Kilowatt (kW) – A kilowatt (kW) equals 1,000 watts and measures how much power a device needs to run; it is the amount of power required to operate the device, distinct from how long it is used.
Kilowatt-hour (kWh) – A kilowatt-hour (kWh) measures energy usage; it is equal to one kilowatt of power used for one hour (e.g., a 1,000 ‑watt appliance running for one hour).
Base Load – The minimum amount of electricity needed to meet demand; the load required to satisfy customer needs at any given time.
Budget Billing – A billing option where customers pay a fixed monthly amount averaged over 12 months to smooth their electricity bills; the utility may adjust the amount periodically based on actual usage.
Generation – The production of electricity, representing one of the three components of electric service.
Transmission – The movement of electricity from where it is generated to the local distribution system.
Distribution – The delivery of electricity from the distribution system to homes or businesses.
Demand – The amount of electricity customers use at a given moment or over a specific period; it reflects the rate at which electricity is consumed.
Deregulation – The restructuring of regulated monopoly electric service so that electricity supply, transmission and distribution are unbundled; this allows customers to buy electricity from retail suppliers.
Distribution Charge – A regulated rate charged for delivering electricity from the electric company to a customer’s home or business.
Electric Distribution Company (EDC) – A company that provides facilities for distributing electricity to retail customers; EDCs transmit and distribute electricity and are regulated by the state.
Electricity Supplier – A retail supplier licensed by the state that sells electricity or related services; electricity suppliers may include aggregators, brokers and marketers.
Capacity Charge – An additional fee applied to commercial customers based on their highest recorded demand, measured in kilowatts. It helps cover the cost of maintaining enough generation capacity to meet their peak power needs.
Demand Charge – A fee based on the maximum amount of electricity a facility draws from the grid during the billing cycle. The higher the peak demand, the higher this charge.
Energy Efficiency – Using less energy to perform the same task, often through upgrades like LED lighting or high-efficiency equipment, which lowers consumption without sacrificing performance.
Load Factor – A ratio that compares a customer’s actual energy usage to the maximum possible usage in the same period; a higher load factor indicates a more consistent and efficient use of electricity.
Peak Demand – The highest amount of electricity used in a specified time frame. Utilities must plan for these peaks to ensure reliability.
Power Factor – A measure of how effectively electrical power is converted into useful work output; a low power factor means that equipment is drawing more current than necessary, which can result in higher utility charges.
Retail Electricity Provider (REP) – In deregulated markets, a company that sells electricity to customers. Consumers can shop among REPs for competitive rates and plans.
Time-of-Use (TOU) Rates – Pricing plans where the cost of electricity varies depending on the time of day. Power used during peak hours is priced higher than power used during off-peak periods.
Transmission Charge – A cost associated with moving electricity over high-voltage transmission lines from generators to local distribution networks.
Supply Rate – The per-kilowatt-hour price for electricity consumed. In deregulated markets, this rate is set by the chosen supplier and is separate from delivery charges.
Demand Response – Programs that encourage customers to reduce or shift electricity use during times of high demand, often in exchange for bill credits or reduced rates.
Power Purchase Agreement (PPA) – A long-term contract under which a customer agrees to buy electricity from a specific generating facility, often renewable, at a set price for a fixed term.
Renewable Energy Certificates (RECs) – Tradable credits that represent the environmental attributes of one megawatt-hour of electricity generated from renewable sources.
Fixed Rate Plan – An electricity supply contract where the price per kilowatt-hour remains the same throughout the term, protecting customers from market fluctuations.
Variable Rate Plan – An electricity supply contract where the price per kilowatt-hour can change with market conditions, resulting in potential savings or higher costs over time.
Load Shedding – The intentional reduction of electricity consumption to prevent strain on the grid, often implemented during emergencies or extreme demand periods.
Energy Audit – A systematic inspection and analysis of how energy is used in a facility with the aim of identifying measures to increase efficiency and reduce costs.
Combined Heat and Power (CHP) – A technology that produces electricity and captures the heat produced for beneficial use, improving overall energy efficiency.
Demand-Side Management (DSM) – Utility programs designed to encourage customers to modify their energy use patterns, such as shifting consumption to off-peak periods or installing energy-efficient equipment.
Grid Parity – The point at which the cost of producing electricity from renewable resources becomes equal to or less than purchasing power from the traditional grid.
Net Metering –excess power back into the grid and receive credits on their bill.
Net Metering – A billing arrangement that allows customers who generate their own electricity, such as with solar panels, to send excess power back into the grid and receive credits on their bill.
Smart Meter – A digital device that measures electricity usage in real time and communicates this information to both the customer and the utility for monitoring and billing.
Tariff – The official document approved by regulators that outlines the rates, terms and conditions under which a utility provides electricity service.
Peak Shaving – Strategies to lower electricity use during high-demand periods in order to reduce costs and alleviate stress on the electrical grid.