Energy Glossary

Backwardation

A condition where prompt prices for a commodity are higher than the price for future delivery. This signals that the market is currently experiencing tight conditions and scrambling for prompt supplies. It’s a situation where prices are high currently, but people believe prices will go down, so they carry a low inventory. Contango is a situation with opposite circumstances from backwardation.

Bandwidth

Bandwidth is the agreed percentage that a customer’s usage can vary from the forecasted usage. The forecast is typically based on the customer’s most recent twelve months of historical usage.

Basepoint

The desired megawatt output sent to a resource.

Behind-the-Meter Generation

Energy generation that’s physically located behind the retail meter and does not participate in the wholesale market as a generation resource.

Capacity

The system operator assesses capacity charges on suppliers, and these ultimately pass through to customers. Grid operators issue capacity charges to guarantee that sufficient generation is available to meet forecasted power demand. Capacity prices are calculated differently across regions and can represent a significant portion of a customer’s overall energy spend.

Carbon Intensity (CI)

Refers to the amount of greenhouse gas emissions created per unit of energy consumed or produced.

Clean Energy Standards (CES)

The cost incurred by suppliers for securing a portion of their electricity from Class I equivalent renewable energy resources.

Cogeneration

The production of heat energy and electrical or mechanical power from the same fuel in the same facility. A typical cogeneration facility produces electricity and steam for industrial process use.

Contingency

An event, usually involving the loss of one or more elements, that affects the power system at least momentarily.

Demand Response

An opportunity for consumers to play a significant role in the operation of the electric grid. For example, consumers can voluntarily reduce or shift their electricity usage during peak periods in response to time-based rates or other forms of financial incentives. Some electric service providers use Demand Response programs as resource options to balance supply and demand. These programs can lower the cost of electricity in wholesale markets and, in turn, lead to lower retail rates.

Distributed Generation

A process in which a variety of smaller systems generate and store energy closer to where that energy is needed. Distributed generation is an alternative to centralized sources (e.g., coal, natural gas, nuclear, large hydropower), which transmit large amounts of power over long distances.

Dual Billing

A billing option that allows a customer to receive separate invoices from their supplier (for their energy) and from the utility (for the distribution of that energy).

Early Termination Fee

Early termination fees specify the potential charges that a customer will incur for terminating a contract prior to the expiration date.

Federal Energy Regulatory Commission

The Federal Energy Regulatory Commission (FERC) is an independent regulatory agency within the U.S. Department of Energy. The FERC regulates the transmission and wholesale sales of electricity in interstate commerce.

Fixed Price, All-in

Includes all the pricing components into one price per kWh and locks in energy costs 100% through the term, limiting exposure to price fluctuations.

Generation Charges

Part of the basic service charges on every customer’s bill for producing electricity. Generation service is competitively priced and not regulated by Public Utility Commissions. This charge depends on the terms of service between the customer and the supplier.

Holdover Rate

Holdover rates are applied to customer accounts if the supplier of record continues to serve the accounts beyond the contract expiration date. If the customer does not renew the contract with the incumbent or another supplier, or defaults back to the utility, the supplier of record continues to serve the accounts on the holdover rate. In most cases, the holdover rate is market-based with an adder to ensure the supplier serving the accounts recoups its costs for all components — including, but not limited to, energy, capacity, ancillaries, supplier fees, and supplier margins.

Load Factor

Load factor is an indication of how efficiently a facility uses power. The load factor is equal to the total electricity used in a billing period (kWh) divided by the peak demand (kW) divided by the number of hours in the billing period. Load factors below 0.5 have periodic spikes in demand and may benefit from demand management initiatives, including peak shaving, shifting operations, or battery storage.

Letter of Authorization (LOA)

Specific form required to retrieve a customer’s historical monthly and interval consumption data.

Letter of Exclusivity (LOE)

A form signed by the customer, specifying that they are working exclusively with that broker at a given time.

Losses

The cost of energy that dissipates between the generation source and the customer’s facility.

Margin and Fees

A customer’s contract has embedded margins and fees. These charges support retail suppliers and other third parties, both in physically delivering energy and additional services.

Material Change

Material change is typically considered a 25% shift in consumption (either up or down) over a period of three months. These changes most often occur when a customer changes production schedules, requires extended maintenance on heavy machinery, or adds or subtracts meters from an existing account. Customers who invest in behind-the-meter distributed energy resources must also consider the effect of those resources on their consumption patterns.

Network Integrated Transmission Service (NITS)

NITS charges are costs customers incur when they gain access to the Open Access Transmission Tariff (OATT) that allows the delivery of energy from multiple resources under a single transmission contract. NITS charges are calculated using a customer’s NITS tag, annual usage, and zonal NITS rate, which are adjusted annually in January, June, and July.

Off-Peak Hours

Off-peak hours are times when consumers typically use less electricity. This normally includes weekends, holidays, and times of day when many businesses are not operating.

On-Peak Hours

On-peak hours are times when consumers typically use more electricity. This is normally on weekdays, when many businesses are operating.

Pass-through

Pass-through is a mechanism that allows customers to unbundle specific energy components with no markup. Various non-energy components can be passed through for greater customer control and transparency, including capacity costs, RPS costs, and transmission costs.

Peak Demand

An end-use customer’s contribution to the zone’s weather-normalized summer peak load, as determined by the zone’s Electric Distribution Company.

Peak Load Contribution (PLC) Tag

PLC tags are determined by a customer’s demand during the hour(s) the grid was most stressed in the previous year. The PLC calculation can vary greatly between grid operators.

Price Adjusted

Price-adjusted clauses are mechanisms that allow suppliers to adjust specific non-energy components of price agreements (e.g., zonal NITS rates) in response to regulatory rate changes.

Regulatory Change

All supply agreements include this language. It reserves the right of a supplier to pass on cost increases resulting from regulatory changes, new laws, or changes to existing laws. The regulatory changes that most frequently affect supply agreements include changes to RPS rates, system capacity rates, and transmission rates.

Renewable Energy

Energy that comes from sources that are sustainable or don’t run out. Examples of renewables include solar and wind.

Renewable Energy Credit (REC)

An REC is a certificate received for power produced from a renewable resource. One REC represents a single megawatt-hour (MWh) of renewable generation.

Renewable Natural Gas (RNG)

RNG is derived from decomposing organic matter and is fully interchangeable with conventional natural gas.

Renewable Portfolio Standards (RPS)

RPS costs incur when a state requires energy providers to secure a portion of their energy from renewable resources. When state legislatures change price subsidies or the percentage requirements associated with renewable generation, retail suppliers generally pass those rate changes through to customers by invoking “change in law” clauses in a retail contract.

Reserve Margin

The reserve margin is a measure of available capacity over and above the capacity needed to meet normal peak demand levels.

Service Territory

The geographic area in which a utility operates and provides energy to customers.

Solar Renewable Energy Credit (SREC)

An SREC is a certificate received for power produced from a solar-generating resource. One SREC represents a single MWh of solar generation.

Tariffs

Tariffs are the approved rate schedules, charges, and terms and conditions under which a utility provides service to its customers.

Transmission Enhancement Charge (TEC)

The cost for maintenance and improvement of the transmission and distribution systems.

Transmission Service Charges (TSC)

TSC charges reflect the cost of embedded transmission systems in New York State.

Utility Consolidated Billing (UCB)

UCB is a billing option allowing customers to receive a single invoice from the supplier or the utility for energy and the distribution cost of that energy. Consolidated billing arrangements may come with an additional cost and may not be available behind all utilities.

Zero-Cost Emission (ZEC)

The cost associated with subsidizing nuclear generation.