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Frequently Asked Questions

Electric Utility

A person, corporation, agency, authority or other legal entity or instrumentality that owns or operates facilities for the generation, transmission, distribution or sale of electric energy to the public and that is defined as a utility under the statutes and rules by which it is regulated

Forward Contract

A financial instrument that specifies the amount, price and time of delivery of electric power; the contract terms are typically customized by both buyer and seller

Interconnection

A facility that connects two transmission systems or control areas, or that connects a non-utility generator to a system or control area; (when capitalized, it refers to the North American Eastern, Western, ERCOT or Alaska electric systems)

LSE (Load Serving Entity)

A transmission or distribution utility that has contractual or regulatory obligations to connect its load to the transmission grid

Pancaking

Paying multiple charges to more than one utility to move (wheel) electric power across bulk-power systems (also called pancaked rates)

SRC (Static Reactive Compensator)

Provides protection against under voltage and/or voltage collapse by injecting positive or negative VARs as necessary to support a transmission system

Backup Power

Power provided by contract to a customer when its normal sources are unavailable

Clawback

Price cuts or increases instituted by a regulator to "claw back" the incremental gain resulting from an underestimate of the X factor, an assumed rate of productivity increase; contract provisions that require tax incentives to be given back