While we make it easy to shop for electricity, there are countless terms, phrases, and concepts in the energy industry that might be foreign for someone who doesn’t work in it — the vast majority of energy consumers, naturally.
Below we’ve defined dozens of these terms:
A
Access Charge – A fee all market consumers pay for withdrawing energy from the local Independent System Operator (ISO) Controlled Grid. The access charge is designed to cover a portion of the utility?s transmission revenue fees that are not covered by the costs from the variable use charge.
Active Solar Energy – Solar radiation that is captured by an active solar energy system and used to create electricity, heat or hot water.
Adjustment Bid – Bids utilized by individual Independent System Operators as a tool to adjust supply or demand during anticipated peak consumption times.
Advanced Metering Infrastructure – A multi-faceted system of different data management systems, smart meters and communication networks that allows for more transparent, two-way communication between utilities and their customers.
Adverse Hydro Conditions- A situation when water conditions limit the amount of hydroelectric power.
Aggregators – An organization in charge of accounting, planning, billing, scheduling and settlement issues for energy deliveries. The main goal of an aggregator is to work with both the buyers and sellers to bring together generators and customers in an effort to buy and sell bulk power orders.
Air Pollution – When the air is laden with gasses, pollutants and unwanted particles that compromise the purity of the air. Typically air pollution is caused by automobile exhaust, factories and other human actions.
Alcohol Fuels – A specific type of liquid chemicals that can be used as a fuel source. All alcohol fuels contain a combination of oxygen, carbon and hydrogen.
Alternating Current – An alternating current, often abbreviated as AC, refers to the flow of electricity that moves between positive and negative charges. Measurements can vary, but in the United States, most electricity distributed to homes moves with an AC rate of at least 60 times per second.
Alternative Energy Sources – Alternative energy sources, also known as renewable energy sources are used to describe anything that can be used to create usable energy besides fossil fuels such as coal, oil and natural gas. Commonly used alternative energy sources are solar, wind, hydro and nuclear energy.
American National Standards Institute – Also known as the ANSI, the American National Standards Institute is a volunteer-run organization that creates guidelines for technology in virtually every industry, including the energy distribution market.
Ancillary Services – In the energy market, ancillary services are any type of service other than scheduled energy service required to maintain the reliability of a system and keep it up to code. This includes coordinating services such as reserve replacement and voltage control.
Angle of Incidence – The angle measured between the direct impact of the sun?s rays and the surface of a solar panel. Solar panels are installed to be perpendicular to the sun?s rays to get the most energy possible and to utilize the best angle of incidence.
Amp – An Amp, which is short for Ampere, is the most commonly used measuring unit to identify how much electricity is flowing through a conductor. An amp represents the flow of the electric current a single item pulls from the source by taking watts divided by volts. For example a 1500, 100 volt blender would pull 10 amps of electricity.
Annual Maximum Demand – The maximum demand for electricity that occurred during a specific calendar year.
Animal Waste Conversion – The process of using animal waste to create energy. Animal waste is referred to as a type of biomass energy.
Appliance Efficiency Standards – Appliance Efficiency Standards were put in place by the state of California as an energy conservation effort designed to regulate the minimum energy performance requirements for California-sold appliances. These standards monitor how energy efficient space heaters, water heaters, air conditioning units, fluorescent lamps and other appliances must be in order to be sold within the state.
Area Load – A number used to describe the total amount of electricity being used at a single point in time by consumer?s in a specific service territory.
Automatic Meter Reading – The technology used to collect billing data on a property?s meter without a physical inspection. This data can then be transferred to the utility company through telephones, power lines, cable, satellite signals or radio frequency.
Average Cost – A utility?s revenue requirement divided by their sales. Average cost typically includes the amount needed to cover distribution lines, transmissions and other facilities.
Average Demand – The amount of energy needed to serve a geographical area over a certain period of time.
Average Hydro – The amount of water, including rain, snow and runoff conditions needed for hydroelectric generation.
Avoided Cost – The amount of money a utility would incur if it weren?t for an independent generator or another outside energy service option. These rates are at times used to determine the power purchase price for independent suppliers looking to buy from local utilities.
Avoided Cost, Regulatory – A term used to describe the amount of money that an electric utility needs to spend to produce or purchase power that it has purchased instead from an outside small-power producer or co-generator. There are federal laws that govern how much a facility can earn on these transactions.
B
Base Load – The lowest amount of power needed during a specific season or year.
Base Loat Unit – A facility that generate power at a level that is intended to run constantly at near-capacity levels.
Baseline Forecast – A prediction of how much future energy will be needed for a certain project or area. This forecast does not take future conservation programs into account.
Base Rate – The portion of the total electric rate that covers general business costs.
Bilateral Contract – A binding agreement between two parties that governs the purchase and sale of electricity products.
Blackout – A complete power loss that impacts numerous energy consumers over a large territory.
Bonneville Power Administration (BPA) – One of the five different federal power marketing administrations. The BPA serves customers in Idaho, Oregon, Washington and parts of Wyoming and Nevada. The company sells low-cost energy products created by federal hydroelectric dams to municipal and agricultural users.
British Thermal Unit (Btu) – The standard unit to measure heat energy.
Broker – An individual retail agent in charge of buying and selling power to consumers.
Brownout – A planned and controlled power reduction put in place by a utility. A brownout decreases the amount of voltage in the power lines, resulting in customers receiving a weaker electric current through their property. Most properties typically do not notice the difference during a brownout.
C
Capacity – The amount of electric power for a generating unit. There are several types of electricity capacity:
Dependable Capacity – A system?s ability to carry electricity for a specific period. Dependable capacity is determined by capability, operating power factor or weather.
Installed Capacity – The manufacturer-rated electricity capacity of equipment, including items like generators and turbines.
Peaking Capacity – The electricity capacity of generating equipment, meant to be used during the highest loads either daily, weekly or seasonally.
Purchased Capacity – The amount of electricity available for purchase outside a specific system.
Reserve Capacity – The excess generating capacity available to meet high power demands or to generate power during unplanned outages.
Combined Cycle Plant – A station that generates electricity to use waste heat from gas turbines to create steam.
Converter – A piece of technology that takes a potential energy fuel and transfers it to a different form of energy from a source such as heat or motion.
Cooperative (Electric Utility) – A joint effort organized by consumers to bring services from an electric utility to a certain area.
D
Daylighting – The use of sunlight to replace or supplement electric lighting. Daylighting is controlled by a system that varies the light output of an electric lighting system.
Demand – The amount of electricity used at a single given time, or over a designated period. Typically electricity demand is measured either in kilowatts (kW) or megawatts (MW).
Demand Charge – A fee paid by larger energy consumers to cover its peak usage level.
Department of Energy (US D.O.E) – A federal department put in place by the Department of Energy Organization Act to consolidate energy functions and create a balanced energy policy.
Deregulation – When a specific market stops having the state regulate their market, meaning consumers are able to choose who they purchase electricity from.
Direct Access – A retail customer?s ability to purchase commodity electricity directly from a wholesaler rather than a distributor.
Direct Current (DC) – Electricity that flows in a continuous pattern in the same direction.
Direct Energy Conversion – The process of producing electricity from an energy source to produce a direct current. Direct conversions do not have any moving parts.
Direct Solar Gain – When solar energy is collected through windows, walls and skylights, in a building as heat from the sun.
Distributed Energy- A term used to describe an energy system that produces power for dozens of small sites across a grid, as opposed to delivering energy to a single site, like a power plant.
Distribution Charge or Delivery Charge – A fee charged to electricity customers to cover the cost of delivering energy of the utility?s power lines. No matter how much electricity a customer uses or who supplies that energy, the distribution, or delivery charges remain the same.
Distribution – The process of delivering electricity to a property through low voltage distribution lines.
Distribution System- The stations, power lines and transformers that convey electricity from high-powered transmission lines directly to consumers. Also known as a GRID.
Distribution Utility – A regulated electric utility that creates and maintains distribution wires that connect the transmission grid to the customer.
Dry Steam – A type of geothermal energy used to produce energy. It is one of the primary forms used in California.
E
Economy Energy (Electric Utility) – A term used to describe the electricity purchased by one utility from another utility to take the place of more expensive electricity that would have cost more to produce.
Electricity Facts Label (EFL) – This label details important information about a customer?s energy supply. This includes contract terms, source of power generation, prices and emission levels. All energy suppliers need to provide an EFL to their consumers.
Electric Generator – A piece of equipment that can convert heat, chemicals or mechanical energy into electricity.
Electric Radiant Heating – A heating system that uses electric resistance to create heat.
Electric Utility – An individual or state-run agency that has a monopoly franchise that sells energy to consumers.
Energy Budget – A budgetary requirement in Building Energy Efficiency Standards for a proposed building so it can be designed to only use a certain amount of British thermal units (Btus) per year per square feet space.
Energy Charge – The amount of money charged to an energy consumer to cover the amount of kilowatt hours that customer consumed.
Energy Consumption – The amount of energy a customer uses, excluding their own electric generation and distribution losses.
Energy Efficiency – A process of using different programs and technology to use a smaller amount of electricity to perform the same function.
Energy/Fuel Diversity – A policy that promotes the development of energy technology in an effort to diversify energy supply sources, to reduce dependence on conventional fuels.
Energy Management System – A digital control system that can help regulate the energy consumption of a building, including HVAC, water heating and lighting systems.
Energy Reserves – A part of all energy resources that is available for use at an affordable price.
Energy Resources – Any source of energy that can be used to create electricity.
Energy Services Company (ESCO) – An ESCO is another term for an energy supplier. These companies have the ability to purchase electricity for their customers and act as a middleman between the company generating electricity and the local utility who delivers that energy.
Environmental Protection Agency (EPA) – An agency created in 1970 that is responsible for protecting the environment. The agency protects the environment through its efforts to control and remove pollution through enforcement, research and monitoring efforts.
Exchange (Electric Utility) – An exchange within an electric utility depicts an agreement between two utilities regarding the purchase, sale and trade of power. Typically the term exchange is used to relate to kilowatt capacity or kilowatt hours.
Exports (Electric Utility) – In an electric utility, exports are used to describe the power capacity or energy that a utility is required to supply outside of its own service area. Exports are not covered by general rate schedules.
Extra High Voltage – When voltage levels are higher than the normal amounts typically used on transmission lines. Typically, when lines reach 345,000 volts or higher, they are described as extra high voltage.
F
Federal Energy Regulatory Commission (FERC) – An independent regulatory commission that serves as part of the U.S. Department of Energy and presides over energy produces that sell or transport fuels.
Feed-In Tariff – A renewable energy policy that offers guaranteed payments to individuals as a result of the amount of renewable energy that they produce.
Flat Plate – A piece of black painted metal used to collect solar energy. This plat faces the sun as a way to absorb the heat from the sun.
G
Generation – This term is used to describe the production of electricity from a variety of sources. Electricity can be generated from natural gas, coal, nuclear energy services, geothermal power, or renewable resources such as sun, wind or water.
Generating Station – Another term used to describe a power plant.
Geothermal Energy – A natural form of heat within the earth that can be captured as a source to produce electric power.
Gigawatt (GW) – A measuring unit equal to one thousand megawatts (1,000 MW) or one million kilowatts (1,000,000 kW), or one billion watts (1,000,000,000 w) of energy.
Green Energy – A type of environmentally-friendly energy that is generated from sustainable resources and converted into electricity. Typically, this energy comes from renewable sources such as water, wind power or the sun.
Greenhouse Gases – Gasses that are released into the atmosphere when fossil fuels such as coal and oil are burned. Typical greenhouse gasses are carbon dioxide and methane. These gases can contribute to changes in the climate as they trap heat in the atmosphere and can ultimately cause serious environmental damage.
Grid – An electrical distribution network, also known as power grids that are governed by the utility companies.
H
Heliothermal – A process that utilizes the sun?s rays to create heat.
Hybrid System – This is a system that combines two or more power-generating methods into a single system. For example, a system could user solar power put have a generator as a backup.
Home Energy Assistance Program (HEAP) – A direct payment program that helps eligible properties with financial need to receive affordable heating and cooling assistance for their homes.
HVAC (Heating Ventilation and Air Conditioning) – A system within a property that is in control of heating, ventilation and cooling.
Hydroelectric Power – Electricity creates by falling water that goes into a turbine generator to produce energy.
I
Imports (Electric Utility) – The energy or power capacity obtained by one utility from another utility under a purchase or an exchange agreement.
Independent Power Producer (IPP) – An entity that generates power that is purchased from an electric utility at wholesale price. The utility will then resell this power to customers. Independent Power Producers do generate power, but they are not utilities, which means they do not own the transmission lines used to transmit any power they generate.
Insolation – The complete amount of solar radiation, including direct, diffused and reflected radiation that strikes a particular exposed surface.
Interchange (Electric Utility) – An Agreement between interconnected utilities where they buy, sell and exchange power between themselves.
Interconnection (Electric Utility) – Linking transmission lines that connect two utilities. This allows power to be moved back and forth between multiple entities.
Interruptible Service (Electric Utility) – An agreement that allows the governing supplier to stop electric service at any given time.
Intertie – An energy transmission line that connects two or more electric power systems within a certain region.
Investor-Owned Utilities (IOU) – A privately-owned company that provides a utility to a specific service territory. These companies are owned by stockholders and are meant to generate a profit.
Independent System Operator (ISO) – An independent, neutral operator in charge of maintaining a balanced energy grid. The IOS is responsible for ensuring the grid?s load matches the system?s available resources.
K
kBtu – An amount of energy equal to 1,000 Btus.
Kilovolt (kv) – An amount of energy equal to 1,000 volts. Typically distribution lines in residential areas are 12 kv.
Kilowatt (kW) – A measurement unit of electricity equal to 1,000 watts. This unit measures the amount of energy produced or consumed by a single device.
Kilowatt Hour (kWh) – The most frequently used measuring unit to determine the amount of electricity consumed over a given period. The kilowatt measures the amount of electrical power, while the time is measured in hours.
L
Layoff (Electric Utility) – The excess capacity of a generating unit. The layoff is available for a limited period of time, depending on the stipulations put in place by the power sales agreement.
LED (Light-Emitting Diode) – A diode that emits light once the appropriate voltage is applied. The light is used in a variety of settings as it utilizes less energy than other types of lights.
Load – The amount of electrical power given to an end user to meet their needs. A load can also be used to describe an end-use device or customer that consumes power.
Load Management – A process used to reduce power demand at peak load times.
Losses (Electric Utility) – The amount of electric energy that is wasted during a power system?s normal operation.
Lumen – A unit used to measure the amount of light available from a light source. A single lumen is equal to the amount of light produced by a single candle.
Lumens/Watt – A unit used to measure the efficacy of a light fixture. Lumens/watts measure the output of light per watt of power consumed.
M
Marginal Cost (Electric Utility) – The cost to a utility of providing another kilowatt-hour of electricity, despite current sunk costs.
Megawatt (MW) – A unit used to measure electricity, equal to 1,000 kW or one million watts.
Megawatt Hour – An amount of electrical energy usage equal to 1,000 kilowatt hours.
Meter – A device used for measuring individual electric consumption in a property.
Module – Another name for solar panel, referring to a grouping of solar photovoltaic cells that are connected together to form a single panel meant to gather heat from the sun and turn it into energy.
Municipal Electric Utility – A specific type of non-profit electric utility that is owned by a local jurisdiction or municipality.
N
Net Metering – A process that allows home solar panel users to sell extra energy they produce back to their local utility. The extra energy can also be rolled over to their next months? bill.
Net-Zero Energy – A term used to describe when a site produces as much energy that this specific site uses. Typically this refers to the production of renewable energy, such as solar or wind power.
Nuclear Energy – Power obtained by splitting or joining atoms to create a reaction and produce heat. The heat is used to make steam that runs turbine generators.
Nuclear Regulatory Commission (NRC) – An independent federal agency that ensures strict public health and safety standards are met during the creation and distribution of nuclear energy. The NRC regulates nuclear power plants throughout the United States and makes certain security measures are adhered to by any entity that possess and uses radioactive materials.
O
Obligation to Serve – An obligation of an electric utility to provide quality electric service to any customer who wants to use their service and is willing to pay the utility?s rate for service.
Off-Grid Electric – A term used to describe a stand-alone energy system that works separately from the main power grid.
Occupancy Sensor – A device that is used to sense movement in a room and control lights based on the presence of an individual within that space. These devices are meant to help save energy by automatically turning off lights when no one is in a room.
Outage – An outage, or a blackout, is a temporary interruption in electric service that impacts a large area and leaves that area without power for minutes or hours at a time.
P
Partial Load – When an electrical demand only uses a portion of the electricity available.
Passive Solar Energy – A process that uses a building?s architectural design and the sun to meet a building?s energy needs. Most passive solar energy strategies use materials, such as flooring materials that can store heat.
Passive Solar System – A solar heating or cooling system that collects solar heat but does not use any external mechanical power to move that collected heat.
Peak Demand – Peak Demand, also known as peak load, relates to the maximum amount of electricity demand during a specific time. The daily peak demand typically occurs on weekdays when the electric demand in the highest, while the peak demand for the year typically occurs in the summer.
Peak Load Power Plant – A plat or station that generates power and specifically works to create extra electricity to use during peak demand times.
Peaking Unit – A utility?s separate power generator that produces extra electricity for a service area during peak demand times.
Photovoltaic – An energy conversion method that transforms solar energy into electricity. Solar panels are typically called photovoltaic panels or photovoltaic cells.
Power Plant – A power generating station that generates and produces energy for a given service area or utility.
Power Purchase Agreement (PPA) – A contract between an energy generator, or the seller, and a party looked to purchase electricity, typically a utility or independent supplier. This contract defines the terms of this sale, including detailed information on pricing.
Price to Compare – This is a line item that appears on electricity bills from local utilities in deregulated markets. This price is used to be a benchmark for consumers so they can compare and see the rates for different energy plans in their area. This term is meant to help consumers determine if they could save money by switching suppliers.
Provider of Last Resort – This term is often included in utility contracts and it describes the legal obligation that electric utilities have to provide service to customers when that utility?s competitors have decided not to provide that individual with energy services.
Q
Qualifying Facility – A small power producer that generates electricity and has the right to sell its excess power. Typically, these facilities use renewable and alternative sources such as solar power or biomass. These facilities must meet federally regulated operating and efficiency standards.
R
Real-Time Pricing – When energy pricing changes according to the time of day. Electric utilities post these rates ahead of time so consumers can plan their energy usage accordingly.
Renewable Energy – Energy that comes from resources that are able to naturally renew themselves. For example sun, water or wind. Technology can use the power generated by these items, such as the power from flowing water, blowing wind or the rays from the sun and transform it into usable electricity.
Renewable Energy Certificates (REC) – These certificates, also known as Renewable Energy Credits, represent a single megawatt hour (mWh) of energy generated from a renewable resource. Consumers can offset the amount of fossil-fuel generated energy they use by purchasing a REC.
Retail Electric Provider (REP) – An REP is a company that sells electricity to customers in deregulated markets. These companies must be certified by their local Public Utility Commission in order to sell energy.
Reserve – An extra source of generated electricity that utilities create, beyond their highest demand level, to use in emergency situations.
S
Self-Generation – An electric generating facility that services a particular retail customer. Typically this facility is owned directly by the retail customer or an approved third-party. Many times large properties in rural areas will have self-generating facilities on their properties.
Solar Cell – A photovoltaic device that takes sunlight and converts it into electricity. Solar panels use multiple solar cells together to create enough electricity to power a building or home.
Solar Lease – An agreement between a homeowner and a solar panel company that is used to help finance the installation of these panels on a home. Typical solar leases range in length from 15-25 years and make solar energy more available to the general public, as there are no required upfront costs with getting solar panel installation.
Solar Panel – A panel that is placed outside a home or building that features dozens of solar cells. Solar panels use these sells to collect the sun?s rays and transform that light into usable electricity.
Solar Power Purchase Agreement – A financing solution for homeowners who want solar panel installation. This agreement allows the homeowner to have a system installed at little cost in exchange for an agreement to purchase power provided by the solar installation company.
Supply Charges – A portion of an electricity bill that covers the actual amount of energy consumed during the given billing period.
T
Teaser Rates – Special rates that are below standard market pricing. These rates are used to lure in new customers and typically go up dramatically after a few months.
Terms of Service (TOS) – A purchase contract between a customer and an energy supplier that details the specifics of the deal. The TOS covers fees, length of service and other important information that both parties have agreed upon.
Therm – A measurement of 100,000 British thermal units (Btus).
Time of Use Rates – Electricity pricing that is based on the estimated cost of energy during a particular time of the day. Typically there are three to four block times in every 24 hours period, classified as on-peak, mid-peak and off-peak times, with some markets also having super off-peak rates. Some utilities offer incentives to consumers who use less power during their high peak times during the day.
U
Usage – A measured amount of energy that an individual used during a specific billing cycle. Electricity bills measure usage in kWh. This is the part of the energy bill that customers have control over.
Utility – A term used to describe a company that generates and delivers electricity. There is a utility in charge of every service area in the United States. They are responsible for energy generation and delivery and in charge of power lines in their service area. Even customers who purchase an energy supply from a retail energy provider are still getting their electricity from their utility.
W
Warranty – A guarantee from a seller that promises that their electric product is what it is represented to be.
Watt – An electric power measuring unit that measures how much power something uses at a single point in time.
Weather Stripping – The process of putting specially designed insulating strips and seals around doors and windows to further insulate and property and prevent heating and cooling loss. This practice is typically used in homes to help conserve energy.
Y
?Your Rights as a Customer? Disclosure (YRAC) – A document that accompanies a new energy contract and details a person?s rights as an electric consumer. All electricity suppliers are required by law to provide their customers with this disclosure.