Access Charge

A fee paid by an independent power producer or its customer to use a transmission company's system


An electric system's ability (maintenance, load following, planning for future needs, etc.) to supply the aggregate electrical demand and energy requirements of its customers at all times


An entity (for profit or non-profit) that assembles generators or customer loads to achieve economies of scale and diversity among the generators or loads being combined

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


The measure of time that a generating unit, transmission line or other facility is capable of providing service, whether the unit, line or facility is in service (expressed as a percent available for the time under consideration)

Available Transfer Capability (ATC)

The measure of the transfer capability remaining in the physical transmission network for commercial activity beyond already committed uses

Avoided Costs

Costs of new transmission or generation (sometimes both) that electric utilities can "avoid" by purchasing from other sources, managing demand, conservation

Backup Power

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

Backup Supply Service

The interconnected operations service that provides the needed capacity and energy to transmission customers to replace the loss of generation and to cover the portion of demand that exceeds generation supplies for more than a short period
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An electric generation company


Conversion of nuclear, thermal, etc. energy into electricity


The interconnected power lines and generators that supply, transmit and distribute electric power to the customers connected to it


An independent company that operates an electric grid

Hedging Contract

A financial instrument that establishes the future prices and quantities of electricity independently of the short-term market, e.g., contracts for differences, forwards, futures, and option contracts

Hourly Market

The market in which blocs of energy are traded on an hourly basis


A transmission network location where the price of electricity is used by traders as a reference price for spot transactions and for contracting

Incremental Load

The portion of a generator's load that is in addition to its existing load


Electric power or energy that flows from one entity to another

Interconnected System

A system consisting of two or more individual electric systems that operates synchroniously and have connecting tielines
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Local distribution company

LMP (Locational Marginal Pricing)

Pricing electricity to include the costs of transmission losses, congestion and the local costs of generation (also called location-based pricing)


Any consumer of electrical energy; also, the amount of power (demand) used by a utility system, electrical device or consumer. Load can be manually or automatically curtailed or shed temporarily during times of high usage (customers have agreed beforehand to such actions) or managed to ensure a reliable electricity supply

Load Center

An area (city, etc.) that uses large amounts of electricity (also called a load pocket)

Load Following

Planning by utilities to ensure that electric generators operate as scheduled, based upon load forecasts (also, operating a generator to balance short-term load fluctuations)

Load Forecasting

Planning by utilities to ensure a reliable electricity supply

Load Response

Reducing electricity use from the grid during peak periods to increase reliability and moderate the energy-clearing price during system-wide peak demand; reducing electric load or using qualifying emergency generators on the customer side of the meter.

LSE (Load Serving Entity)

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


The difference between net capacity (a system's total capacity resources) and net internal demand, that is generally expressed in MW for operating reserves and as a percentage of either system load or installed generating capacity for planning reserves

Marginal Cost

The cost of providing additional electricity; "The competitive price of a MWh of electricity is equal to the additional amount it would cost to generate an additional MWh, once all current demand is met. This additional cost is commonly referred to as the marginal cost. The marginal cost of generating electricity rises as more electricity is produced, because different generators use different types and amounts of fuel_.under competition, the rising marginal cost of electricity leads to high prices when demand is high and low prices during low-demand periods." (GAO-02-828 Restructured... Read more about Marginal Cost

QF (Qualifying Facility)

Under PURPA, a non-utility generator of electric power that has received a certificate from FERC, enabling it to sell electricity only at wholesale avoided cost to a utility

Rate Base

Accumulated capital cost of a utility's purchased or installed facilities that serve customers

Real Option Theory

in economics, finding reduced economies of scale and applying them across all alternatives

Real Time Pricing

Pricing electricity based on the actual cost at the time it is demanded by a customer

Regional Transmission Organization (RTO)

A for-profit or non-profit entity that coordinates transmission planning, operations and use on a regional and inter-regional basis and that is subject to FERC approval

Regulatory Asset

An intangible (deferred debt cost, accelerated depreciation, etc.) that appears on a regulated utility's balance sheet and that can be recovered from ratepayers under regulation


The measure of performance of a bulk-power system that results in electricity being delivered to consumers within accepted standards and in the amount desired; measured by frequency, duration and magnitude of adverse impacts on the electric supply (also called system reliability). Reliability comprises both generation adequacy and system security.

Retail Wheeling

Allowing a customer to buy electricity from a supplier of choice and transmit (wheel) it on the grid

Revenue Cap

An alternative regulation plan that caps a utility's allowed revenues with an external index


An agreed-upon transaction size (measured in MW), start and end times, start and end ramp times and rates required for delivery and receipt of power and energy between contracting parties and the control areas involved in the transaction

VAR (Volt-Amperes Reactive)

The unit of measure of the power that maintains the constant variation of the electro-magnetic fields associated with alternating-current circuits


The force that makes electricity flow; the unit of measure of electric potential

Volumetric Wires Charge

A fee for using the transmission or distribution system that is based on the volume of electricity that is transmitted

Wholesale Wheeling

Buying transmission services from a utility to transport (wheel) electricity to another utility, non-utility generator or a wholesale customer

Wires Charge

Charging electric suppliers or their customers for the use of transmission or distribution wires