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 (BTM)

Energy generation, storage, or other equipment located on the customer’s side of the utility meter. Examples may include onsite solar, battery storage, generators, and energy-management equipment.

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.

CAISO (California Independent System Operator)

The Independent System Operator that manages much of California’s high-voltage transmission grid and competitive wholesale electricity market.

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.

Ccf (Hundred Cubic Feet)

A unit of natural gas volume equal to 100 cubic feet.

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.

Co-op / Cooperative Utility

A utility owned by the customers or members it serves rather than by investors or a municipal government.

Day-Ahead Pricing

Electricity pricing established in the day-ahead wholesale market, where electricity purchases and generation are scheduled for the following operating day.

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.

Dth (Dekatherm)

A unit of heat energy commonly used to measure natural gas. One Dth equals one million Btu, or 10 therms.

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.

Emergency Curtailment

Implemented during catastrophic or unforeseen events—such as natural disasters or major pipeline failures—and may affect all customer classes to preserve the integrity of the system.

ERCOT (Electric Reliability Council of Texas)

The organization responsible for managing the electric grid and wholesale electricity market serving most of Texas.

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.

Firm Curtailment

A reduction of service to firm customers who typically have guaranteed, uninterrupted supply. This is rare and occurs only during extreme system failures or severe supply deficits.

Firm Supply

Energy supply provided under terms that generally require delivery except under specifically defined circumstances. Firm service typically receives a higher level of delivery priority than interruptible service.

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.

Force Majeure

A contract provision that addresses extraordinary events outside a party’s reasonable control that prevent or delay contractual performance. The specific events covered and remedies available depend on the contract.

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.

Grid Operator

An organization responsible for coordinating and operating part of the electric grid while helping maintain the balance between electricity supply and demand.

Hedge

A financial or physical strategy used to reduce exposure to future energy price changes. For an energy buyer, hedging can involve fixing or otherwise managing a portion of future electricity or natural gas costs.

Henry Hub

A major natural gas pipeline hub in Louisiana that serves as the delivery point and benchmark for U.S. natural gas futures pricing.

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.

Hourly Data

Energy consumption or market information recorded in hourly intervals. For customers, hourly usage data can help identify consumption patterns, peak demand periods, and potential energy-management opportunities.

Interruptible Curtailment

The most common form, affecting large industrial users who pay lower rates in exchange for agreeing to be the first to reduce or lose service during supply shortages.

Interruptible Supply

Energy supply or service that may be curtailed or interrupted under specified conditions, often in exchange for different pricing or other economic benefits.

ISO (Independent System Operator)

An independent organization that operates a regional transmission system and typically administers organized wholesale electricity markets while supporting reliable grid operations.

ISO-NE (ISO New England)

The Independent System Operator responsible for managing New England’s bulk electric grid and regional wholesale electricity markets across the six New England states.

kW (Kilowatt)

A measure of electrical power or demand equal to 1,000 watts. It describes the rate at which electricity is being used or produced at a given moment.

kWh (Kilowatt-hour)

A measure of electrical energy consumption. One kWh represents using one kilowatt of power for one hour and is a common unit used to measure and bill electricity usage.

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.

Mcf (Thousand Cubic Feet)

A unit of natural gas volume equal to 1,000 cubic feet. Unlike Dth and MMBtu, which measure energy content, Mcf measures the physical volume of gas.

Mcf:Dth Conversion

A conversion used to translate natural gas volume into energy content. The exact conversion varies based on the heat content of natural gas, but as a general approximation, one Mcf is about one Dth.

MISO (Midcontinent Independent System Operator)

A Regional Transmission Organization that manages the electric transmission system and wholesale electricity markets across a large portion of the central United States.

MMBtu (Million British Thermal Units)

A unit used to measure the heat content of fuels such as natural gas. One MMBtu is equivalent to one Dth.

Municipality / Municipal Utility

A utility owned and operated by a city, town, or other local government to provide electricity or other utility services to its community.

MWh (Megawatt-hour)

A unit of electrical energy equal to 1,000 kWh. MWh is commonly used to measure larger commercial, industrial, and wholesale electricity quantities.

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.

NYISO (New York Independent System Operator)

The organization responsible for operating New York’s bulk electric grid and administering the state’s competitive wholesale electricity markets.

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.

OFO – Operational Flow Order

An Operational Flow Order (OFO) is a directive issued by natural gas pipeline operators or utilities requiring customers and shippers to keep their gas deliveries and usage closely balanced within narrow tolerances—typically daily—to protect the operational integrity of the pipeline system. OFOs are commonly issued during periods of system stress, such as extreme weather, low inventory levels, or high demand. Non‑compliance can result in substantial financial penalties for exceeding allowable daily limits.

OMO – Operational Matching Order

An Operational Matching Order (OMO) is an operational directive used by natural gas utilities and pipeline operators during times of system strain. While similar to an OFO, an OMO specifically emphasizes the precise “matching” of supply to demand to mitigate immediate reliability risks. OMOs are issued before more severe measures, such as curtailments or interruptions. Participants who fail to match their usage to their confirmed supply during an OMO event may be subject to significant daily non‑compliance fines.

On-Peak Hours

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

Open Auction

A competitive procurement process in which suppliers submit bids and may have visibility into the competitive bidding process, depending on the auction structure. The objective is generally to encourage competition on price and contract terms.

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.

PJM (PJM Interconnection)

A Regional Transmission Organization that coordinates wholesale electricity movement and operates competitive wholesale power markets across a large portion of the Mid-Atlantic, Midwest, and neighboring areas.

PPA – Power Purchase Agreement

A Power Purchase Agreement (PPA) is a long‑term commercial contract between an energy buyer (offtaker) and an energy generator that establishes the specific price, volume, and terms under which electricity is purchased. PPAs are widely used for renewable energy projects such as solar or wind farms. They provide cost stability for buyers by locking in a fixed or pre‑agreed price and give generators predictable revenue to finance and operate energy assets.

PPAs are generally structured as onsite (behind‑the‑meter) installations or offsite (grid‑delivered) arrangements, including Virtual PPAs, which function as financial swaps rather than physical energy delivery.

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.

Power Grid

The interconnected network of generation facilities, transmission lines, substations, and distribution systems used to move electricity from producers to consumers.

PSC (Public Service Commission)

Another commonly used name for a state agency that regulates public utilities. Its responsibilities are generally similar to those of a PUC, although specific authority varies by state.

PUC (Public Utility Commission)

A state regulatory agency that oversees utilities and utility services. Responsibilities may include rates, service quality, infrastructure, and consumer protection and can vary by state.

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.

RTO (Regional Transmission Organization)

An independent organization that coordinates, controls, and monitors electricity transmission across a broad region. RTOs perform many of the same functions as ISOs but meet specific federal requirements for RTO designation.

Sealed Bid

A procurement process in which suppliers independently submit confidential offers by a specified deadline. Suppliers generally do not see competitors’ bids before the offers are opened and evaluated.

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.

Term

The length of time an energy supply contract or pricing agreement remains in effect, such as 12, 24, or 36 months.

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.

Zonal Pricing

A pricing structure in which electricity prices are determined for a defined geographic zone rather than for each individual location within that zone.