The terms defined below are intended to provide background on a selected group of terms and concepts useful in the L.R. 455 Study.

Access: The contracted right to use an electrical system to transfer electrical energy. Under a competitive market system, state and federal regulators are expected to require this access at fixed, regulated prices.

Access Charge: A charge levied on a power supplier, or a consumer, for access to a utility's transmission or distribution system. This charge may include a "stranded cost. or other charges as well as transmission or distribution service charges. (See Wires Charge).

Aggregator: Any entity that seeks to aggregate consumers for delivery of service under specified contract terms.

Ancillary Services: Interconnected operations services for operating reserve, voltage control, regulation and frequency response, scheduling and system control and dispatch, and other power supply necessary to effect a reliable transfer of electrical energy at specified contract terms between a buyer and a seller.

Availability: A measure of time that a generating unit or transmission line, or other facility is capable of providing service, whether or not it is actually in service. Typically this measure is expressed as a percent available for the period under consideration.

Average Cost: The revenue requirement of a utility divided by the utility's sales. Average cost typically includes the costs of existing power plants, transmission, and distribution lines, and other facilities used by a utility to serve its customers. It also includes operating and maintenance, tax, and fuel expenses.

Avoided Cost: The cost the utility would incur but for the existence of an independent generator or other energy service option. Avoided cost rates have been used as the power purchase price utilities offer independent suppliers (Qualifying Facilities).

Backup Power: Power provided by contract to a customer when that customer's normal source of power is not available.

Baseload: The minimum amount of power delivered or demanded over a given period at a constant rate. On a energy demand chart this will be the constant bottom line demand for a given customer or group of customers. (This is differentiated from Intermediate and Peak demand).

Bilateral Contract: A direct contract between a power producer or end-user outside of a centralized power pool or POOLCO.

Bottleneck Facility: A point on the system, such as a transmission line, through which all electricity must pass to get to its intended buyers. If there is limited capacity at this point, some priorities must be developed to decide whose power gets through. It also must be decided if the owner of the bottleneck may, or must, build additional facilities to relieve the constraint.

BPA: Bonneville Power Administration. One of five federal power marketing administrations that sell low-cost electric power produced by federal hydro electric dams to agricultural and municipal users. BPA serves Idaho, Oregon, and Washington as well as parts of Nevada and Wyoming.

Broker: A retail agent arranges power transactions. The agent may also aggregate customers and arrange for transmission, firming and other ancillary services as needed. The broker does not take title to the power supply which differentiates it from a competitive power supplier or power marketer.

Bulk Power Supply: Often this term is used interchangeably with wholesale power supply. In broader terms, it refers to the aggregate of electric generating plants, transmission lines, and related-equipment. The term may refer to those facilities within one electric utility, or within a group of utilities in which the transmission lines are interconnected.

Buy-Through: An agreement between utility and customer to for the utility to arrange a contract for supply on behalf of the customer with a supplier other than the utility; literally "buying-through" the utility.

Capacity: The rated continuous load-carrying ability, expressed in megawatts (MW) or megavolt-amperes (MVA) of generation, transmission, or other electrical equipment. For generating plants, capacity is typically differentiated into "Baseload Capacity" (a capacity factor above 60 percent); "Intermediate Capacity" (a capacity factor of 20 to 60 percent); and "Peaking Capacity" (a capacity factor of less than 20 percent).

Capacity Factor: The ratio of total energy generated by a plant for a specified period of time to the maximum possible energy it could have generated if operated at the maximum capacity rating for the same period, expressed as a percent.

Capacity Release: A secondary market for capacity that is contracted by a customer which is not using all of its capacity.

Captive Customer: A customer who does not have realistic alternatives to buying power from the local utility, even if that customer had the legal right to buy from competitors.

Cogeneration: Production of electricity from steam, heat, or other forms of energy produced as a by-product of another process. usually manufacturing.

Commercialization: Programs or activities that increase the value or decrease the cost of integrating new products or services into the electricity sector. (See "Sustained Orderly Development.")

Competitive Power Supplier: A supplier of retail energy and capacity, as well as ancillary services, other than the incumbent utility. The Competitive Power Supplier may own generation or may buy and resell. The Competitive Power Supplier has title to the commodity, in contrast to a "Broker."

Contract Path: The most direct physical transmission tie between two interconnected entities. When utility systems interchange power, the transfer is presumed to take place across the "contract path," notwithstanding the electrical fact that power flow in the network will distribute in accordance with network flow conditions. This term can also mean to arrange for power transfer between systems. (See also Parallel path flow)

Contracts for Differences (CfD): A type of bilateral contract in which the electric generation seller is paid a fixed amount over time which is a combination of the short-term market price and an adjustment with the purchaser for the difference. For example, a generator may sell a distribution company power for ten years at 6 cents/kWh. That power is bid into Poolco at some low /kWh value (to ensure it is always taken). The seller then gets the market clearing price from the pool and the purchaser pays the producer the difference between the Poolco selling price and 6 cents/kWh (or vice versa if the pool price should go above the contract price).

Control Area: An electric system or systems, bounded by interconnection metering and telemetry, capable of controlling generation to maintain its interchange schedule with other Control Areas and contributing to frequency regulation of the Interconnection.

Co-op: This is the commonly used term for a rural electric cooperative. Rural electric cooperatives generate and purchase wholesale power, arrange for the transmission of that power, and then distribute the power to serve the demand of rural customers. Co-ops typically become involved in ancillary services such as energy conservation, load management and other demand- side management programs in order to serve their customers at least cost.

Curtailability: The right of a transmission provider to interrupt all or part of a transmission service due to constraints that reduce the capability of the transmission network to provide that transmission service. Transmission service is to be curtailed only in cases where system reliability is threatened or emergency conditions exist.

Demand: The rate at which electric energy is delivered to or by a system, generally expressed in kilowatts or megawatts, at a given instant or averaged over any designated interval of time. Demand should not be confused with Load.

Peak Demand: The highest electric requirement occurring in a given period (e.g., an hour, a day, month, season, or year). For an electric system, it is equal to the sum of the metered net outputs of all generators within a system and the metered line flows into the system, less the metered line flows out of the system.

Coincident Demand: The sum of two or more demands that occur in the same demand interval.

Non-coincident Demand: The sum of two or more demands that occur in different demand intervals.

Contract Demand: The amount of capacity that a supplier agrees to make available for delivery to a particular entity and which the entity agrees to purchase.

Firm Demand: That portion of the Contract Demand that a power supplier is obligated to provide except when system reliability is threatened or during emergency conditions.

Demand-Side Management: This is a term that is intended to cover all activities undertaken by an electric supplier or consumers to influence the amount and timing of electricity use. This may occur through technological improvements, or revision in practices, billing rates, or direct control measures by the supplier (e.g. "smart metering" or non-firm or interruptible load agreements).

Derivatives: A specialized security or contract that has no intrinsic overall value, but whose value is based on an underlying security or factor as an index. A generic term that, in the energy field, may include options, futures, forwards, etc.

Direct Access: The ability of a retail customer to purchase commodity electricity directly from the wholesale market rather than through a local distribution utility. (See also Retail Competition)

Distributed Generation: A distributed generation system involves small amounts of generation located on a utility's distribution system for the purpose of meeting local (substation level) peak loads and/or displacing the need to build additional (or upgrade) local distribution lines.

Distribution Provider (DISCO): Any owner of a distribution system and associated substations and other facilities providing use of the distribution system to suppliers and end-users. The distribution provider in a competitive market will also be the likely supplier of metering, billing and other administrative services related to direct consumer contact. The Disco can also perform other services such as aggregating customers, purchasing power supply and transmission services for customers, billing customers and reimbursing suppliers, and offering other regulated or non-regulated energy services to retail customers. The "wires" and "customer service" functions provided by a distribution utility could be split so that two totally separate entities are used to supply these two types of distribution services.

Distribution System: Distribution lines, poles, meters and associated facilities that deliver energy directly to the end-use customer.

Divestiture: The sale of utility assets; one of the methods of "privatization."

Economic Dispatch: The allocation of demand to individual generating units on line to effect the most economical production of electricity.

Electrical Energy: The generation or use of electric power over a period of time expressed in kilowatthours (kWh), megawatthours (MWh), or gigawatthours (GWh).

There are several types of electrical energy:

Firm Energy: Electrical energy supported by sufficient capacity, interruptible only on conditions agreed upon by contract. To guarantee firm energy, the seller will provide all ancillary services.

Nonfirm Energy: Electrical energy that may be interrupted either by the provider or the receiver by giving notice to the other party as specified in a contract.

Peak Energy: Electrical energy supplied during a period of high system demand as specified in a contract.

Off-Peak Energy: Electrical energy supplied during a period of relatively low system demand as specified in a contract.

Electric System Losses: Total electric energy losses in the electric system consisting of transmission, transformation, and distribution system losses between supply and delivery points.

Energy Efficiency: measures undertaken as part of Demand-Side Management to reduce the consumption of electricity for a specific task or function.

Energy Services Company (ESCO): An entity offering consumers a range of energy efficiency measures designed to reduce consumption and costs.

EPAct: The Energy Policy Act of 1992 addresses a wide variety of energy issues. The legislation creates a new class of power generators, exempt wholesale generators (EWGs), that are exempt from the provisions of the Public Utilities Holding Company Act of 1935 and grants the authority to FERC to order and condition access by eligible parties to the interconnected transmission grid.

Exempt Wholesale Generator (EWG): Created under the 1992 Energy Policy Act, these wholesale generators are exempt from certain financial and legal restrictions stipulated in the Public Utilities Holding Company Act of 1935.

Federal Energy Regulatory Commission (FERC): The Federal Energy Regulatory Commission regulates the price, terms and conditions of power sold in interstate commerce and regulates the price, terms and conditions of all transmission services. FERC is the federal counterpart to state utility regulatory commissions.

Forecast: Predicted demand for electric power for a given customer or group of customers for a given period. A forecast may be short-term (e.g., 15 minutes) for system operation purposes, or five to ten years for a contract period, or twenty years for generating planning purposes. The forecast will typically include identification of baseload, intermediate, and peak demand based upon historical sales and projected growth data.

Forward: A forward is a commodity bought and sold for delivery at some specific time in the future. It is differentiated from futures markets by the fact that a forward contract is customized, non-exchange traded, and a non-regulated hedging mechanism.

FPA: Federal Power Act of 1935. Established guidelines for federal regulation of interstate energy sales. It is the primary statute governing FERC regulation of the electric sector.

Franchise: The franchise is a grant of right or privilege to occupy or use public streets and ways and facilities located on public streets and ways to deliver service to consumers. Franchises are historically, and typically, granted by local governments.

Futures Market: Arrangement through a contract for the delivery of a commodity at a future time and at a price specified at the time of purchase. The price is based on an auction or market basis. Standardized, exchange-traded, and government regulated hedging mechanism.

Generation (Electricity): The process of producing electrical energy from other forms of energy; also the amount of electric energy produced, usually expressed in kilowatt hours (kWh) or megawatt hours (MWh). Gross generation is the electrical output at the terminals of the generator, usually expressed in megawatts (MW). Net generation is gross generation minus the service power requirements of the generating station itself.

Generation Company (Genco): A regulated or non-regulated entity (depending upon the industry structure) that operates and maintains existing generating plants. The Genco may own the generation plants or interact with the short term market on behalf of plant owners. In the context of restructuring the market for electricity, Genco is sometimes used to describe a specialized "marketer" for the generating plants formerly owned by a vertically-integrated utility.

Generation Dispatch and Control: Aggregating and dispatching (sending off to some location) generation from various generating facilities, providing backup and reliability services. Ancillary services include the provision of reactive power, frequency control, and load following. (Also see "Power Pool" and "Poolco" below.)

Grid: A system of interconnected power lines and generators that is managed so that the generators are dispatched as needed to meet the requirements of the customers connected to the grid at various points. Gridco is sometimes used to identify an independent company responsible for the operation of the grid.

Hedging Contracts: Contracts which establish future prices and quantities of electricity independent of the short-term market. Derivatives may be used for this purpose. (See Contracts for Differences, Forwards, Futures Market, and Options.)

Imbalance: A condition in which the generation and demand or interchange schedules do not match.

Independent Power Producer: An independent power producer (IPP) refers to any entity that owns or operates and electric generating facility that is not included in a utility's rate base. This term included utility subsidiaries as well as entrepreneurs and non-utility producers.

Independent System Operator (ISO): An independent system operator is envisioned by federal regulators and others to be an independent third party who will take over ownership and/or control of a region' s transmission system for the purpose of providing open access to retail and wholesale markets for supply. (This is to be distinguished from a Regional Transmission Group or RTG which is a group of transmission line owners who propose to cooperatively operate the regional transmission grid.)

Integrated Resource Planning (IRP): A public planning process and framework within which the costs and benefits of both demand- and supply-side resources are evaluated to develop the least-total-cost mix of utility resource options. In many states, IRP includes a means for considering environmental damages caused by electricity supply/transmission and identifying cost-effective energy efficiency and renewable energy alternatives. IRP has become a formal process prescribed by law in some states and under some provisions of the Clean Air Act Amendments of 1992.

IOU: An investor owned utility. A company, owned by stockholders for profit, that provides utility services. A designation used to differentiate a utility owned and operated for the benefit of shareholders from municipally owned and operated utilities and rural electric cooperatives.

ISDN: Integrated Services Digital Network. A 128 Kbps (kilobytes per second) digital telephone service available in many parts of the country though not universally available that may be able to substitute for fiber optic cable in every respect except possibly television transmission.

Load: An end-use device or customer that receives power from an electrical system. Load should not be confused with Demand, which is a measure of the power that a load receives or requires.

Load Duration Curve: A nonchronological, graph summary of demand levels with corresponding time durations using a curve, which plots demand magnitude (power) on one axis and percent of time that the magnitude occurs on the other axis.

Load Following: An electric system's process of regulating its generation to follow the changes in its customers. demand. This capability is especially important for firm power and delivery of all-requirements service.

Load Factor: A measure of the degree of uniformity of demand over a period of time, usually one year, equivalent to the ratio of the average demand expressed as a percentage. It is calculated by dividing the total energy provided by a system during the period by the product of the peak demand during the period and the number of hours in the period. This is expressed as a percentage (e.g., residential load factors are typically 45-55 percent).

Marginal Cost: In the utility context, the cost to the utility of providing the next (marginal) kilowatt-hour of electricity, irrespective of sunk costs.

Market-Based Price: A price set by the mutual decisions of many buyers and sellers in a competitive market.

Metering: The process and methods of utilizing devices to measure the amount and direction of electrical energy flow; particularly for end-use.

Mid-Continent Area Power Pool (MAPP) . One of the nation's nine electric reliability councils that covers a geographic area including the eastern two-thirds of Nebraska, South Dakota, North Dakota, Montana, Minesota, western Wisconsic, Iowa, and parts of Saskatchewan and Manitoba. Western Nebraska systems are part of the Western Systems Coordinating Council (WSCC) see below.

Monopoly: The only seller with control over market sales.

Monopsony: The only buyer with control over market purchases.

Municipalization: The process by which a municipal entity purchases utility facilities and assumes responsibility for supplying utility service to its constituents. In supplying electricity, the municipality may generate and distribute the power or purchase wholesale power from other generators and distribute it.

Municipal System: A provider of utility services owned and operated by a municipal government.

NARUC: The National Association of Regulatory Utility Commissioners. An advisory council composed of governmental agencies of the fifty States, the District of Columbia, Puerto Rico and the Virgin Islands engaged in the regulation of utilities and carriers. "The chief objective is to serve the consumer interest by seeking to improve the quality and effectiveness of public regulation in America."

Net-Billing/Net Marketing: A process of integrating a customer's generating equipment in a utility grid. In net-billing a customer is credited for the energy they generate and put into the system by making the meter spin backward.

NOPR: A Notice of Proposed Rulemaking. A designation used by the FERC for some of its dockets.

NUG: A non-utility generator. A generation facility owned and operated by an entity who is not defined as a utility in that jurisdictional area.

Obligation-to-Serve: An obligation to have sufficient power supply for all consumers who are connected.

Oligopoly: A few sellers who exert market control over prices.

Open Access Same Time Information Sharing (OASIS): An electronic information posting system for transmission access data that allows all transmission customers to view the data simultaneously. Development of the OASIS system has been mandated by federal regulators as on one the necessary components of a open transmission system.

Options: An option is a contractual agreement that gives the holder the right to buy (call option) or sell (put option) a fixed quantity of a security or commodity (for example, a commodity or commodity futures contract), at a fixed price, within a specified period of time. May either be standardized, exchange-traded, and government regulated, or over-the-counter customized and non-regulated.

Outage: There are two primary types of outages:

Forced Outage: The removal from service availability of a generating unit, transmission line, or other facility for emergency reasons or a condition in which the equipment is unavailable due to unanticipated failure.

Planned Outage: Removing equipment from service availability for inspection and/or general overhaul of major equipment. A planned outage does not usually result in power supply failure, although planned outages during critical peak demand periods may place stress upon a system and lead to load shedding or forced outages

Parallel Path Flow: As defined by NERC, this refers to the flow of electric power on an electric system's transmission facilities resulting from scheduled electric power transfers between two other electric systems. (Electric power flows on all interconnected parallel paths in amounts inversely proportional to each path's resistance.)

Peak Load or Peak Demand: The electric load that corresponds to a maximum level of electric demand in a specified time period.

Performance-Based Regulation (PBR): Any rate-setting mechanism which attempts to link rewards (generally profits) to desired results or targets. PBR sets rates, or components of rates, for a period of time based on external indices rather than a utility's cost-of-service. Other definitions include light-handed regulation which is less costly and less subject to debate and litigation. A form of rate regulation which provides utilities with better incentives to reduce their costs than does cost-of-service regulation.

Point of Delivery: A point on the electrical systems, usually a substation, where a power supplier delivers electricity to the distribution system. This point can also include an interconnection with another system. The Point of Delivery is specified in a supply contract.

Power Pool: Generating plants in any given region are interconnected through a transmission grid. The operation of this grid and its coordination and cooperation between generating plant owners takes place on a formal "tight pool" basis with coordinated dispatch (e.g., the New England Power Pool), or as a "loose pool" with less formal integration and coordination.

POOLCO or Power Exchange: An entity envisioned by federal regulators and other that would provide a centrally dispatched spot market power pool. It would make ancillary generation services available to all market participants on comparable terms. The POOLCO or Power Exchange is sometimes seen as an alternative to "Bilateral Contracts".


Power Broker: A power broker is an entity that arranges a transaction between a buyer and a seller. The broker does not take title to the power.

Power Marketer: A power marketer is an entity that buys and sells power. The marketer does take title to the power. A marketer may or may not own generation facilities.

Provider of Last Resort: A legal obligation associated with traditional requirements for "universal service" and the "obligation-to-serve" in which customers in a retail market are guaranteed service if no competitors offer service to the customer; this is typically the distribution utility, however, the provider of last resort or "default" provider may be bid out.

PURPA: The Public Utility Regulatory Policy Act of 1978. Among other things, this federal legislation requires utilities to buy electric power from private "qualifying facilities," at an avoided cost rate. This avoided cost rate is equivalent to what it would have otherwise cost the utility to generate or purchase that power themselves. Utilities must further provide customers who choose to self-generate a reasonably priced back-up supply of electricity.

Qualifying Facility (QF): Under PURPA, QFs were allowed to sell their electric output to the local utility at avoided cost rates. To become a QF, the independent power supplier had to produce electricity with a specified fuel type (cogeneration or renewables), and meet certain ownership, size, and efficiency criteria established by the Federal Energy Regulatory Commission.

Real-Time Pricing: The instantaneous pricing of electricity based on the cost of the electricity available for use at the time the electricity is demanded by the customer.

Reliability: Electric system reliability has two components -- adequacy and security. Adequacy is the ability of the electric system to supply the aggregate electrical demand and energy requirements of the customers at all times, taking into account scheduled and unscheduled outages of system facilities. Security is the ability of the electric system to withstand sudden disturbances such as electric short circuits or unanticipated loss of system facilities.

Renewable Resources: Renewable energy resources are naturally replenishable, but flow-limited. They are virtually inexhaustible in duration but limited in the amount of energy that is available per unit of time. Some (such as geothermal and biomass) may be stock-limited in that stocks are depleted by use, but on a time scale of decades, or perhaps centuries, they can probably be replenished. Renewable energy resources include: biomass, hydro, geothermal, solar and wind. Utility renewable resource applications include bulk electricity generation, on-site electricity generation, distributed electricity generation, non-grid-connected generation, and demand-reduction (energy efficiency) technologies.

Resource Efficiency: The use of smaller amounts of physical resources to produce the same product or service. Resource efficiency involves a concern for the use of all physical resources and materials used in the production and use cycle, not just the energy input.

Restructuring: The reconfiguration of the vertically-integrated electric utility. Restructuring usually refers to separation of the various utility functions into individually-operated and -owned entities.

Retail Competition: A market system under which more than one electric provider can sell to retail customers, and retail customers are allowed to buy from more than one provider. (See also Direct Access)

Retail Market: A market in which electricity and other energy services are sold directly to the end-use customer.

Retail Wheeling: See Direct Access.

Regional Transmission Group (RTG): A voluntary organization of transmission owners and users interested in coordinating transmission planning and expansion on a regional basis. Such groups are subject to FERC approval.

Reliability: The degree to which an electrical system can deliver power supplies to customers at contract specifications, or acceptable regulatory standards. Reliability may be measured by the frequency, duration, and magnitude of adverse effects on the electric supply. It is usually considered for two primary elements: adequacy of supply and security of supply.

Renewable Energy: Renewable energy generally refers to energy derived from non-fossil fuel resources (excluding nuclear). It often includes wind, photovoltaics, biomass and hydro. However, the definition may vary in different parts of the county and in situations in which new energy technology development is being promoted (e.g., hydro may be excluded).

Reserve: There are several types of reserve capability and capacity that are usually included in consideration of supply of firm power needs. These include: operating reserve, spinning reserve, regulating reserve, contingency reserve, non-spinning reserve, and planning reserve.

RTO: A Regional Transmission Organization. An umbrella term used to describe a variety of transmission organizations including ISOs and Transcos.

Rules of Conduct: Rules set in advance to delineate acceptable activities by participants, particularly participants with significant market power.

Securitize: The aggregation of contracts for the purchase of the power output from various energy projects into one pool which then offers shares for sale in the investment market. This strategy diversifies project risks from what they would be if each project were financed individually, thereby reducing the cost of financing.

Self-Generation: A generation facility dedicated to serving a particular retail customer, usually located on the customer's premises. The facility may either be owned directly by the retail customer or owned by a third party with a contractual arrangement to provide electricity to meet some or all of the customer's load.

Special Contracts: Any contract that provides a utility service under terms and conditions other than those listed in the utility's tariffs. For example, an electric utility may enter into an agreement with a large customer to provide electricity at a rate below the tariffed rate to prevent the customer from taking advantage of some other option that would result in the loss of the customer's load. (See Buy-Through as an alternative arrangement.)

Stranded Benefits: Public interest programs and goals which could be compromised or abandoned by a competitive retail market for electric services.

Stranded Costs: Above-market costs of utilities and other power producers that would be "stranded" by consumers choosing a different supplier.

Stranded Obligations: The revenues, taxes, and fees for federal, state, and local governments that would be lost by changes in contracts, valuations and revenue policies

Sunk Cost: In economics, a sunk cost is a cost that has already been incurred, and therefore cannot be avoided by any strategy going forward.

Supply-Side: Activities conducted on the utility's side of the customer meter. Activities designed to supply electric power to customers, rather than meeting load though energy efficiency measures or on-site generation on the customer side of the meter.

Sustained Orderly Development: A condition in which a growing and stable market is identified by orders that are placed on a reliable schedule. The orders increase in magnitude as previous deliveries and engineering and field experience lead to further reductions in costs. The reliability of these orders can be projected many years into the future, on the basis of long-term contracts, to minimize market risks and investor exposure. (See also "Commercialization.")

System Integration (of new technologies): The successful integration of a new technology into the electric utility system by analyzing the technology's system effects and resolving any negative impacts that might result from its broader use.

System Operator: An individual at an electric system control center whose responsibility it is to monitor and control that electric system in real time.

Tariff : A document, approved by the responsible regulatory agency, listing the terms and conditions, including a schedule of prices, under which utility services will be provided.

Time-of-Use (TOU) Rates: The pricing of electricity based on the estimated cost of electricity during a particular time block. Time-of-use rates are usually divided into three or four time blocks per twenty-four hour period (on-peak, mid-peak, off-peak and sometimes super off-peak) and by seasons of the year (summer and winter). Real-time pricing differs from TOU rates in that it is based on actual (as opposed to forecasted) prices which may fluctuate many times a day and are weather-sensitive, rather than varying with a fixed schedule.

Transaction Costs: Costs incurred in the process of competitive retail power supply that may include marketing, advertising, billing, accounting and coverage for collection and non-payment exposure.

Transition Costs: These include both existing costs that are stranded and incremental costs of the new market system for both start-up and on-going expenses ranging from consumer protection to power exchange and access fees.


Transmission-Dependent Utility: A utility that relies on its neighboring utilities to transmit to it the power it buys from its suppliers. A utility without its own generation sources, dependent on another utility's transmission system to get its purchased power supplies.

Transmission Provider: Any transmission line owner who provides use of the facilities for the transfer of electrical energy.

Transmission System: An interconnected group of lines and associated equipment for the movement or transfer of electric energy between points of supply and points at which it is transformed for delivery to customers, or is delivered to other electric systems. Transmission is commonly on the generator side of the substation (distribution is on the customer side.)

Transmitting Utility (Transco): This is a regulated entity which owns, and may construct and maintain, wires used to transmit wholesale power. It may or may not handle the power dispatch and coordination functions. It is regulated to provide non-discriminatory connections, comparable service and cost recovery. According to EPAct, any electric utility, qualifying cogeneration facility, qualifying small power production facility, or Federal power marketing agency which owns or operates electric power transmission facilities which are used for the sale of electric energy at wholesale.

Vertical Integration: An arrangement whereby the same company owns all the different operations for making, selling, and delivering a product or service. In the electric industry, it refers to the historically common structure in which a utility would own its own generating plants, transmission system, and distribution lines to provide all aspects of electric service.

Volumetric Wires Charge: A type of charge for using the transmission and/or distribution system that is based on the volume of electricity that is transmitted.

Voltage Control: The control of transmission voltage through adjustments in generator reactive output and transformer taps, and by switching capacitors and inductors on the transmission and distribution systems.

Unbundling: Restructuring of utilities into component operations: generation, transmission and distribution. Also "unbundling" of consumer bills into price components reflecting charges for each segment of operation.

Universal Service: The obligation of a utility to connect any customer who seeks electric service, and is willing to pay the rates set for that service. This is often confused with "obligation-to serve". see above.

Wheeling: The contracted use of electrical facilities of one or more entities to transmit electricity for another entity. When conducted on behalf of retail customers it is sometimes referred to a "retail wheeling."

Wholesale Competition: A market system in which a distributor of power has the option to buy its power from a variety of power producers, and the power producers would be able to compete to sell their power to a variety of distribution companies.

Wholesale Power Market: The purchase and sale of electricity from generators to resellers (who sell to retail customers) along with the ancillary services needed to maintain reliability and power quality at the transmission level.

Wholesale Transmission Services: The transmission of electric energy sold, or to be sold, at wholesale in interstate commerce (from EPAct).

Wires Charge: A broad term which refers to charges levied on power suppliers or their customers for the use of the transmission or distribution wires.

WSSCC: The Western System Coordinating Council. A voluntary industry association created to enhance reliability among western utilities.

WSSP: The Western Systems Power Pool. A FERC approved industry institution that provides a forum for short-term trades in electric energy, capacity, exchanges and transmission services. The pool consists of approximately 50 members and serves 22 states, a Canadian province and 60 million people. The WSSP is headquartered in Phoenix, Arizona.