Electric Utilities Industry Terminology

Advanced Metering Infrastructure (AMI)

A network of smart meters, communications, and data systems that enables two-way communication between utilities and customers for granular measurement, remote operations, and new rate designs.

- The utility accelerated its AMI rollout to enable time-of-use pricing and remote disconnects. - AMI data helped the regulator verify savings from the demand response pilot. - With AMI, outage detection moved from customer phone calls to automated alerts.

Ancillary Services

Support services necessary to maintain grid reliability and power quality, including frequency regulation, spinning/non-spinning reserves, voltage support, and black start.

- The RTO procures ancillary services like spinning reserve and frequency regulation daily. - Storage bids into ancillary services markets to monetize fast-response capabilities. - Ancillary services costs are allocated to load-serving entities based on demand.

Balancing Authority

An entity responsible for maintaining the balance between electricity supply and demand within a defined area in real time and for managing interchange with neighbors.

- The balancing authority issued a curtailment order to maintain ACE within limits. - Our plant’s schedules must be approved by the local balancing authority. - EIM participation requires coordination across multiple balancing authorities.

Behind-the-Meter (BTM)

Generation, storage, or load-control assets located on the customer’s side of the utility meter, often used to reduce bills, increase resilience, or provide grid services.

- BTM solar reduced the customer’s net load by 30%. - The utility is piloting incentives for BTM batteries to support peak shaving. - Regulators clarified interconnection rules for BTM generation exporting to the grid.

Capacity Market

A market that compensates resources for committing to be available to meet peak demand in future periods, separate from energy and ancillary services markets.

- The plant secured revenue through a three-year capacity market auction. - Policy changes altered the minimum offer price rule in the capacity market. - Capacity payments support resource adequacy even when energy prices are low.

Congestion (Transmission Congestion)

A condition where transmission limits prevent the least-cost dispatch from serving all load, causing locational price differences and requiring redispatch.

- Congestion on the 345 kV interface drove up LMPs in the city node. - The utility’s non-wires alternative relieved congestion at lower cost. - FTRs were used to hedge congestion between hubs.

Cost of Service (COS) Regulation

A regulatory model where rates are set to recover a utility’s prudent operating costs and capital investment, plus an allowed rate of return.

- In its rate case, the IOU justified capex under traditional cost-of-service. - COS allows recovery of prudently incurred costs plus a fair return. - The commission scrutinized O&M under the COS framework.

Demand Response (DR)

Programs or price signals that incentivize customers to reduce or shift electricity usage during peak periods or system stress.

- The utility called a DR event during the heatwave to reduce peak. - Industrial DR aggregated 50 MW for participation in the ISO market. - Dynamic rates complement behavioral DR programs.

Distributed Energy Resources (DER)

Small-scale, often customer-sited resources such as solar PV, batteries, EVs, and controllable loads that can supply energy, capacity, or grid services.

- The utility is proposing a DER tariff to compensate locational value. - DERs like rooftop PV and batteries can participate via a virtual power plant. - Hosting capacity maps inform where DER interconnections are easiest.

Economic Dispatch

The process of selecting the lowest-cost mix of available generation to meet load while satisfying system constraints.

- The ISO performs economic dispatch every five minutes. - Fuel price spikes changed the merit order in economic dispatch. - Co-optimization improved economic dispatch of energy and reserves.

Energy Efficiency (EE)

Investments or practices that reduce the energy required to provide the same service, lowering consumption and bills.

- EE programs reduced annual load growth by 0.8%. - The utility earns performance incentives tied to verified EE savings. - EE is modeled as a resource in the IRP alongside generation options.

Feed-in Tariff (FiT)

A policy mechanism offering a fixed, long-term price for electricity from qualifying generators, typically renewables, to encourage deployment.

- The FiT guarantees a 15-year price for community solar output. - Policymakers are reforming FiTs to reflect declining technology costs. - The utility recovered FiT payments through a renewable surcharge.

Frequency Regulation

An ancillary service that adjusts generation and load in near real time to maintain system frequency (e.g., 60 Hz) within tight bounds.

- Batteries captured premium revenues in the regulation market. - AGC signals direct units providing frequency regulation. - Performance penalties apply if regulation resources deviate from setpoints.

Greenhouse Gas (GHG)

Gases like CO2 and methane that trap heat in the atmosphere; utility strategies increasingly aim to reduce GHG emissions across power supply.

- The utility’s decarbonization plan targets 80% GHG reduction by 2040. - GHG compliance costs were embedded in the PPA price. - Methane leakage materially increases GHG intensity of gas-fired power.

Grid Modernization

Investments and technologies that upgrade the electric grid’s reliability, flexibility, cybersecurity, and ability to integrate DERs.

- The grid mod portfolio includes AMI, advanced relays, and FLISR. - Regulators approved a multiyear grid modernization plan with PBR metrics. - Grid mod improves reliability, resilience, and DER hosting capacity.

Heat Rate

A measure of power plant efficiency, typically BTU per kWh, indicating fuel energy required to produce electricity.

- The CCGT’s heat rate improved after the turbine overhaul. - Heat rate informs variable O&M and dispatch economics. - PPAs sometimes include heat rate curves for fuel pass-throughs.

Independent System Operator (ISO)

A neutral entity that operates the transmission system and wholesale markets over a region, ensuring open access and reliability.

- The ISO runs day-ahead and real-time markets. - Market participants register assets directly with the ISO. - ISO tariff revisions changed interconnection timelines.

Investor-Owned Utility (IOU)

A privately owned, for-profit utility regulated by state commissions, serving customers under monopoly franchises.

- The IOU filed a general rate case for its T&D investments. - IOU service territories often coexist with municipal utilities. - Earnings are driven by allowed ROE for IOU capital expenditures.

Just and Reasonable Rates

A regulatory principle requiring that utility rates be fair to both customers and investors, neither excessive nor confiscatory.

- The commission must ensure rates are just and reasonable under statute. - Opponents argued the tracker surcharge wasn’t just and reasonable. - Cost prudence reviews anchor the just-and-reasonable standard.

Kilowatt (kW)

A unit of power equal to 1,000 watts; commonly used to denote instantaneous demand or generator capacity.

- The customer’s peak demand was 250 kW last summer. - Demand charges are billed per kW based on monthly peak. - The interconnection is limited to 50 kW of inverter capacity.

Kilowatt-hour (kWh)

A unit of energy equal to using one kilowatt for one hour; standard measure for electricity consumption and billing.

- Monthly consumption fell by 120 kWh after the retrofit. - Energy charges are billed per kWh on volumetric rates. - The battery cycles 200 kWh daily for arbitrage.

Levelized Cost of Energy (LCOE)

The present value of total cost per unit of energy produced over a project’s lifetime, enabling technology cost comparisons.

- Utility-scale solar LCOE fell below $30/MWh in recent bids. - IRPs compare resources on an LCOE and system-value basis. - LCOE excludes some network and integration costs.

Locational Marginal Pricing (LMP)

The market-clearing price for energy at a specific node, reflecting marginal energy, congestion, and losses.

- LMPs spiked downtown due to a transformer outage. - Hedging with FTRs mitigates LMP congestion risk. - Nodal LMP provides price signals for DER siting.

Meter Data Management (MDM)

Software and processes that validate, store, and provision detailed meter data for billing, operations, and analytics.

- The MDM system validates and estimates AMI interval data. - MDM integration enabled new TOU rate analytics. - Data retention and privacy policies are enforced in MDM.

Microgrid

A local energy system that can operate connected to or islanded from the main grid, integrating generation, storage, and controllable loads.

- The campus microgrid islanded during the storm. - Regulators approved tariffs to value microgrid resilience. - A utility-owned microgrid supports critical facilities downtown.

Net Energy Metering (NEM)

A billing mechanism crediting customers for excess on-site generation exported to the grid, usually at retail or near-retail rates.

- NEM 3.0 changed export compensation for rooftop solar. - The utility reports NEM queue volumes quarterly. - NEM aggregation lets farms offset multiple meters.

Non-wires Alternatives (NWA)

Non-traditional solutions—such as DERs, demand response, or efficiency—that defer or replace conventional wires upgrades.

- The NWA portfolio deferred a $50M substation upgrade. - DERs bid to provide targeted load relief as an NWA. - Regulators set a competitive process for NWA sourcing.

Open Access Transmission Tariff (OATT)

A FERC-jurisdictional tariff that sets terms, conditions, and rates for non-discriminatory access to transmission service.

- The OATT outlines interconnection studies and cost allocation. - FERC approved OATT revisions for generator imbalance service. - Transmission customers must comply with the OATT’s credit rules.

Outage Management System (OMS)

A software platform that detects, analyzes, and manages outages, dispatching crews and communicating restoration ETAs.

- OMS integration with AMI improved outage detection. - The utility’s OMS displayed real-time crew locations. - SAIDI reductions were tracked through the OMS dashboard.

Peak Demand

The highest level of power demand over a defined time, often driving capacity needs and rate design.

- Peak demand hit a record during the heat dome. - New TOU rates aim to flatten system peak. - Capacity planning is driven by coincident peak demand forecasts.

Power Purchase Agreement (PPA)

A long-term contract under which a buyer purchases electricity from a generator at agreed prices and terms.

- The PPA price escalates 1.5% annually over 20 years. - The utility signed a solar-plus-storage PPA with firm delivery windows. - Lenders required a take-or-pay PPA for project finance.

Public Utility Commission (PUC)

A state regulatory body that oversees electric utilities’ rates, service quality, and investment plans.

- The PUC approved the utility’s grid modernization plan. - Stakeholders intervened in the PUC’s rate case docket. - The PUC set performance metrics tied to reliability.

Qualified Facility (QF)

A generator that meets PURPA criteria (typically small power or cogeneration), qualifying for certain purchase obligations and rates.

- The biomass plant sought QF certification under PURPA. - Utilities must offer avoided-cost contracts to QFs. - The commission updated screening procedures for QF interconnection.

Rate Case

A formal regulatory proceeding in which a utility requests approval to change rates, supported by cost and investment evidence.

- The utility filed a multiyear rate case seeking higher ROE. - Test year adjustments were contested in the rate case. - Settlements can shorten rate case litigation timelines.

Renewable Portfolio Standard (RPS)

A policy requiring a minimum percentage of electricity sales to come from eligible renewable resources by specified dates.

- The state increased its RPS target to 60% by 2030. - Unbundled RECs help meet RPS obligations cost-effectively. - Compliance penalties apply for missing RPS milestones.

Resource Adequacy (RA)

Ensuring sufficient capacity is available to meet forecasted peak demand plus a reserve margin over planning horizons.

- The ISO’s RA program mandates procurement of peak capacity plus reserves. - Demand response counts toward RA with qualifying performance. - Local RA requirements address transmission constraints.

SAIDI (System Average Interruption Duration Index)

An industry reliability metric measuring the average total outage duration experienced by customers over a period.

- SAIDI improved 12% after vegetation management investments. - The commission tied incentives to SAIDI and SAIFI performance. - OMS and AMI data refined SAIDI calculations.

SCADA (Supervisory Control and Data Acquisition)

A control system architecture for monitoring and operating grid equipment via remote sensors, communications, and control interfaces.

- SCADA alarms flagged a voltage deviation at the substation. - Upgrading SCADA improved situational awareness for operators. - Cybersecurity controls were tightened on SCADA networks.

Smart Grid

An enhanced power system using digital communications, automation, and analytics to improve reliability, efficiency, and customer engagement.

- The smart grid roadmap prioritizes automation and DER integration. - Smart grid pilots included FLISR and dynamic voltage control. - Regulators asked for cost-benefit analyses of smart grid investments.

Spinning Reserve

Online, synchronized capacity that can increase output immediately to respond to sudden supply-demand imbalances.

- Gas turbines provided spinning reserve during peak hours. - The market cleared 500 MW of spinning reserve at $8/MW-h. - Spinning reserve helps arrest frequency decline after contingencies.

Tariff

A utility’s schedule of rates, terms, and conditions approved by regulators, governing service and pricing.

- The EV tariff offers off-peak discounts. - Interconnection procedures are specified in the tariff. - The tariff sheet details demand charges for large C&I customers.

Time-of-Use (TOU) Rates

Pricing that varies by time of day to reflect cost differences between peak and off-peak periods, encouraging load shifting.

- TOU rates shifted EV charging to overnight hours. - Customers on TOU saved by pre-cooling before peak periods. - The PUC approved default TOU for residential class.

Transmission and Distribution (T&D)

The high-voltage network that transports bulk power (transmission) and the lower-voltage system that delivers electricity to end-users (distribution).

- T&D capex rose due to wildfire mitigation and undergrounding. - T&D losses were estimated at 5% in the cost study. - The utility’s T&D plan adds a new 230 kV line to relieve congestion.

Undergrounding

Relocating overhead lines below ground to improve resilience, safety, or reliability, typically at higher cost.

- The utility prioritized undergrounding in high fire-risk zones. - Cost estimates for undergrounding exceed $3 million per mile. - Targeted undergrounding improved resilience and aesthetics.

Value of Solar (VOS)

A compensation framework that pays solar exports based on the calculated system value they provide, rather than retail rates.

- The commission adopted a VOS tariff replacing retail NEM. - The VOS includes avoided energy, losses, and capacity benefits. - Location-specific VOS signals better siting for rooftop PV.

Virtual Power Plant (VPP)

A networked aggregation of DERs coordinated via software to act like a single power plant in energy and services markets.

- The VPP aggregated 10,000 home batteries for peak relief. - A VPP enrolled thermostats to bid into the day-ahead market. - Regulators set telemetry standards for VPP participation.

Volt/VAR Optimization (VVO)

Techniques and controls that manage voltage and reactive power on distribution systems to reduce losses, improve power quality, and save energy.

- VVO reduced feeder energy by 2% via CVR. - Smart inverters participate in VVO to support voltage profiles. - The utility’s VVO project deferred a capacitor bank upgrade.

Wholesale Market

The marketplace where electricity and related services are traded between generators, retailers, and large buyers, typically operated by an ISO/RTO.

- Generators cleared in the ISO’s wholesale market at nodal prices. - Retail suppliers hedge wholesale volatility with forward contracts. - Policy reforms addressed scarcity pricing in the wholesale market.

X-Factor

A productivity offset in price-cap or performance-based regulation that reduces allowed price increases by an expected efficiency amount.

- Under PBR, rates escalate by inflation minus an X-factor. - The X-factor reflects expected productivity improvements. - Debates focus on setting a realistic X-factor to protect customers.

Zero-Emissions Credits (ZEC)

Policy instruments that compensate qualifying zero-emission generators for their environmental attributes, often via credits funded by ratepayers.

- ZECs kept the nuclear fleet economically viable. - The PUC approved a ZEC program tied to carbon intensity. - Opponents argued ZECs distort wholesale market signals.