric transmission lines and associated equipment for moving or transferring electric energy in bulk between points of supply and points at which it is transformed for delivery over the distribution system lines to consumers, or is delivered to other electric systems.

Transmitting Utility

This is a regulated entity which owns, and may construct and maintain, wires 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. According to EPACT, this includes 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.



The separating of the total process of electric power service from generation to metering into its component parts for the purpose of separate pricing or service offerings.

Utility Consolidated Billing

In a market with Utility Consolidated Billing (“UCB”), the utility offers an option to Alternative Retail Electric Suppliers (“ARES”) in which it provides, for a fee, a single bill to the customer that includes both the utility’s delivery charges and the ARES’ supply charges. ARES supply charges, included on the consolidated bill, are sent to the utility via electronic communication. The utility performs all regular billing and payment processing functions that it performs for customers on utility supply. The utility then forwards customer payments for the ARES supply portion of the consolidated bill to the ARES. The utility recovers the cost of UCB through fees assessed to the ARES.

Utility Distribution Companies

The entities that will continue to provide regulated services for the distribution of electricity to customers and serve customers who do not choose direct access. Regardless of where a consumer chooses to purchase power, the customer's current utility, also known as the utility distribution company, will deliver the power to the consumer's home, business, or farm.



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 Sales

Energy supplied to other electric utilities, cooperatives, municipals, and Federal and State electric agencies for resale to ultimate consumers.

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.

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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