Brief Definitions of Deregulation Terms
Aggregation
A grouping of electric consumers (generally residential and small business customers) into a larger purchasing unit in order to gain more bargaining power with the electricity-generation supplier.
Avoided Cost
An estimate of what it would cost the utility to produce the next increment of electricity. The estimate is used to evaluate the purchase of power from nonutility sources.
Biomass
Organic matter including wood, agricultural crops, and crop residues that can be burned to produce energy.
Broker
Someone licensed by the PUC that acts as a middleman in the purchase and sale of electricity.
Cogeneration
A process of producing simultaneously electric and thermal (heat) energy from one fuel source.
Competitive Transition Charge (CTC)
A charge that must be applied to the bill of every customer accessing the transmission or distribution network. The charge is needed so that an electric utility can recover a portion of its transition costs or stranded costs as determined by the Public Utility Commission.
Demand
Maximum amount of electrical power used over a 15- , 30- , or 60- minute interval in the billing period. Expressed in units of kilowatt (kW).
Demand Charge
Amount charged for the highest average power demand recorded during any one time period (ranging from 15 minutes to one hour) within the billing period.
Deregulation
Removal or relaxation of regulations or controls governing a business or service operation. In the case of the electric industry, deregulation means consumers will have their choice of electricity generation suppliers.
Distribution
The local part of an electricity system that delivers power from the substation to the retail customers.
Electricity-Generation Supplier
A person or corporation, broker, marketer, aggregator, or any others who sell electricity or related services using the transmission and/or distribution facilities of an electric utility company.
Electricity Generator of Last Resort
A consumer's local electric utility that will provide power to the consumer if his or her selected generation supplier is unable to deliver.
Energy Conservation
The process of reducing use of energy to conserve and protect environmental resources.
Fossil Fuels
Natural resources such as coal, oil, and natural gas that can be burned to generate electricity.
Generation
Production of electricity from a power plant.
Generation Capacity
The maximum amount of electrical power that a power plant is able to produce, usually expressed in megawatts (MW).
Geothermal Energy
Natural heat from within the Earth, captured for production of electric power. Geothermal energy can also cool air in the summer and heat air in the winter when using ground-coupled heat pumps.
Investor-owned Utility (IOU)
A utility company owned and operated by private investors.
Interruptible Rate
A special utility rate given to those who have their service temporarily stopped as part of an agreement with the utility company. Service interruptions may occur during periods of high demand or high cost periods of short supply for the utility.
Kilowatt-hour (kWh)
Unit of measure of electricity use over a period of time. For example, ten 100-watt light bulbs operated for one hour consumes one kilowatt hour (kWh) of electricity.
Load
The amount of electrical power being used at one time by a customer, circuit, or system. Expressed in units of kilowatts (kW).
Load Management
Shifting energy demands to different time periods of the day in order to reduce demand charges.
Load Profile
Graphic representation of electricity used over a period of time.
Non-Utility Generation
When a company other than a regulated public company produces power for sale.
Off-Peak Period
Period of time when the electricity supplied by a utility system is at a low level compared to other time periods. Corresponds to when demand by customers is low.
On-Peak Period
Period of time when the electricity supplied by a utility system is at a high level compared to other time periods. Corresponds to when demand by customers is high.
Peak Generation Load
The maximum demand for energy (or the maximum load consumed or produced) on a utility system in a stated period of time. This determines the utility's required generating capacity.
Pilot
A utility program offering a limited group of customers their choice of certified or licensed energy suppliers on a short-term trial basis.
Public Utility Commission (PUC)
The state regulatory agency that provides oversight, policy guidance, and direction to electric public utilities as well as other utilities.
Real-time Pricing
Hourly rates for electricity that reflect the actual fluctuating costs for generating electricity.
Renewable Electricity
Electricity generated from replenishable energy sources, such as hydropower, wind, solar, geothermal, or biomass.
Retail Wheeling
Also known as retail customer choice. A utility company is required to transport electricity from a generating plant it does not own directly to its retail customers. This gives retail customers the ability to purchase electricity from sources they choose.
Rural Electric Cooperative
Generally a nonprofit, customer-owned electric utility responsible for providing electricity in primarily rural areas.
Stranded Costs
Investments and commitments made by utility companies that cannot be recovered in the deregulated environment, expect by special billings over a projected five- to nine-year period. The PUC will determine the amount of stranded costs to be recovered.
Transmission
Electric lines that transport generated electricity in bulk from the generation plant to substations
Unbundling
Itemizing utility company services (generation, transmission, distribution, stranded costs, local service) so the customer knows the cost of each service.
Universal Service
Policies, protections, and services that help low-income customers maintain service.This includes customer assistance programs and policies and services that help low-income customers reduce or manage energy consumption in a cost-effective manner.
Valley Filling
An electric utility procedure used to change customer consumption patterns so that output of electricity is more evenly distributed throughout the day or year.
Wheeling
The transmission of power that has been generated by one utility system over the lines of another utility system.
For a more complete list of terms, refer to the Glossary of Electric Terms for the Future produced by the PA Public Utility Commission.