Glossary

Aggregator
An entity that groups together customers to buy electricity in bulk, aiming for a better price.
Example: A group of small businesses may hire an aggregator to negotiate lower electricity rates on their behalf.

Base Load
The minimum amount of electric power needed to supply customers at any given time.
Example: The base load might be higher in winter months due to heating requirements.

Capacity Charge
A fee charged by utilities to ensure they have enough infrastructure to meet peak demand.
Example: Even if your business uses minimal electricity, you might still pay a capacity charge to cover system maintenance.

Competitive Supplier
A company that offers electricity supply in a deregulated market, allowing consumers to choose among different providers.
Example: In Illinois, businesses can compare and switch to competitive suppliers like Direct Energy or Constellation.

Delivery Charge
The fee for transporting electricity from the generation source to the customer, including maintaining power lines and infrastructure.
Example: Regardless of your energy provider, the utility company will charge a delivery fee for maintaining the network.

Deregulation
The process of opening electricity markets to competition, allowing consumers to choose their energy supplier.
Example: Texas has a deregulated electricity market, which means residents can shop around for the best rates.

Distribution Utility
The company responsible for delivering electricity to homes and businesses via the local grid, regardless of who supplies the electricity.
Example: In Connecticut, Eversource is the distribution utility, but consumers can choose a different supplier for the electricity they use.

Energy Charge
The cost for the actual electricity you use, measured in kilowatt-hours (kWh).
Example: Your monthly bill will include an energy charge based on how much electricity you consumed.

Fixed Rate
An energy pricing plan where the rate per kilowatt-hour remains the same for a specified period, regardless of market changes.
Example: A fixed-rate plan might lock in your price at 10 cents per kWh for one year.

Generation Charge
The cost of producing electricity, typically passed on from the supplier to the consumer.
Example: The generation charge on your bill reflects the cost your supplier incurs to produce the electricity you use.

Kilowatt-hour (kWh)
A unit of measurement for electricity use, representing the consumption of 1,000 watts over one hour.
Example: Running a 1,000-watt appliance for one hour uses 1 kWh of electricity.

Peak Demand
The highest amount of electricity consumed during a specific period, often during hot summer days when air conditioning usage is high.
Example: Utility companies often charge more for electricity used during peak demand times.

Power Purchase Agreement (PPA)
A contract between an electricity generator and a purchaser to buy power at agreed rates for a certain period.
Example: Many businesses enter into PPAs to secure predictable electricity rates for the future.

Renewable Energy Credit (REC)
A certificate proving that electricity was generated from a renewable source, which can be bought and sold in deregulated markets.
Example: A business can purchase RECs to offset its carbon footprint without installing solar panels or wind turbines.

Retail Electricity Provider (REP)
A company that sells electricity to consumers in deregulated markets.
Example: In Texas, consumers can choose a REP like Reliant Energy or TXU Energy.

Supply Charge
The cost of the electricity you consume, separate from delivery and other charges.
Example: The supply charge depends on your agreement with the competitive supplier you’ve chosen.

Transmission Charge
The fee for moving electricity from generation plants over high-voltage lines to distribution points.
Example: Even if you reduce your energy usage, the transmission charge will still apply as it covers the infrastructure cost.

Variable Rate
An energy pricing plan where the rate per kilowatt-hour fluctuates based on market conditions.
Example: Businesses with variable-rate plans may see lower rates during off-peak months but higher rates when demand is high.

Volatility
Fluctuations in electricity prices due to changes in market conditions, fuel costs, or regulatory factors.
Example: High demand during extreme weather can increase market volatility, affecting energy rates.

Wholesale Electricity Market
A market where electricity is bought and sold in bulk, usually by utility companies, suppliers, and large industrial consumers.
Example: The price businesses pay for electricity can be influenced by changes in the wholesale market.

Ancillary Services
Services necessary to support the transmission of electricity from generators to consumers and to maintain grid reliability.
Example: Ancillary services include things like voltage control, frequency regulation, and reserve power.

Block Pricing
A pricing structure where the cost of electricity changes based on the amount consumed in different tiers or blocks.
Example: A business may pay 10 cents per kWh for the first 1,000 kWh, then 12 cents for the next 1,000 kWh.

Brownout
A temporary reduction in voltage levels by the utility to prevent a complete blackout.
Example: During times of high demand, utilities may implement a brownout to protect the grid from overloading.

Curtailment
A reduction in electricity usage by customers in response to a request from the utility, often during peak demand periods.
Example: Some businesses agree to curtail electricity use during high-demand periods in exchange for reduced rates.

Demand Charge
A charge based on the highest level of electricity a business consumes at one time during a billing period.
Example: A factory might face a high demand charge if it operates heavy machinery simultaneously during peak hours.

Demand Response
Programs designed to reduce electricity use during peak demand in exchange for financial incentives.
Example: Businesses enrolled in a demand response program may lower their electricity consumption when the utility requests it.

Distributed Generation
The production of electricity from small, decentralized energy sources like solar panels or wind turbines, located close to where the electricity is used.
Example: A business with rooftop solar panels participates in distributed generation by producing some of its own electricity.

Dual Billing
A system where customers receive separate bills from their electricity supplier and their utility for delivery charges.
Example: In deregulated states, you may get one bill from your energy supplier and another from your local utility for infrastructure and delivery services.

Energy Efficiency
Using less energy to perform the same task, often through improved technology or processes.
Example: Replacing traditional light bulbs with LED lights is a common energy efficiency measure that reduces electricity consumption.

Grid
The network of transmission lines, substations, transformers, and equipment that delivers electricity from power plants to homes and businesses.
Example: Utilities maintain the grid to ensure reliable delivery of electricity to consumers.

Independent System Operator (ISO)
An organization responsible for coordinating, controlling, and monitoring the operation of the electric grid in a region.
Example: In the U.S., ISOs like PJM Interconnection manage grid reliability and wholesale electricity markets in several states.

Interruptible Service
A type of electricity service that can be interrupted by the utility during peak times, often in exchange for lower rates.
Example: Businesses that agree to interruptible service may face temporary power cuts during high-demand periods to prevent blackouts.

Kilovolt-ampere (kVA)
A unit used to measure the apparent power in an electrical circuit, indicating the amount of electrical capacity a business needs.
Example: A large manufacturing plant might require several thousand kVA to power its operations.

Load Factor
A measure of how efficiently a customer uses electricity, calculated by comparing average energy use to peak demand.
Example: Businesses with a high load factor use electricity more evenly throughout the day, reducing their demand charges.

Net Metering
A billing mechanism that credits solar energy system owners for the electricity they add to the grid.
Example: If a business with solar panels generates more electricity than it uses, it may receive a credit on its bill through net metering.

Non-bypassable Charges
Fees on a utility bill that cannot be avoided, even if the customer chooses a different electricity supplier.
Example: Delivery charges and system improvement fees are common non-bypassable charges that all customers must pay.

Power Factor
A measurement of how effectively electrical power is being used, with a lower power factor indicating inefficient use of electricity.
Example: A business with a low power factor might be charged extra by the utility for inefficient energy use.

Public Utility Commission (PUC)
The state agency responsible for regulating utilities, including electricity rates and services.
Example: The PUC in each state ensures that electric utilities provide reliable service at reasonable rates.

Real-time Pricing
A pricing model where the cost of electricity changes throughout the day based on wholesale market prices.
Example: Businesses on real-time pricing plans can save money by using electricity during off-peak hours when prices are lower.

Renewable Portfolio Standard (RPS)
A regulation requiring that a certain percentage of electricity sold by utilities comes from renewable sources.
Example: Many states have RPS policies, mandating utilities to source a portion of their energy from wind, solar, or other renewable resources.

Retail Access
The ability of consumers in deregulated markets to choose their electricity supplier, separate from their utility company.
Example: In Pennsylvania, businesses have retail access and can shop for competitive electricity rates while still receiving delivery from the local utility.

Service Charge
A fixed monthly fee that covers the cost of maintaining the electrical service connection, regardless of how much electricity is used.
Example: Most electricity bills include a service charge that pays for the upkeep of electrical infrastructure.

Time-of-Use (TOU) Rates
Electricity pricing that varies based on the time of day, with higher rates during peak hours and lower rates during off-peak times.
Example: A business that operates primarily at night may benefit from TOU rates, which offer lower prices during off-peak hours.