Glossary of Energy Terms
Below is a list of common energy terms that you may find on this website. Click a term to view its definition.
- Distribution and Transmission
- Electric choice
- Electric supply
- Energy source
- Energy supply
- Fixed Rate
- Kilowatt (kW)
- Kilowatt Hour (kWh)
- Megawatt (MW)
- Megawatt hour (MWh)
- On-peak and Off-peak demand
- Price-to-Compare (P2C)
- Retail electricity provider (REP)
- Renewable Electricity
- Shopping around
- Traditional electricity
- Variable Rate
- Watt (W)
Demand – the measurement of the maximum energy use of a customer, usually over a short period of time. Demand is often used by utilities and retail electricity providers to determine what rate schedule they fall under. For example, customers with a high maximum demand may pay higher rates overall or may pay a higher rate after a set kilowatt hour usage is met (i.e., a higher rate for usage over 500-600 kilowatt hours is common).
Deregulation – in terms of energy, the process whereby states have required utilities to break down their businesses via selling off some assets or by creating subsidiary companies. In most deregulated states, utility companies are now not able to generate their own electricity (or natural gas) and are only able to profit from distribution and transmission, not from the sale of energy supply). Deregulation is the process that has created competition in the energy market: residents and businesses can choose among various retail energy providers and their energy plans.
Distribution and transmission – in terms of electricity, the process where utilities transport and deliver electricity to homes and businesses via power substations and power lines. In terms of natural gas, the process where utilities transport and deliver natural gas to homes and businesses via underground pipes. In most deregulated states, utilities can only profit from the distribution and transmission, and not from electric supply.
Electric supply – the actual power produced from the generation of electricity. In deregulated states, this is the portion of electric service that consumers are able to shop around for. In deregulated states, generation companies create the electricity, and then sell to utilities and retail electric providers. In turn, utilities sell the electricity to customers at no profit, while retail electricity providers profit from the sale.
Fixed rate – refers to a type of electric supply plan that offers one, “fixed” rate that cannot not change for the duration of the contract. In contrast, see variable rate.
Infrastructure – the physical structures needed to distribute and transmit energy. In terms of electricity, infrastructure includes (but is not limited to) substations, power lines, poles, and other wires that deliver electricity to homes and buildings. In terms of natural gas, infrastructure includes (but is not limited to) natural gas storages, terminals, pipelines, and the pipes that enter your home or business.
Kilowatt (kW) – 1000 watts of electric power.
On-Peak & Off-Peak Demand – in some variable rate electricity supply plans on-peak and off-peak demand is referred to. On-peak demand refers to times of the day that electricity use is the highest for a given utility, while off-peak demand refers to times of the day that electricity use is the lowest. Utilities and providers may charge different rates for electricity used during on-peak and off-peak times.
Price-to-Compare (P2C) – there are two variations of the Price-to-Compare. (1) If you are receiving your electric supply from your default utility, this is the rate you or your small business is currently paying. (2) The average supply rate that all residential and small business are paying under a given utility. Both types are expressed in cents per kilowatt hour (cents/kWh).
Retail Electricity Provider (REP) – in deregulated areas of the country, the companies that compete with each other to sell electric supply to residential and business customers. These companies source electricity from generation companies to sell back to their customer for a profit. Retail electricity providers do not distribute and transmit electricity since that is the responsibility of the utility in a given area.
Also referred to as:
- Alternative electricity supplier (AES)
- Energy service company (ESCO)
- Electricity service provider (ESP)
- Retail electricity supplier (RES)
Renewable Electricity – electricity that is derived from naturally occurring sources of energy that are replenishable and not derived from fossil or nuclear fuel. Includes: wind, sunlight, biomass, water, geothermal heat, and more. This is in contrast to traditional electricity. While some traditional electricity sources, such as coal, are technically replenishable, they will not replenish in the time it takes to consume all of the source as does renewable electricity (e.g., coal is formed over millions of years). Furthermore, renewable electricity is often “green”, meaning that fewer (or no) carbon emissions and other greenhouse gases are emitted into the atmosphere when burned for electricity use.
Shopping Around – the process of comparing retail electricity providers and their rates and plans, most often with the intention of switching from a utility or a current retail electricity provider.
Traditional Electricity – aka conventional electricity; refers to the electricity sources that have traditionally powered homes and businesses since the industrial revolution. Most types are formed over hundreds of thousands to millions of years, and include coal, natural gas, nuclear, and more. In contrast, see renewable electricity.
Utility – in deregulated areas and in terms of electricity, the utility is the company that delivers and transmits electricity to homes and businesses. The utility is responsible for not only delivering the electricity but also responding to emergencies, fixing power lines and poles, maintaining and reading electricity meters, and sending electricity bills to customers. The utility is also responsible for supplying electricity to non-shopping customers, most often at no profit. In non-deregulated areas, the utility is responsible for providing the electric supply in addition to distribution and transmission and is allowed to profit from the sale of supply.
Variable Rate – refers to a type of electric supply plan that offers rates that varies along with the market price of electricity. These plans generally have month-to-month contract terms. In contrast, see fixed rate.