Glossary Of Terms And Acronyms

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Access Charge: A fee levied on a power supplied, or its customer, for access to a utility's transmission or distribution system. It is a charge for the right to send electricity over another's wires.
ADR (Alternative Dispute Resolution): ADR stands for "alternative dispute resolution." It means that a dispute can be resolved through a number of options and the parties are enabled to choose which one of them to use.; The options exist along a continuum. At one end are means for resolution that allow parties control over the process used and the final agreements. They range from agreements made with no outside involvement (negotiations) through facilitation and mediation. At the other end are established formal procedures that result in a decision being made for the parties by arbitration and an administrative tribunal - e.g.,OEB, EUB Board hearing or the court system.
Aggregator: An entity that puts together customers into a buying group for the purchase of a commodity service. The vertically integrated investor owned utility, municipal utilities and rural electric cooperatives perform this function in today's power markets. Other entities such as buyer cooperatives or brokers could perform this function in a restructured power market. This is not to be confused with a marketer which can be defined as an entity that represents different suppliers.
Allowance for Funds Used During Construction (AFUDC): The amount a regulated entity is allowed to earn to recover its cost of financing assets under construction. AFUDC is equal to the average cost of the construction work in process, times a financing rate which is usually equal to the entity's cost of capital rate. AFUDC is not recovered immediately through rates; it is included in the cost of the related assets and recovered in future periods through the depreciation charge.
Allowed rate of return: The rate of return a regulated entity is allowed the opportunity to earn. When applied to the rate base, the allowed rate of return provides an amount equal to the cost of financing the investment required for regulated operations. The financing costs include both the cost of debt and the cost of equity.
Alternative Dispute Resolution: See ADR
Application for reconsideration: An application to have a regulator (Board/Commission) reconsider, vary, or rescind a decision or order previously issued.
Average Cost: The revenue requirement of a utility divided by the utility's sales. Average cost typically includes the costs of existing power plants, transmission and distribution lines and other facilities used by a utility to serve its customers. It also includes operating and maintenance, tax and fuel expenses and margin or income.
Average Demand: The measure of the total of energy loads placed by consumers on a system divided by the time period over which the demands are incurred.
Avoided Cost: The incremental cost to a utility for capacity or energy or both that, but for the acquisition of energy or capacity from another source, the utility would have to incur. Thus, in demand side management (DSM), the cost of producing or delivering power that the utility can avoid by procuring DSM resources (i.e., by lowering capacity and energy requirements via DSM).

B

Base Load: The minimum amount of electric power delivered or required over a given period of time at a steady rate. The minimum continuous load or demand in a power system over a given period of time.
Base Load Capacity: The generating equipment normally operated to serve loads on an around-the-clock basis.
Base Load Plant: A plant which is normally operated to take all or part of the minimum continuous load of a system and which consequently produces electricity at an essential constant rate. These plants are operated to maximize system mechanical and thermal efficiency and minimize system operating costs. A base load plant is typically characterized by relatively high fixed costs and low unit operating costs. Traditionally, coal and nuclear plants and some high efficiency steam electric plants have been considered as base load plants.
Base Rate: A charge normally set through rate proceedings by appropriate regulatory agencies and fixed until reviewed at future proceedings. It is calculated through multiplication of the rate from the appropriate rate schedule by the level of consumption. It does not include components that may vary from billing cycle to billing cycle, such as fuel.
Basis Point: A basis point is 1/100 of 1 percent (0.01%). For example, if an interested rate of 8.75% were reduced to 8.50%, the rate would have been reduced by 25 basis points. (8.75% - 8.50% = 0.25% or 25 basis points)
Bilateral Contracts: A function of retail wheeling in which a generator and a user establish a contract for the supply of electricity bypassing the existing utility structure and producing stranded costs for the utility. In a restructured electrical world, a bilateral contract could be used to establish a price for electrical supply over a certain duration and would remove the risk associated with the spot market.
Bill Minimization: Efforts by the utility, such as DSM programs, designed to reduce customer bills, rather than the rate (price) per unit of power.
Billing Demand: The demand charge that a consumer actually pays for the reservation of capacity or facilities used, regardless of consumption. Also referred to as Ratchet or Ratcheted Demand Charge.
Bundled Rates vs. Unbundled Rates: Bundled rates include costs for all three segments of the delivery of electrical service; generation, transmission and distribution. This is known as functional bundling. This is to be contrasted to corporate bundling in which a single company, a utility or a holding company, incorporates the three segments. In a functionally unbundled world, one of the primary tenants of a restructured electrical system, each segment would be separated in the hopes that competition at the generation segment would provide lower costs overall.
Burnertip Rate: The rate charged for gas at the customer's meter, including the delivery charge, fixed monthly charge and gas commodity charge. It is usually calculated as an annual average rate based on typical annual consumption for the customer class.
Buy Through: An agreement between utility and customer to import power when the customer's service would otherwise be interrupted.
Bypass: The action of a retail consumer to obtain power directly from a wholesale supplier or transporter, thus eliminating any utility charges applicable to distribution.

C

Capacity Charge: One element of a two-part pricing method used in power transactions (energy is the other element). The Capacity Charge, sometimes called Demand Charge, is assessed on the amount of capacity being purchased or demanded. The Capacity Charge is typically expressed in $/kW month (kilowatt month).
Capital Cost: The fixed costs associated with the construction of an energy facility, including land and siting costs, material and labour costs, allowance for funds used during construction, and other applicable overhead charges.
Captive Customer: A customer who does not have realistic alternatives to buying power from the local utility, even if that customer had the legal right to buy from competitors.
CEAA: Canadian Environmental assessment Act
CMSC: Congestion Management Settlement Credits
Codes or Standards of Conduct: Regulations that define the relationship between a utility and its unregulated affiliates in electricity and other markets. Standards of conduct are designed to prevent a utility's consumers from cross-subsidizing its unregulated affiliates. To protect competition and increase consumer benefits, standards should apply to competitors equally and not impose limitations or cost-raising burdens on any competitor.
CODR: Coupled Operational Dry Run.
Cogeneration: The simultaneous production of both usable heat or steam and electricity from a common fuel source.
Cogenerator: An entity owning a generation facility that produces electricity and another form of useful thermal energy (such as heat or steam), used for industrial, commercial, heating or cooling purposes
Commercial: A sector of consumers or services defined as non-manufacturing business establishments, including hotels, motels, restaurants, wholesale businesses, retail stores and health, social and educational institutions. A utility may classify the commercial sector as all consumers whose demand or annual use is within specified limits.
Common Carrier(s): An energy transportation provider, typically a crude oil or natural gas pipeline which provides service on a nondiscriminatory basis to all potential shippers.
Conservation Cost Recovery Charge: Given many different names, and with different variations as to the costs included, this is a surcharge on the bill (sometimes folded into the energy charge) to recover DSM costs. In some cases it is reconcilable.
Copayment: The amount a customer is asked to pay towards the DSM measure as a condition of receiving a utility incentive.
COPRR: Company Owned Production Rate Rider
COSRR: Company Owned Storage Rate Rider
Cost-Based Rates: When consumers are on "cost-based" rates, each rate classification (residential, commercial, irrigation, etc.) pays its fair share of the electric company's costs and there is no subsidization between rate classifications. The total costs are divided into rate components based on the costs each class imposes on the cooperative.
Cost of Service: The total amount of money, including return on invested capital, operation and maintenance costs, administrative costs, taxes and depreciation expense, to produce a utility service. The cost of service is also known as "revenue requirements"
Cost of Service Study: A study designed to determine the cost of service by class of service/or customer; used as a basis for establishing power, transmission and distribution rates.
Cost of Service Regulation: A pricing concept traditionally used as a primary basis for designing electric rate schedules. This concept attempts to correlate utility costs and revenues with the services provided to each of the various customer classes.
Creamskimming:: Going after only the most profitable markets. In DSM, taking advantage of only the lowest-cost, most cost-effective DSM measures in any given home, office or factory, and leaving behind other potentially cost-effective opportunities for power savings. Sometimes the term is used to refer to doing DSM only in the premises where the DSM savings are most cost-effective. There are two major problems with cream-skimming. When it limits DSM only to certain homes or businesses, it unfairly excludes some customers. When it limits DSM measures only to the most cost-effective, it fails to take advantage of the opportunity for cost-effective savings, and it may even render those remaining opportunities non-cost-effective (if the cost of returning to the premise to install those DSM measures is not warranted by the remaining DSM opportunities left after the cream-skimming).
Cross Subsidization: Increasing the rates for one service or class of customers so the rates of another service or class of customers can be reduced below cost.
Customer Charge:: A flat monthly charge payable regardless of the level of usage of the customer.

D

Debt-Equity Ratio: The ratio of money borrowed by the utility to money invested in the utility by shareholders.
Debt Service Coverage (DSC): A financial measurement relating to the borrower's ability to generate sufficient funds to cover the cash requirements of its total indebtedness (principal and interest) on an annual basis using margins and depreciation as the source of cash.
Decoupling: A technique for setting the rates of a utility so that the earnings a company can achieve are not coupled to the level of sales. In standard utility ratesetting, at least for non-fuel costs, if sales go down, earnings go down, and if sales go up, earnings go up. This is a disincentive to DSM. Decoupling allows rates to float up and down with the level of sales, so that earnings are not tied to sales.
Deferral Account: An account that records the deferral of a cost or revenue until a future date. A deferred asset account records a cost that would normally be expensed and recovered in the current period, but which is to be expensed or recovered in a future period. A deferred liability account records an amount recovered in the current period, to cover costs of providing service in a future period.
Demand: The amount of energy used at a specific moment in time, measured in watts, kilowatts (kW=1000 watts), megawatts (mW=1000 kilowatts, or 1 million watts). A large nuclear plant has about 1100 megawatts of capacity. A peaking plant may have only 100 megawatts of capacity. For scale, the demand of a domestic hot water heater is typically only 4 kilowatts. Demand is also used by economists to refer to the amount of any good or service which is procured by consumers. Thus, an economist can meaningfully talk about the demand for energy, while an engineer would see this as a contradiction in terms. Utility economists use demand in both senses, so look to the context.
Demand Charge: The Demand Charge portion of a rate design is expected to recover the costs associated with the level of demand for the particular service. Included in demand charges are capital-related costs and the cost of operation and maintenance of generation, transmission and distribution.
Demand Options: Demand options are measures that an electric company or consumer may take to modify the demand levels or reshape the daily or seasonal load curve. Demand options encompass both economic and load control measures. For example, economic measures would include time-of-use rates which offer a discount designed to attract loads to the off-peak period. An example of load control would be irrigation systems which agree to have their power interrupted under agreed-upon conditions in exchange for a lower demand rate.
Demand-Side Management (DSM): DSM is the management of the demand for power. It consists of actions undertaken by utilities to influence customer use of electricity for the benefit of both the customer and the utility company. For example, when a utility reaches the point that more capacity is needed, it can either supply more power or reduce demand for electricity through DSM. DSM can include the shifting of demand to off-peak hours, reducing overall consumption, or increasing customers' overall energy efficiency.
Depreciation: The loss of value of assets, such as buildings and transmission lines, due to age and wear. Depreciation is charged to utility consumers as a normal cost of doing business.
Deregulation: The elimination of regulation from a previously regulated industry or sector of an industry.
Derivatives: A specialized security or contract that has no intrinsic overall value, but whose value is based on an underlying security or factor as an index. A generic term that, in the energy field, may include options, futures, forwards, etc.
Direct Access: The ability of a retail customer to purchase commodity electricity directly from the wholesale market rather than through a local distribution utility.
Direct Load Control: Refers to program activities that can interrupt consumer load at the time of the annual peak by directed control of the utility system operator by interrupting power supply to individual appliances or equipment on consumers premises. This type of control usually involves residential, irrigation or industrial consumers.
Disaggregation: The functional separation of the vertically integrated utility into smaller, individually owned business units (i.e., generation, dispatch/control, transmission, distribution). The terms "deintegration," "disintegration" and "delamination" are sometimes used to mean the same thing. (See also "Divestiture")
Diseconomies of Scale: Increasing long-run average cost that occurs as a firm increases all inputs and expands its scale of production. This is graphically illustrated by a positively-sloped long-run average cost curve and typically occurs for relatively large levels of production. Diseconomies of scale overwhelm economies of scale for relatively large production levels. Together, economies of scale and diseconomies of scale cause the long-run average cost curve to be U-shaped.
Distributed Generation: A distributed generation system involves small amounts of generation located on a utility's distribution system for the purpose of meeting local (substation level) peak loads and/or displacing the need to build additional(or upgrade) local distribution lines. (i.e. fuel cells and photo voltaics)
Distribution: The delivery of electricity to an end-user through low-voltage lines or natural gas through pipeline systems.
Divestiture: The stripping off of one utility function from the others by selling (spinning-off) or in some other way changing the ownership of the assets related to that function. Most commonly associated with spinning-off generation assets so they are no longer owned by the shareholders that own the transmission and distribution assets. (See also "Disaggregation")
DPP: Deferred Payment Plan
DRC: Debt Retirement Charge
DSM Measure: A single technology, such as a CF bulb or waterheater wrap, that can be used to alter customer energy or demand requirements.
DSM Program: A plan describing a specific group of customers to receive DSM services (the target market), the specific measures and services provided to that target market, the means to market the measures/services, the incentives offered to the participants, the process of delivering the measures/services, and the process of monitoring program quality and evaluating program benefits, together with the budget for the program.

E

EBIT: Earnings Before Interest and Taxes
Economic Development Rate: A discount to a commercial or industrial customer intended to spur economic development. Can be based on number of jobs brought to an area, or saved, or some other such measure of the impact of retaining the customer on the economic health of the area. Similar to Economic Incentive Rate or Incentive Rate.
Economic Dispatch: The process of determining the desired generation level for each of the generating units in a system in order to meet consumer demand at the lowest possible production cost given the operational constraints on the systm. Under open access, economic dispatch can mean looking for the best or cheapest generation asset on your own system and also other generation assets available to you but not necessarily owned or controlled by you. Economic dispatch can be affected by types of fuel available.
Economic Efficiency: A term that refers to the optimal production and consumption of goods and services. This generally occurs when prices of products and services reflect their marginal costs. Economic efficiency gains can be achieved through cost reduction, but it is better to think of the concept as actions that promote an increase in overall net value (which includes, but is not limited to, cost reductions).
Economies of Scale: Declining long-run average cost that occurs as a firm increases all inputs and expands its scale of production. This is graphically illustrated by a negatively-sloped long-run average cost curve and typically occurs for relatively small levels of production. Economies of scale are then overwhelmed by diseconomies of scale for relatively large production levels. Together, economies of scale and diseconomies of scale cause the long-run average cost curve to be U-shaped.
Economy Energy: Electric energy produced from a more economical source in one system and substituted for less economical energy in another system. Energy sold on a non-firm basis and subject to recall at the discretion of the selling party.
Efficiency Service Company (ESCO): A company the offers to reduce a client's electricity consumption with the cost savings being split with the client.
Elasticity of Demand: The degree to which consumer demand for a product responds to changes in price, availability or other factors.
Electric Utility: Any person, entity or state agency with a monopoly franchise (including any municipality) which sells electric energy to end-use customers; this term includes the Tennessee Valley Authority, but does not include other Federal power marketing agencies (from EPAct).
Electric Rate: The unit prices and the quantities to which they apply as specified in the rate schedule.
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 oversight authority.
Embedded Cost: The historical cost of all facilities in the power supply system.
Embedded Costs Exceeding Market Prices (ECEMP): Embeded costs of utility investments exceeding market prices are 1) costs incurred pursuant to a regulatory or contractual obligation; 2) costs that are reflected in cost-based rates; and 3) cost-based rates that exceed the price of alternatives in the market place. ECEMPS may become "staranded costs" where they exceed the amount that can be recovered through the asset's sale. Regulatory questions involve whether such costs should costs should be recovered by utility shareholders and if so, how they should be recovered. "Transition costs" are stranded costs which are charged to utility customers through some type of fee or surharge after the assets are sold or separated from the vertically-integrated utility. "Stranded assets" are assets which cannot be sold for some reason. The British nuclear plants are an example of stranded assets which no one would buy. (Also referred to as transition costs)
End-Use: The ultimate benefit that utility service provides, or the use to which the utility service is put. For example, in the residential sector, end-uses include space heat, lights, cooking, refrigeration, motor power (e.g. fans), air conditioning, localized heating such as waterbed warming or electric blankets, hot-air blowers, entertainment/communications (TV, radio, etc.) and water heating.
Energy Efficiency: Using less energy/electricity to perform the same function. Programs designed to use electricity more efficiently - doing the same with less. Energy efficiency is distinguished from DSM programs in that the latter are utility-sponsored and -financed, while the former is a broader term not limited to any particular sponsor or funding source. "Energy conservation" is a term which has also been used but it has the connotation of doing without in order to save energy rather than using less energy to do the same thing and so is not used as much today. Many people use these terms interchangeably.
Energy Loss: The difference between energy input and output as a result of transfer of energy between two points. Energy losses on a typical natural gas system are around 1 to 3 percent. Energy losses on a large electric system are around 5 to 8 percent.
Energy Marketer: An organization that arranges deals to sell electricity or natural gas for a customer and may provide other services. In the electricity market they may be referred to as Power Marketers.
Energy Value: That part of the at-site or at-market value of electric power which is assigned to energy.
Environmental Externalities: An 'externality' exists when one party's activities affect the life or activities of the other parties in ways that are not factored into the production and pricing decisions of the first party. Such impacts may be positive or negative. With respect to utility activities, if costs are imposed on society that are not counted in electricity resource selection and operation decisions, two effects can be expected: 1) certain resources may be selected to meet incremental capacity requirements over alternatives that have higher 'direct' costs, but whose external costs are so low that these alternatives, if selected, would impose lower total costs on society; and 2) the product (electricity) will be underpriced, so that, from an economic perspective, too much will be consumed. In sum, these two effects will result in inefficient utilization of society's resources, as well as the imposition of costs, without compensation, on parties who have little or no say in the polluting firm's decisions."
Excess Capacity: Exaggerated projections of demand throughout the 1980s produced forecasts of shortages which, in turn, produced decisions for capacity expansions. Since the projections were flawed, the extra generating capacity was not necessary and is excess. Even though there is now over-supply, the costs of the new generation are keeping prices high. This is one of the primary factors which has brought on calls for greater competition.
Exercise Price: The price at which an option may be exercised. A decrease in the exercise price has the same effect as an increase in the current price of the underlying asset.
Exit Fee: A fee that can be charged when a customer switches electric distribution systems, the purpose of which is to provide for the recovery of stranded costs and the investment cost of losing the customer, and other appropriate costs the Corporation Commission may deem appropriate.

F

Feebates: A feebate is a revenue neutral strategy which imposes a fee on polluting resources and rebates those fees to cleaner technologies. This can be accomplished directly through the revenue paid to generators by the Poolco or through incorporation of these values into the dispatch/pricing mechanism of the pool.
Firm Power: Power intended to have assured availability to the customer to meet its load requirements. Electric 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, but subject to force majeure interruptions. Firm power consists of either firm energy, firm capacity or both.
Fixed Charge: The charge calculated in rate design to recover all or a portion of the fixed costs of a utility plant, including the generation facility and the transmission lines, meters and some taxes.
Fixed Cost: Cost of facilities incurred regardless of the amount of energy produced. Such costs normally include capital costs, the cost of financing construction and insurance.
Fixed Operating Costs: Costs, other than fixed cost associated with investment in plant, which do not vary or fluctuate with changes in operation or utilization of plant.
Fixed Price: A contract in which a named, exact price is specified for commodities. A fixed price contract usually has variations to the fixed price such as escalators or redeterminations for increased costs or incentives for meeting various goals.
Flat Rate: A one-part electrical rate wherein a utility's revenue requirements are lumped and consumers pay the same rate for each kilowatt-hour of electricity used, regardless of the demand they place on the system or their individual load factor.
Forward Buying: Providing commodities (such as power) for future needs assuring that it will be on hand when needed and that there will be no disruption of service.
Forward Contract: A commitment to buy (long) or sell (short) an underlying asset at a specified date at a price (known as the exercise or forward price) specified at the origination of the contract.
Forward Curve: A Forward Curve is the sequence of future yields corresponding to the floating reference rates on a swap.
Forward Price: Forward Price is the future yield of an instrument that will determine the Forward Curve.
Forward Rate (interest): Arrangement for a loan to begin at some point in the future with a promise today to receive a specific interest rate or interest rates prevailing today for future loans. The term structure of interest rates is the relation between the current long-term and short-term interest rates, but underlying this is a relationship between the current long-term rate and the rates on current and future short-term loans.
Forward Rate Agreement (FRA): A transaction in which two counterparties agree to a single exchange of cash flows based on a fixed and a floating rate respectively. A Forward Rate Agreement can be viewed as a one-date interest rate swap.
Forward Swap: Swaps that begin more than one year in the future. The terms are fixed before the start date. Also known as a deferred-start swap.
Forwards: A forward is a commodity bought and sold for delivery at some specific time in the future. It is differentiated from futures markets by the fact that a forward contract is customized, non-exchange traded and a non-regulated hedging mechanism.
Franchise: A license or similar legal authority to provide service at retail in a given geographic area. An exclusive franchise is a monopoly to provide service in that area.
Futures Contract: An exchange-traded contract promising to buy or sell standard commodities or securities at a future date at a set price. Futures are "paper" deals and involve profit and loss on promises to deliver, not possession of the actual commodity. The main difference between a futures contract and a forward contract is that a futures contract is cash settled, or market-to-market, daily. Additionally, the futures market requires that all market participants- sellers and buyers alike- post a performance bond call margin.
Futures Market: Arrangement through a contract for the delivery of a commodity at a future time and at a price specified at the time of purchase. The price is based on an auction or market basis. Standardized, exchange-traded and government regulated hedging mechanism.

G

Gas Cost Reconciliation Account(GCRA), Gas Cost Variance Account (GCVA): A deferral account which accumulates the variance in actual gas costs from the actual gas revenue recovered in customer rates.
Generation Company (Genco): A regulated or non-regulated entity (depending upon the industry structure) that operates and maintains existing generating plants. The Genco may own the generation plants or interact with the shortterm market on behalf of plant owners. In the context of restructuring the market for electricity, genco is sometimes used to describe a specialised "marketer" for the generating plants formerly owned by a vertically integrated utility.
Generation Charge: The component of an energy bill covering the cost of supplying the energy. For gas, this is typically referred to as the Gas Charge.
Generation Dispatch and Control: Aggregating and dispatching (sending off to some location) generation from various generating facilities, providing backup and reliability services. Ancillary services include the provision of reactive power, frequency control and load following.
Gigawatt (GW): One billion watts.
Gigawatt-hour (GWh): One billion watt-hours.
Green Power rates: Rates changed for electricity service from generators which do not pollute or damage the environment. Different groups define "green" power with various levels of restriction. For example, a run of the river hydro plant may be included while a new dam and reservoir may be excluded.
Grid: A system of interconnected power lines and generators that is managed so that the generators are dispatched as needed to meet the requirements of the customers connected to the grid at various points. Gridco is sometimes used to identify an independent company responsible for the operation of the grid.
GRA: General Rate Application

H

Horse Power: A unit of energy equivalent or equal to .746 kW. Some new energy efficient motors are rated at one hp to one kW.
Hydroelectric energy, hydroelectricity: Electric energy produced by water falling through a turbine generator.

I

Incentive Rate: A discount offered to encourage consumption or appliance usage during a desired time interval. For example, off-peak, time-of-use, interruptable, dual-fuel heating rates, etc., are all types of incentive rates. They are designed to limit usage during the on-peak periods and encourage consumption during the off-peak periods. Electric companies use incentive rates to encourage a change in consumption patterns.
Incentive Ratemaking: Refers to the practice of using a price cap or other form of performance-based ratemaking instead of traditional cost-plus ratemaking, to give the utility an incentive to be efficient by letting it retain a larger share of any savings it creates.
Incremental Cost: The incremental cost (or marginal cost) represents the cost of an additional unit. This may be an additional kWh or kW or an additional load.
Incremental Load: That portion of a generating facility's load that is in addition to their existing load. This is significant when discussing price. The cost of additional load, the incremental increase, is typically smaller that the khw cost of the existing load.
Independent Power Producer (IPP): A Non-utility electric energy generator. Also referred to as a non-utility supplier. Until the early 1970s, independent power producers were rare. With recent changes in utility technology and economics, they have become more common. Many issues relating to restructuring of the utility industry involve the role of independent power producers in a deregulated energy market.
Independent System Operator (ISO): A neutral operator responsible for maintaining instantaneous balance of the grid system. The ISO performs its function by controlling the dispatch of flexible plants to ensure that loads match resources available to the system.
Index: A measure of relative value attached to a specific commodity or group of commodities or stocks. An index option is an option contract based on an index instead of an individual stock or commodity. A measure of market trends.
Industrial Bypass: A situation in which large industrial customers buy power directly from a non-utility generator, bypassing the local utility system. Deregulation of generation and transmission in some instances has opened up the opportunity for large electricity users to purchase services from a supplier other than the local retail utility.
Industrial Rate: An industrial rate is simply a rate designed for the industrial customer classification. It may refer to a single large consumer or to several large consumers having similar plant and consumption requirements.
Information Requests: Questions posed to the providers of evidence pertaining to the evidence they have filed with a regulator for a hearing. Information requests and their responses are made prior to the hearing, in writing, and become evidence in the hearing. Information requests are also referred to as "interrogatories"..
Integrated Demand: The demand averaged over a specified period, usually determined by an integrating demand meter or by the integration of a load curve.
Integrated Resource Planning (IRP): A public planning process and framework within which the costs and benefits of both demand- and supply-side resources are evaluated to develop the least-total-cost mix of utility resource options. In many states, IRP includes a means for considering environmental damages caused by electricity supply/transmission and identifying cost-effective energy efficiency and renewable energy alternatives. IRP has become a formal process prescribed by law in some states and under some provisions of the Clean Air Act Amendments of 1992.
Integrated Resource Planning Principles: The underlying principles of IRP can be distinguished from the formal process of developing an approved utility resource plan for utility investments in supply- and demand-side resources. A primary principle is to provide a framework for comparing a variety of supply- and demand-side and transmission resource costs and attributes outside of the basic provision (or reduction) of electric capacity and energy. These resources may be owned or constructed by any entity and may be acquired through contracts as well as through direct investments. Another principle is the incorporation of risk and uncertainty into the planning analysis. The public participation aspects of IRP allow public and regulatory involvement in the planning rather than the siting stage of project development.
Interim Rate: A rate which is put in place until the regulator can determine the final rates. If the final rates are lower than the interim rates, customers are generally refunded their over contributions with interest for the period of time the interim rates existed.
Interruptible Load/Demand: Demand that can be interrupted by direct action of the supplying system's system operator in accordance with contractual provisions at times of seasonal peak load. It usually involves commercial, industrial or irrigation 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 includes Direct Load Control and Other Load Management.
Investor-Owned Utility: An electric or gas utility that is owned by private shareholders.
IPP: Independent Power Producer. A private entity that operates a generation facility and sells power to electric utilities for resale to retail customers.

J

Joule: A measure of energy equal to one (1) watt second. One gigajoule (one billion joules) is roughly equal to energy from 915 cubic feet of natural gas, 29 litres of gasoline, or 278 kWh of electricity.

K

Kilowatt (kW): A unit of electrical power equal to one thousand watts
Kilowatt-hour (kWh): A unit of electrical energy which is equivalent to one kilowatt of power used for one hour. One kilowatt-hour is equal to 1,000 watt-hours. An average household will use between 800 - 1,300 kWh per month depending upon geographical area.
Kilowatt-year (kW-y): A unit of electrical capacity demanded for 8,760 hours. This would equate to a 100% load factor for that demand.

L

LDCs: Local Distribution Companies
Least Cost Planning: Also called Least Cost Integrated Resource Planning, Integrated Resource Planning, Integrated Resource Management (or their acronyms). Any of a number of ways to identify, rank, select and price resources for a utility in such a way that all resources are evaluated on "a level playing field" such that the resources selected are the least cost, most reliable resources for the planning horizon.
Line Loss: Energy loss and capacity loss on a transmission or distribution line under specified conditions. Difference between input and output due to moving power through conductor or equipment caused by friction.
LLR: Licence Liability Rating
Load: 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. The load of an electric utility system is effected by many factors and changes on a daily, seasonal annual basis, typically following a pattern. System load is usually measured in megwatts(MW)
Load Base Revenues: The revenues the utility would have collected (usually not including revenues to cover fuel costs, which are collected through reconciling dollar-for-dollar fuel charges), had they not been successful in reducing demand (in the economists' sense of the term).
Load Control: The process of managing demand requirements in order to achieve a desired load pattern. Load control devices are installed on customers' appliances or services to reduce the electric system's demand when a peak situation is about to occur. Examples of load control devices would include controls on air conditioner compressors, hot water heaters and dual-fuel heaters.
Load Curve: A curve of power versus time showing the level of a load for each time period covered. The horizontal axis is time and the vertical axis is load (kW).
Load Duration Curve: A curve of loads, plotted in descending order of magnitude, against time intervals for a specified period. The curve indicates the period of time load was above certain magnitude. Load duration curves are profiles of system demand that can be drawn for specified periods of time (e.g., daily, monthly, yearly).
Load Factor: The ratio of average load to peak load during a specified period of time, expressed as a percent. The load factor indicates to what degree energy has been consumed compared to maximum demand or the utilization of units relative to total system capability. An electric system's load factor shows the variability in all customer's demands.
Load Management: The management of load patterns in order to better utilize the facilities of the system. Generally, load management attempts to shift load from peak use periods to other periods of the day or year.
Load Management Rate: A load management rate incorporates a discount for users to improve their load factor to a specified level. A typical load management rate may take the following form:; Customer Charge $18.00/month; Energy: 1^st 365 kWh/kW 5.0 cents/kWh; Over 365 kWh/kW 3.5 cents/kWh
Load Profiling: The study of the consumption habits of consumers to estimate the amount of power they use at various times of the day and for which they are billed. Load profiling is an alternative to precise metering.
Load-Resource Balance: The point at which demand for energy exactly equals energy production.
Load Shifting: Demand Side Management (DSM) programs designed to shift load from on-peak times to off-peak times
Local Distribution Company (LDC): The utility company that provides the distribution, customer and energy services for natural gas and electricity.
Long Run Marginal Costs: All costs associated with the lowest cost incremental unit including variable production costs, fixed O&M and capital costs.
Loss Factor: The ratio of the average power losses to total power delivered during a specified period of time.
LPP: Late Payment Policy

M

Marginal Cost: The change in total cost (or total variable cost) resulting from a change in the quantity of output produced by a firm in the short run. Marginal cost indicates how much total cost changes for a given change in the quantity of output. Because changes in total cost are matched by changes in total variable cost in the short run (remember total fixed cost is fixed), marginal cost is the change in either total cost or total variable cost. Marginal cost, usually abbreviated MC, is found by dividing the change in total cost (or total variable cost) by the change in output. In the utility context, the cost to the utility of providing the next (marginal) kilowatt-hour of electricity, irrespective of sunk costs.
Marginal Cost Pricing: A system of pricing designed to ignore all costs except those associated with producing the next increment of power generation. Sometimes referred to as incremental cost pricing
Marginal Price of Energy: Price for power from a unit which is already running. Includes only fuel and variable O&M plus markup.
Margin Stabilization: Margin stabilization refers to the adjustment of revenue to smooth margin levels over a period of time. Similar cost stabilization objectives can be accomplished with capital credits.
Market Failures: also known as Stranded Benefits. In the case of a restructured electrical industry where a market with competition would be encouraged, there is concern that the market would not provide for some of the programs that have been included in the regulated monopoly. These so-called market failures, or stranded benefits, would include all the limitations of the invisible hand such as environmental externalities, demand side management (DSM) (where utilities have sponsored conservation measures which have lowered rates through reduced demand for greater generating capacity), fairness concerns that have been covered by the obligation to serve such as low cost assistance programs and shut off protections which have been provided by utilities and risk management in which long term planning can include great lead times for new projects to provide adequate generation capacity.
Market Price: The current price of an underlying instrument in the marketplace.
Market-Based Price: A price set by the mutual decisions of many buyers and sellers in a competitive market.
Mcf: One thousand cubic feet of natural gas.
Megawatt (MW): A unit of electrical power equal to one million watts or one thousand kilowatts.
Megawatt-hour (MWh): One million watt-hours of electric energy. A unit of electrical energy which equals one megawatt of power used for one hour.
MMBtu: One million British thermal units.
MMcf: One million cubic feet of natural gas.
Monopoly: The only seller with control over market sales.
Monopsony: The only buyer with control over market purchases.
MRL: Maximum Rate Limitation
Municipal Electric Utilities (Munis) and Cooperatives: Municipal and rural utilities and cooperatives that generally buy electricity and resell it to customers. These utilities may or may not own generation, transmission or distribution facilities.
Municipalization: The process by which a municipal entity assumes responsibility for supplying utility service to its constituents. In supplying electricity, the municipality may generate and distribute the power or purchase wholesale power from other generators and distribute it.

N

NBV: Net Book Value
Non-coincident Demand (NCD) or Non-coincident Peak Load: A customer's maximum electric demand during any stated period. Consumers who use large quantities of electricity pay a monthly demand charge based on their maximum electric demand during each month. This maximum demand can also be called a consumer's monthly non-coincident demand.
Natural Monopoly: A situation where one firm can produce a given level of output at a lower total cost than can any combination of multiple firms. Natural monopolies occur in industries which exhibit decreasing average long-run costs due to size (economies of scale). According to economic theory, a public monopoly governed by regulation is justified when an industry exhibits natural monopoly characteristics.
Negotiated settlement Process(NSP): A less formal process where the applicant, interested parties and the Board/Commission staff meet to review and attempt to negotiate a settlement on some or all aspects of an application. NSP is used to complement or as an alternative to the traditional regulatory process (e.g. oral public or written hearings) in an effort to save time and reduce the cost of utility regulation while achieving sound regulatory outcomes.
Non-Utility Supplier: A company other than a utility that provides natural gas or electricity. Also referred to as independent power producer.

O

Obligation to Serve: The obligation of a utility to provide electric service to any customer who seeks that service and is willing to pay the rates set for that service. Traditionally, utilities have assumed the obligation to serve in return for an exclusive monopoly franchise.
Off Peak: A period of relatively low demand for electrical energy, such as the middle of the night
Off Peak Energy: Electric energy supplied during periods of relatively low system demands as specified by the supplier.
On-Peak: Period of relatively high demand on the company's electric system.
Oligopoly: A few sellers who exert market control over prices.

P

Peak: Peak refers to the maximum requirements. It is usually expressed in conjunction with demand requirements. The following are typical usages of the term: peak monthly demand, peak customer demand and peak system demand. Ordinarily, electric utilities try to limit the growth of peak demand, unless they have a capacity surplus, because new plants must be added to accommodate peak needs.
Peak Load or Peak Demand: The electric load that corresponds to a maximum level of electric demand in a specified time period.
Peaking Capacity: Generating capacity available to assist in meeting that portion of peak load which is above base load.
Peaking Gas: Gas which is stored or purchased under contracts which will allow delivery during the periods of highest demand.
Performance Based Regulation: PBR. Also known as incentive regulation and including price caps and revenue sharing, this is a tool that is being used during the current transition from the regulated to a competitive electrical industry. Any rate-setting mechanism which attempts to link rewards (generally profits) to desired results or targets. "PBR policies continue to protect ratepayers; but unlike conventional cost-of-service regulation, they also begin to systematically expose utilities to the consequences of their actions, both good and bad."
Performance-based Ratemaking: A form of ratemaking intending to make more explicit the performance requirements on which a utility's profits are based. Usually refers to incentive ratemaking (price caps). Can include incentives to meet or exceed specific performance measures, such as prices relative to those of similar utilities, customer service quality, and the like.
Performance-Based Rates: One of various rate making alternatives to traditional cost-of-service regulation. Under performance-based rate making, rates for utility service are based on objectives or standards for a utility's operating performance, rather than being based directly on the costs a utility incurs in providing service. This kind of rate making can provide incentives for utilities to reduce costs and/or meet other specified performance targets. An example would be a demand-side management (DSM) program where the company can earn additional profits based on how well the DSM program is run and the extent to which its goals are achieved.
Petajoule(PJ): 1015 or one quadrillion joules.
Plant Factor: The ratio of the average load on the plant for the period of time considered to the aggregate rating of all the generating equipment installed in the plant.
Pool: As used in the retail competition debate, refers to a system in which all suppliers of electricity sell to a central buying entity, the pool, which in turn is the single agent for selling power to retail customers and their aggregators.
Power Authorities: Quasi-governmental agencies that perform all or some of the functions of a public utility.
Power Cost Adjustment Clause: A clause in a rate schedule that provides for an adjustment in the billing if the purchased power cost varies from a specified unit cost.
Power Factor: The fraction of power actually used by a consumer's electrical equipment compared to the total apparent power supplied, usually expressed as a percentage. Power factors apply only to alternating current circuits; direct current circuits always exhibit a power factor of 100 percent. A power Factor indicates how far a consumer's electrical equipment causes the electric current delivered at the consumer's site to be out of phase with the voltage.
Price Cap: A method of setting distribution company's rates whereby a maximum allowable price level is established by regulators, flexibility in individual pricing is allowed and where efficiency gains can be encouraged and captured by the company.
Provider of Last Resort: A legal obligation (traditionally given to utilities) to provide service to a customer where competitors have decided they do not want that customer's business.
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 it varies from a specified unit base amount.

Q

Quasi-judicial: The powers and processes of a regulator which are similar to the courts.

R

Ratchet or Ratcheted Demand Charge: The demand charge level that a consumer pays each month regardless of actual consumption. The demand charge is based on the peak consumption rate during a rolling period of time (usually 12 months).
Rate Base: The value of property upon which a utility is given the opportunity 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.
Rate Case: The formal procedure in which a power supplier applies for an increase in its electric rates.
Rate Design: The methodology for apportioning the revenue requirement to the various class of utility customers.
Ratepayers: The customers of a utility.
Rate Rider: A specific charge on a customer's bill to recover a specific cost over a fixed period of time.
Real-Time Pricing (RTP): The intantaneous pricing of electricity based on the cost of the electricity available for use at the time the electricity is demanded by the customer.
Regulatory Commission: A state or federal agency responsible for the activities of an industry or segment of an industry. In the electric utility industry, most states have regulatory commissions that must approve service area, construction permits, financing and rates. A majority of electric cooperatives are not regulated by their respective state commissions.
Renewable Energy: An energy source for generating electricity that is not based on fuels with limited reserves. Included are solar power, hydro-power, wind power, geothermal power, and tidal power.
Renewable Resources: Renewable energy resources are naturally replenishable, but flow-limited. They are virtually inexhaustible in duration but limited in the amount of energy that is available per unit of time. Some (such as geothermal and biomass) may be stock-limited in that stocks are depleted by use, but on a time scale of decades, or perhaps centuries, they can probably be replenished. Renewable energy resources include: biomass, hydro, geothermal, solar and wind. In the future, they could also include the use of ocean thermal, wave and tidal action technologies. Utility renewable resource applications include bulk electricity generation, on-site electricity generation, distributed electricity generation, non-grid-connected generation and demand-reduction (energy efficiency) technologies.
Reregulation: The design nd implementation of regulatory practices to be applied to the remaining regulated entities fter restructuring of the vertically integrated electric utility. The remaining regulating entities would be those that continue to exhibit characteristics of natural monopoly, where imperfections in the market prevent the realization of more competitive results and where, in light of other policy considerations, competitive results are unsatisfactory in one or more respects. Reregulation could employ the same or different regulatory practices as those used before restructuring.
Resource Efficiency: The use of smaller amounts of physical resources to produce the same product or service. Resource efficiency involves a concern for the use of all physical resources and materials used in the production and use cycle, not just the energy input.
Restructuring: The reconfiguration of the vertically integrated electric utility. Restructuring usually refers to separation of the various utility functions into individually operated and -owned entities.
Retail Competition: A system under which more than one electric provider can sell to retail customers and retail customers are allowed to buy from more than one provider. (See also "Direct Access")
Retail Market: A market in which electricity and other energy services are sold directly to the end-use customer.
Return On Common Equity(ROE): The pecentage return allowed for the invested equity of utility shareholders.
Revenue Requirements: The amount of funds (revenue) a utility must take in to cover the sum of its estimated operation and maintenance expense, debt service, taxes and allowed rate of return. Also see "cost of service"
Revenue Sharing: This model strengthens incentives inherent in traditional regulatory practice by providing up-front assurance that if the company can cut costs relative to its most recent cost of service estimate, it will be allowed to keep a predefined portion of the savings for its shareholders. Also see 'Performance Based Regulation'
Risk Management: Risk management is the reducing of the prospect of losses which will interfere with the execution of a company's business strategy. It allows managers to focus directly on shareholder value as an objective in decision making. A risk management program frequently involves five steps:

identify the source of exposure
quantify the exposure
clarify the impact of the exposure on the company's overall business strategy
assess the capability for managing the exposure internally
select the appropriate risk management products.

RMR: Retail Market Readiness.
RR: Revenue Requirements (See revenue requirements)
RRO: Regulated Rate Option
RROT: Regulated Rate Option Tariff
RTOs: Regional Transmission Organizations
Rules of Conduct: Rules set in advance to delineate acceptable activities by participants, particularly participants with significant market power.

S

Scheduling: Operating a power system to balance generation and loads; managing the accounting, billing and information reporting for such operations.
Scheduled Outage: The shutdown of a generating unit, transmission line or other facility, for inspection or maintenance, in accordance with an advance schedule.
Seasonal Power: Power generated or made available to customers only during certain specific seasons of the year.
Seasonal Rate Schedule: A schedule containing an electric rate available only during specified seasons of the year.
Self-Generation: A generation facility dedicated to serving a particular retail customer, usually located on the customer's premises. The facility may either be owned directly by the retail customer or owned by a third party with a contractual arrangement to provide electricity to meet some or all of the customer's load.
Service Area: Territory in which a utility system has the right to supply or make available electric service.
Short Run Marginal Cost: see Marginal Cost
SMD: Standard Market Design
Social Costs: The cost of certain programs including, but not limited to, residential low usage rate program, peak load reduction programs, energy audit programs, bad weather cutoff moratorium programs, medical priority programs and other similar programs the Corporation Commission may require on a statewide basis for the public good.
Special Contracts: Any contract that provides a utility service under terms and conditions other than those listed in the utility's tariffs. For example, an electric utility may enter into an agreement with a large customer to provide electricity at a rate below the tariffed rate in order to prevent the customer from taking advantage of some other option that would result in the loss of the customer's load. This generally allows that customer to compete more effectively in their product market.
Spot Market: A real-time commodity market for immediate sale and delivery of energy products.
SSS: Standard Supply Service
Stranded Benefits: Benefits of the current system of regulation of the utility industry that would not be realized in a purely competitive market structure. For example, the costs of support for energy conservation activities that utilities would not be able to undertake on their own in a competitive market. See also 'Market Failure'
Stranded Costs: Costs that a utility has an obligation to pay (e.g., long-term contracts or payments on a generation plant) but may not be able to recover in a competitive market where rates are no longer set by regulatory bodies.
Stranded Investment: An investment with a cost recovery schedule that was initially approved by regulatory action that subsequent regulatory action or market forces has rendered not practically recoverable. Costs that electric utilities are currently permitted to recover through their rates but whose recovery may be impeded or prevented by the advent of competition in the industry.
Sunk Cost: Cost already incurred which cannot be recovered regardless of future events
Supply-Side: Activities conducted on the utility's side of the customer meter. Activities designed to supply electric power to customers rather than meeting load though energy efficiency measures or on-site generation on the customer side of the meter.
Surplus System Capacity: The difference between assured system capacity and the system peak load for a specific period.

T

Tariff: A document, approved by the responsible regulatory agency, listing the terms and conditions, including a schedule of prices, under which utility services will be provided.
Tiered Rates or Block Rates: A rate design which divides consumers use into different tiers or blocks, with different prices charged for each tier.
Time-of-Use Metering: A metering system that measures a customer's power usage at various intervals during each 24-hour period. By this means, a utility can determine which of its customers are using the most power at the time of the system's maximum demand and are, thereby, making the heaviest contributions to the system's peak.
Time-of-Use (TOU) Rates: The pricing of electricity of electricity based on the estimated cost of electricity during a particular time block. Time-of-use rates are usually divided into three or four time blocks per 24 hour period (on-peak, mid-peak, off-peak and sometimes super off-peak) and by seasons of the year (summer and winter). real-time pricing differs from TOU rates in that it is based on actual (as opposed to forecasted) prices which may fluctuate many times a day nd are weather-sensitive rather than varying with a fixed schedule.
Top Down or Bottom Up (Valuations of Stranded Costs): Slang for two methods of valuating stranded costs. Top down meaning an evaluation of a utilities assets as a whole. Bottom up meaning an asset by asset valuation. Both cases depend on accepting estimates of valuations from the companies. This is in contrast to some sort of auction method of valuation which would require the assets to be sold. Although most details remain to be explored further concerning an auction format, the amounts realized from the sale of assets could be balanced against the utility's valuations of their sunk costs. Would the utilities themselves be allowed to bid for their own assets? Would there be a single auction or one spread out over a period of time? These and other questions remain.
Total Resource Cost (TRC) Test: A benefit-cost test which measures the net costs of a demand-side program as a resource option based on the total costs of the program, including both the participants' and the utility's costs. The benefits for the TRC are avoided supply costs (avoided credit and collection costs should also be included, as they are system costs). The costs in this test are the program costs (including equipment costs) paid by both the utility and the participants plus the increase in supply costs for any period in which load has been increased. Sometimes includes externalities:
Transition Costs: Costs associated with the change of an industry from a regulated, bundled service to a competitive open-access service.
Transmission and Distribution Loss: Electric energy lost due to the transmission and distribution of electricity. Much of the loss is thermal in nature due to the electrical resistance of the transmission wire.
Transmission-Dependent Utility: A utility that relies on its neighboring utilities to transmit to it the power it buys from its suppliers. A utility without its own generation sources, dependent on another utility's transmission system to get its purchased power supplies.
Transmission grid, Transportaion grid, Transmission System: Transmission system. An interconnected system of high voltage energy transportation lines and associated facilities used for bulk transfers of electricity. A high-pressure pipeline used for bulk transfers of natural gas is also referred to as a transmission system.
Transmitting Utility (Transco): 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 nondiscriminatory connections, comparable service and cost recovery. According to EPAct, 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
Two Part Rate: A charge for electricity consisting of a demand (kW) component and an energy or commodity (kWh) component.

U

Unbundling (Unbundled Services): Disaggregating electric utility service into its basic components and offering each component separately for sale with separate rates for each component. For example, generation, transmission and distribution could be unbundled and offered as discrete services.
Undue Discrimination: Discrimination results when a firm provides service at rates that are not proportional to costs. Undue discrimination cannot be justified, does not promote economic efficiency and communicates improper price signals.
Utility: A regulated entity which exhibits the characteristics of a natural monopoly. For the purposes of electric industry restructuring, "utility" refers to the regulated, vertically-integrated electric company. "Transmission utility" refers to the regulated owner/operator of the transmission system only. "Distribution utility" refers to the regulated owner/operator of the distribution system which serves retail customers.
Utility Cost Test: A benefit-cost test which measures the net costs of a demand-side management program as a resource option based on the costs incurred by the utility (including incentive costs) and excluding any net costs incurred by the participant. The benefits for the Utility Cost Test are the avoided supply costs of energy and demand (avoided credit and collection costs should also be included, as they are system costs). The costs for the Utility Cost Test are the program costs incurred by the utility, the incentives paid to the customer, and any increased supply costs.

V

Vertical Integration: An arrangement whereby the same company owns all the different aspects of making, selling and delivering a product or service. In the electric industry, it refers to the historically common arrangement whereby a utility would own its own generating plants, transmission system and distribution lines to provide all aspects of electric service.
Variable Cost: The total cost incurred to produce energy, excluding fixed costs which are incurred regardless of whether the resource is operating. Variable costs usually include fuel, increased maintenance and additional labour.
Vertical Integration: An arrangement whereby the same company owns all the different aspects of making, selling and delivering a product or service. In the electric industry, it refers to the historically common arrangement whereby a utility would own its own generating plants, transmission system and distribution lines to provide all aspects of electric service.
Volatility: A measurement of the price fluctuation of an underlying instrument that takes place over a certain period of time.

W

Watt: The power required to do work at the rate of one joule per second.
Watt-hour: 1 watt-hour is equal to 3600 joules of energy.
Wheeling: The transmission of electricity by an entity that does not own or directly use the power it is transmitting. Wholesale wheeling is used to indicate bulk transactions in the wholesale market, whereas retail wheeling allows power producers direct access to retail customers. This term is often used colloquially as meaning transmission.
Wholesale Competition: A market that allows a distribution company to buy energy from a variety of sources, and where the energy producers would be able to sell to distribution companies.
Wholesale Customers: Any entity that purchases electricity at the wholesale level, including municipal utilities, private utilities, electric cooperatives, or government-owned utility districts. Wholesale customers purchase electricity from other wholesale suppliers to resell to their own retail customers.
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.