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DEREGULATION TERMS

Parts of your electricity bill before deregulation

Generation *

Transmission

Distribution

Historically the three (3) main parts of your electric bill were BUNDLED.

In States that are deregulated, your electricity bill can be UN-BUNDLED.

    * Only the generation part of your bill is deregulated. Your electric
      distribution company (EDC) still delivers the power and often handles
      the billing even if you chose an alternate 'electricity generation supplier'.

Electricity : Deregulation Terms:

Aggregation - A grouping of electric consumers (generally residential and small business customers)
who join to form 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 non-utility sources.

Biomass - Organic matter including wood, agricultural crops and crop residues that can be burned to
produce energy.

Broker - Someone, licensed by the PUC, who acts as a intermediary 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). In some are the demand is show as KVA which
is the same number adjusted for power factor.

Demand Charge - Amount charged for the highest average power demand recorded during any
one-time period (ranging from 15 min 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 which 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 utilizing 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 1 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 reflects 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 non-profit, customer-owned electric utility, responsible
for providing electricity in primarily rural areas.

Standard Service Offer (SSO). Standard electricity generation offer from the regulated utility
(EDC Electric Distribution Company). In deregulated market you can shop the energy commodity (generation)
part of the utility bill by comparing your 'price to compare" to the 3rd party generation service company offer.

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 which transport generated electricity in bulk from the generation
plant to substations.

Unbundling - Itemizing utility company services (generation, transmission, distribution, stranded
costs and 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.

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OTHER ENERGY TERMS

LINKS in blue:

NATURAL GAS - Prices and Trading Terms

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ENERGY UNITS - Conversion factors