HOME /

Frequently Asked Questions

Price Cap

A maximum price applied by a regulator to the sale of electricity or services, whereby the level of the cap is set somewhat above the marginal costs of the most expensive generator on the system

Securitization

Issuing revenue bonds backed by anticipated revenue to refinance a utility's debt and stranded assets

Unbundling

Separating (spinning off) the generation, transmission, distribution and customer service functions of an electric utility; separating a customer's bill into its individual components

Ancillary Services/Interconnected Operations Services (IOS)

The services necessary to effect a transfer of electricity between purchasing and selling entities that transmission providers must include in their open access transmission tariffs; IOSs are the voluntary services that transmission providers may offer to their customers (FERC Order 888, April 24, 1996). Ancillary services include regulation and frequency response; reactive supply and voltage control from generating sources, economic dispatch, and the like

Customer Choice

The ability of a customer to purchase power from a supplier at a rate agreed upon by both that is delivered to the customer's location (also called customer choice or retail competition)

Economic Dispatch

Operating a generating system by running the generation units that have the lowest operating costs

Flow-Based Pricing

Pricing transmission based on the cost of each parallel path upon which the electric power flows

ISO (Independent System Operator)

A for-profit or non-profit entity established under FERC Order 888 and independent of market participants, that maintains generation-load balance through real-time monitoring and controlling of the transmission system and some generating units