TPI Services Common Energy Terms
The energy industry has specific related terms to this area of business.
Here are some definitions from the EIA to help you better understand the vocabulary to may see in the media, on bills, or in conversation with TPI consultants.
TPI Electricity Procurement Energy Glossary:
Active solar – As an energy source, energy from the sun is collected and stored using mechanical pumps or fans to circulate heat-laden fluids or air between solar collectors and a building.
Aggregator – Any marketer, broker, public agency, city, county, or special district that combines loads of multiple end-use customers in negotiating the purchase of electricity, the transmission of electricity, and other related services for these customers.
Ancillary services – Services that ensure reliability and support the transmission of electricity from generation sites to customer loads. Such services may include load regulation, spinning reserve, non-spinning reserve, replacement reserve, and voltage support.
Balancing authority (electric) – The responsible entity that integrates resource plans ahead of time, maintains load-interchange-generation balance within a Balancing Authority Area and supports Interconnection frequency in real-time.
Basis or Basis Differential – a term commonly used to refer to the difference in the value of a unit of electricity or natural gas delivered at one location as compared to the value of the same unit of electricity or natural gas delivered at another location. For example, suppose the value of a unit of natural gas delivered to the Chicago Citygate is $3.00 / MMBtu, and the value of a unit of natural gas delivered to Henry Hub is $2.75 / MMBtu. In that case, the Chicago Citygate basis is $0.25 / MMBtu.
British Thermal Unit (BTU) – defined as the amount of heat required to raise the temperature of 1 lb of liquid water by 1 °F at a constant pressure of one atmosphere. MMBtu represents one million BTU.
Bundled utility service (electric) – A means of operation whereby energy, transmission, distribution services, and ancillary and retail services are provided by one entity.
Capacity (kW) – how much energy the system must generate to meet the instantaneous Load; also a measurement of immediate electricity load.
Carbon footprint – the total set of greenhouse gas (GHG) emissions caused by an organization, event, product, or person.
Carbon offsetting – reducing a carbon footprint.
Citygate is a point or measuring station where a distributing gas utility receives gas from a natural gas pipeline company or transmission system.
Cooling degree days (CDD) – measure how much (in degrees) and for how long (in days) outside temperature was higher than a specific base temperature.
Congestion – A condition that occurs when insufficient transfer capacity is available to implement all of the preferred schedules for electricity transmission simultaneously.
Consumption vs. Demand – kWh vs. kW – Consumption is the total energy used during a period (kWh); demand is the instantaneous consumption rate usually measured as an average over 15 or 30 min intervals. Automobile analogy to understand how demand and consumption relate – the car’s speedometer is like the demand, and the odometer is like the consumption.
Degree days – Used in the energy industry to represent outside temperatures and how it relates to energy consumption.
Dekatherm – A standard measurement unit for natural gas based on its energy content; equal to 10 therms or 1 MMBtu
Demand response programs – Demand response programs are incentive-based programs that encourage electric power customers to temporarily reduce their demand for power at certain times to reduce their electricity bills. Some demand response programs allow electric power system operators to directly reduce Load, while in others, customers retain control. Customer-controlled reductions in demand may involve curtailing Load, operating onsite generation, or shifting electricity use to another period. Demand response programs are one type of demand-side management, covering broad, less immediate programs such as promoting energy-efficient equipment in residential and commercial sectors.
Demand-side management (DSM) – A utility action that reduces or curtails end-use equipment or processes. DSM is often used in order to reduce customer load during peak demand and/or in times of supply constraint. DSM includes focused, profound, and immediate programs such as the brief curtailment of energy-intensive processes used by a utility’s most demanding industrial customers and programs that are broad, shallow, and less immediate, such as promoting energy-efficient promotion equipment in residential and commercial sectors.
Deregulation – The elimination of some or all regulations from a previously regulated industry or sector of industry; in regards to the electricity and natural gas industries, often refers to the introduction of supplier competition and consumer choice.
Direct access – The ability of a retail customer to purchase electricity or other energy sources directly from a supplier other than their regulated utility.
Distribution provider (electric) – Provides and operates the wires between the transmission system and the end-use customer. For those end-use customers who are served at transmission voltages, the Transmission Owner also serves as the Distribution Provider. Thus, the Distribution Provider is not defined by a specific voltage but rather as performing the Distribution function at any voltage.
Electricity broker – An entity that arranges the sale and purchase of electric energy, the transmission of electricity, and/or other related services between buyers and sellers but does not take title to any of the power sold.
Energy charge – That portion of the cost for electric service is based upon the electric energy (kWh) consumed or billed.
Energy efficiency, Electricity – Refers to programs that are aimed at reducing the energy used by specific end-use devices and systems, typically without affecting the services provided. These programs reduce overall electricity consumption (reported in megawatt hours), often without explicit consideration for the timing of program-induced savings. Such savings are generally achieved by substituting technologically more advanced equipment to produce the same end-use services (e.g., lighting, heating, motor drive) with less electricity. Examples include:
- High-efficiency appliances.
- Efficient lighting programs.
- High-efficiency heating.
- Ventilating and air conditioning (HVAC) systems or control modifications.
- Efficient building design.
- Advanced electric motor drives.
- Heat recovery systems.
Energy service provider – An energy entity that provides service to a retail or end-use customer.
Firm power – Power or power-producing capacity, intended to be available at all times during the period covered by a guaranteed commitment to deliver, even under adverse conditions.
Futures market – A trade center for quoting prices on contracts for the delivery of a specified quantity of a commodity at a specified time and place in the future.
Generation – The process of producing electric energy by transforming other forms of energy; also, the amount of electric power produced, expressed in kilowatt hours.
Generator capacity – The maximum output, commonly expressed in megawatts (MW), that generating equipment can supply to system load, adjusted for ambient conditions.
Grid – The layout of an electrical distribution system.
Heat Rate – Used to calculate how efficiently a generator uses heat energy. It is expressed as the number of BTUs of heat required to produce a kilowatt-hour of energy; Power Price / Natural Gas Price = Implied or Market Heat Rate.
Heating degree days (HDD) – a measure of how much (in degrees) and for how long (in days) outside temperature was lower than a specific base temperature.
Hedging – a position established in one market in an attempt to offset exposure to price changes or fluctuations with the goal to minimize risk.
Independent system operator (ISO) – An independent, federally regulated entity established to coordinate regional transmission in a non-discriminatory manner and ensure the safety and reliability of the electric system.
Interruptible Load – This Demand-Side Management category represents the consumer load that, per contractual arrangements, can be interrupted at the time of annual peak load by the consumer’s action at the direct request of the system operator. This type of control usually involves large-volume commercial and industrial consumers. Interruptible Load does not include Direct Load Control.
kW, kWh – 1 kilowatt or 1 kilowatt hour of electricity; equal to 1,000 watts.
Load Factor – average consumption divided by the peak power over a period of time.
Locational Marginal Price (LMP) – the price of electricity at a particular point on the electrical grid; a term commonly used to refer to real-time or day-ahead electricity prices.
Mcf – A standard measurement unit of natural gas based on its volume; 1 Mcf is roughly equal to 1.03 Dth and 1.03 MMbtu, though this conversion varies depending on the energy content of delivered natural gas
MMBtu – A standard measurement unit of natural gas based on its energy content, equal to 1,000,000 Btu
Open access (electric) – Federal Energy Regulatory Commission Order No. 888 requires public utilities to provide non-discriminatory transmission service over their transmission facilities to third parties to move bulk power from one point to another on a nondiscriminatory basis for a cost-based fee. Order 890 expanded Open Access to cover the methodology for calculating available transmission transfer capability; improvements that opened a coordinated transmission planning process; standardization of energy and generation imbalance charges; and other reforms regarding the designation and undesignation of transmission network resources.
Photovoltaic cell (PVC) – An electronic device is consisting of layers of semiconductor materials fabricated to form a junction (adjacent layers of materials with different electronic characteristics) and electrical contacts and is capable of converting incident light directly into electricity (direct current).
Pipeline (natural gas) – A continuous pipe conduit, complete with such equipment as valves, compressor stations, communications systems, and meters for transporting crude and/or supplemental gas from one point to another, usually from a point in or beyond the producing field or processing plant to another pipeline or to points of utilization. It also refers to a company operating such facilities.
Power Purchase Agreement (PPA) – an agreement between the owner of an electricity generation facility and a buyer of electricity that sets forth the commercial terms for purchasing and selling electricity from a generation facility.
RECs – Renewable Energy Credits – are tradable, non-tangible energy commodities in the U.S. represent proof that 1 MWh of electricity was generated from an eligible renewable energy resource.
Renewable energy resources – Energy resources that are naturally replenishing but flow-limited. They are virtually inexhaustible in duration but limited in the amount of energy available per unit of time. Renewable energy resources include biomass, hydro, geothermal, solar, wind, ocean thermal, wave action, and tidal action.
Shale Gas – Natural gas is produced from open wells to shale formations. Shale is a fine-grained, sedimentary rock composed of mud from flakes of clay minerals and tiny fragments (silt-sized particles) of other materials. The shale acts as both the source and the reservoir for natural gas.
Solar Power Purchase Agreement – A power purchase agreement (PPA) is a financial agreement where a developer arranges to design, permit, finance, and install a solar energy system at little to no cost upfront. And a contract on the part of the customer to purchase the energy for a per-unit price.
Stranded costs – Costs incurred by a utility which may not be recoverable under market-based retail competition. Examples include underappreciated generating facilities, deferred costs, and long-term contract costs.
Tariff – For electric and natural gas utilities, a surcharge is the collection of rules and rates that define how and at what cost a utility provides service to its customers; a common term refers to the rate structure a customer is served under.
Therm – A standard measurement unit of natural gas based on its energy content; equal to one hundred thousand (100,000) Btu
Virtual (or Financial) Power Purchase Agreement (VPPA) – Unlike a physical PPA, a virtual PPA is a financial contract rather than a power contract. The off-taker does not receive or take legal title to the electricity, and in this way, it is a “virtual” power purchase agreement.
Working gas – The quantity of natural gas in the reservoir that is in addition to the cushion or base gas. It may or may not be completely withdrawn during any particular withdrawal season. Conditions permitting, the total working capacity could be used more than once during any season. Volumes of working gas are reported in thousand cubic feet at standard temperature and pressure.
Source for some definitions – www.eia.go
