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Electricity Primer
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Basic Terms
Samuel C. Randazzo, Counsel
21 East State Street, 17th Floor
Columbus, Ohio, 43215
phone 614.469.8000
fax 614.469.4653

Basic Electricity Terms

A basic understanding of utility terms and services is key for all consumers.
Ancillary services:
services that are necessary for the operation and reliability of the transmission system, e.g. scheduling, voltage support,
standby generation, power dispatch, etc.
Bundled services:
electric services sold together, i.e. generation, transmission, distribution and ancillary services; a typical billing approach in
a regulated environment.
the total amount of electricity a generating unit can generate and distribute at a particular time.
Firm capacity or firm power:
power intended to be available at all times during the time period covered by a guaranteed commitment to deliver (contract).
Peaking capacity:
capacity used to serve a peak demand; peaking units operate a limited number of hours a year.
production of electricity as a by-product of another thermal form of energy, e.g. steam.
Competitive market:
an environment in which buyers and sellers can buy and sell goods or services among themselves; governed by supply and
demand requirements, not regulators.
Customer choice:
an environment in which customers can choose their electricity supplier(s).
the rate at which electricity is delivered, usually expressed in KW or MW.
Demand interval:
time period during which electric energy is measured, usually at 15, 30 or 60-minute intervals.
Peak demand
the highest electricity requirement in any given time period, e.g. an hour, day, month, year.
Demand charge:
a fee based on the "peak demand" or highest amount of electricity used during the billing period.
Demand side management (DSM):
customers' control of their electricity usage. DSM includes opportunities for conservation, energy efficiency, load shifting, and
peak shaving activities.
delivery of electricity from a substation to the end users' location (home, business), through low voltage distribution lines.
Energy measurements:
watt, kilowatt, kilowatt-hour, megawatt.
basic measurement of electricity; a watt-hour measures energy consumption.
kWh; 1000-watt hours; usually a retail market measurement. One kWh energizes a 100-watt bulb for 10 hours.
kW; 1000 watts; a measure of the speed at which energy is being used; 'demand' is measured in kW.
MW; one million watts; usually a wholesale market measurement.
electrical energy produced by a generating unit, usually expressed in MW that goes to the transmission grid for distribution.
Base load generation:
generation that is operated to produce electricity on a constant, 24/7 basis.
Distributed generation:
small generating units located throughout a utility's system, often on customers' premises, used for peak shaving or backup
interconnected power lines that cross the country and take electricity from a generating facility to a utility's distribution system.
Interval meter:
a meter that measures electricity usage in intervals, usually an hour or fifteen-minute periods.
Independent System Operator/Regional Transmission Operator is a neutral operator (one that does not own generation or
transmission on the system) that maintains operations, reliability and maintenance of the power grid within a defined geographic
Load management:
customer actions intended to influence the amount of electricity used at a particular time.
Load factor:
a measurement expressed in a percentage that identifies how consistently a customer (or load center) is using electricity
during a particular time period. Load factor is calculated by dividing a load center's total energy used by the number of hours
in the time period and then dividing that number by the amount used at the peak demand.
Total kWh used in time period x; then x
----------------------------- -----------------
Total hours in time period peak kWh in time period
155,762 kWh = 231.79
-------------- -------------
675 hours 379 kWh = 61.16% Load Factor
(in Feb.) (Feb. Peak)

Merchant plant:
generating facility built to recover revenue based on sales in an open market; may be built by a utility outside the service area or
by an independent power producer. Risk is assumed by the owners and not the customers.
Native load:
those customers on a transmission system that the transmission owner is obligated to serve by statute, contract, or other
regulatory requirements.
North American Electric Reliability Council is an organization formed to monitor and promote the reliability of power supply in each
of 11 regions in North America. Ohio is part of the East Central Area Reliability Coordination Agreement, or ECAR, region.
the addition of transmission charges from each control area to the cost of power as it moves from its point or origin through
successive transmission control areas.
Rate structures:
traditionally include "standard offer" and "usage based" rates.
Standard offer:
the package of bundled electricity and related services provided by the local distribution utility. Customers who "choose not to choose"
and stay with their local utility have a ""standard offer" rate.
Time of use:
electricity pricing based on the estimated cost of electricity during a particular block of time, e.g. on-peak, off-peak, super off-peak
or based on seasonal use, i.e. winter or summer.
Real-time pricing:
electricity pricing based on the actual, fluctuating price of electricity at times throughout the day, impacted by demand and weather.
Regulators (State and Federal):
Public Utilities Commission of Ohio (PUCO):
the state regulatory body that has the authority to address utility rates and utility practices; oversees utility distribution systems and
in-state transmission.
Federal Energy Regulatory Commission (FERC):
the federal agency regulating price, terms and conditions of interstate power sales and transmission.
Spot market or spot purchases:
a market for energy sales and purchases made within and for short time frames, e.g. an hourly purchase made one day in advance
of need.
Supply side:
activities focusing on the utility's side of the meter having to do with power supply, as opposed to activities on the customer side
of the meter with an impact on demand.
a document approved by a regulatory agency listing price, terms and conditions under which utility services are provided.
transfer of electric energy from a supply source to local distribution systems or to connection points with other utilities.
the process of separating bundled services and prices into individual functional components: generation (or production),
transmission, distribution and ancillary services.
Ohio electric consumers are supplied by investor-owned (privately-owned) utilities, rural electric cooperatives (consumer-owned)
and municipal electric (community-owned) systems.

Ohio-Specific Electricity Terms

the process of combining individual customer accounts for purposes of purchasing competitive energy services. Ohio's restructuring
law provides for two types of aggregation by local governments: opt-in and opt-out.
Opt-in aggregation:
established by a municipality, township and/or county, this program requires that each consumer sign up (or opt-in) individually
to participate.
Opt-out aggregation:
this program automatically enrolls all accounts within the boundaries of the municipality, township and/or county into the program.
Any customer can choose not to participate by opting-out of the program. This approach requires that the program be placed on
the local ballot for approval by local voters.
CRES provider:
Competitive Retail Electric Service provider is one that provides retail electric generation services. CRES providers include marketers,
brokers and aggregators.
Power Marketers:
a person certified by the PUCO to provide power-marketing services. This includes assuming the contractual and legal responsibility
for the sale and provision of competitive retail electric generation service to a retail customer and having title to the electric power at
some point.
Power Brokers:
a person certified by the PUCO who contracts with customers to combine the customers' electric load for the purpose of purchasing
competitive retail electric generation service on an aggregated basis.
Governmental Aggregator:
a legislative authority of a municipal corporation, a board of township trustees, or a board of county commissioners acting as an
aggregator for the provision of competitive retail electric service.
acronyms for electric distribution utility and local distribution company.
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