Glossary of Terms




Mar 27, 2024

Mar 27, 2024

Mar 27, 2024

Demand measures the maximum energy usage of a customer, typically over a short period. It's a key factor for utilities and retail electricity providers in determining rate schedules. For instance, customers with high demand may face higher overall rates or elevated rates once a certain kilowatt-hour threshold is reached.

Deregulation in the energy sector involves states mandating utilities to divest some assets or establish subsidiary companies. In deregulated states, utility companies are restricted from generating their own electricity (or natural gas) and can only profit from distribution and transmission, not from energy supply sales. This process fosters competition in the energy market, enabling residents and businesses to choose from various retail energy providers and their energy plans.

Distribution and Transmission in electricity involve utilities transporting and delivering electricity to homes and businesses via power substations and lines. In terms of natural gas, it refers to utilities transporting and delivering natural gas via underground pipes. In most deregulated states, utilities can profit only from distribution and transmission, not from electric supply.

Energy Choice in deregulated states grants consumers the freedom to select from various retail electricity suppliers for electric or natural gas service supply.

Electric Supply pertains to the actual power produced from electricity generation. In deregulated states, consumers can shop around for this portion of electric service. Generation companies produce electricity and sell it to utilities and retail electric providers, with utilities then distributing it to customers at no profit, while retail electric providers profit from sales.

Energy Source refers to materials used to create energy, such as coal, natural gas, wind, solar, hydro, and biomass.

Energy Supply is the actual energy produced from energy generation. It encompasses electric supply as well as natural gas supply.

Fixed Rate denotes an electric supply plan featuring a fixed rate that remains constant throughout the contract duration, as opposed to variable rate plans.

Generation in electricity involves the process of generating usable electricity from energy sources like coal, natural gas, renewable energy, and others.

Infrastructure comprises the physical structures necessary for energy distribution and transmission. For electricity, it includes substations, power lines, and poles, while for natural gas, it encompasses storage, terminals, pipelines, and distribution pipes.

Kilowatt (kW) denotes 1000 watts of electric power.

Kilowatt-hour (kWh) measures 1000 watts over one hour, commonly used for billing by utilities and retail electricity providers.

Megawatt (MW) equals 1,000,000 watts or 1,000 kilowatts of electric power.

Megawatt-hour (MWh) represents 1,000,000 watts or 1,000 kilowatts over one hour, sometimes used by utilities to bill large electricity users.

On-Peak & Off-Peak Demand in certain variable rate electricity supply plans, refer to periods of highest and lowest electricity use. Utilities and providers may charge different rates for electricity used during on-peak and off-peak times.

Price-to-Compare (P2C) indicates the rate paid by consumers receiving electric supply from their default utility or the average rate paid by all residential and small business customers under a given utility, expressed in cents per kilowatt-hour.

Retail Electricity Provider (REP) are companies competing to sell electric supply to residential and business customers in deregulated areas. They source electricity from generation companies and sell it to customers for a profit.

Renewable Electricity is derived from replenishable, natural sources like wind, sunlight, biomass, and hydro, emitting fewer or no greenhouse gases when consumed for electricity use.

Shopping Around involves comparing retail electricity providers, rates, and plans, often with the aim of switching from a utility or current retail electricity provider.

Traditional Electricity refers to conventional electricity sources like coal, natural gas, and nuclear power that have powered homes and businesses since the industrial revolution, in contrast to renewable electricity.

Utility in deregulated areas and in electricity, delivers and transmits electricity to homes and businesses, responsible for emergencies, repairs, meter reading, billing, and supplying electricity to non-shopping customers.

Variable Rate features rates that vary based on the market price of electricity, typically with month-to-month contract terms, contrasting fixed rate plans.

Watt (W) is the base unit for measuring power.

The Choosy Power Newsletter

Get new insights, articles, and updates right in your inbox.