When you get your energy bill in the mail, on the back you just might find a glossary of energy-related terms long enough to surprise you.
When you pick up the tab after eating in a restaurant, you won’t find the definitions for fettuccini or salmon on the back of your bill. When you purchase a television, the manufacturer assumes you won’t need them to explain what a remote control is. So why do so many energy providers include this glossary on the back of their bills?
As experts in the field, we know that understanding energy and its role in your life can be difficult for many customers. In fact, a 2017 survey from Energy Price Choice revealed that 90 percent of consumers don’t even know their electric rate.
How can you be sure that you’ve partnered with the right energy supplier if you don’t understand what you’re looking at? In order to develop a good energy strategy, you need to have a solid understanding of energy.
In order to help clear up some of the most confusing terms in the industry, take a look at these definitions. Some of these terms might help you make more sense of your energy bill, while others will simply give you more insight into the inner-workings of the energy industry. Either way, you’ll walk away a more informed consumer.
Ancillary services: These are additional services necessary to ensure transmission of energy from the site of generation to the consumer. This includes reactive power supply, voltage support, regulation, frequency control and more. These services are typically included as part of your energy bill.
Base bill: This is your charge. It is calculated by multiplying consumption by the rate you pay for electricity.
Base load: Electric plants must provide a minimum amount of electricity on a constant basis to ensure continual service. This is called the base load. Knowing your base load will allow you to make more accurate predictions about future use and expenses.
Basic services: These are services needed for the actual delivery of electricity. There are three basic services: generation, transmission and distribution. The generation is at the power plant, transmission is to regional facilities and distribution is to end-users.
Bcf: Bcf is an abbreviation for billion cubic feet. This term used as a unit of measurement for natural gas.
BTU: BTU is an abbreviation for British Thermal Unit. This is a unit of measurement that is roughly equivalent to the amount of heat required to raise the temperature of a pound of water by one degree Fahrenheit. BTUs are generally used to measure the amount of heat that an air conditioner can remove from a room per hour.
Daily peak: The daily peak is the greatest amount of electricity used during a certain period of a day. It can be measured in various intervals, such as hourly, every half-hour or quarter hour. Daily peak loads are important to measure because they help set rates and help to measure the stability of the electric grid.
Demand: Demand is the amount of electricity that you use. It can refer to your consumption at any given moment. It can also be calculated as an average over time. Demand is typically expressed in kilowatts or Megawatts.
Deregulation: In the energy industry, deregulation refers to controls governing business or service operations being loosened. This often is used in industries such as utilities. In some states deregulation has led to the ability for consumers to purchase power from retail energy providers.
Direct access: Direct access is an arrangement that gives consumers the power to buy electricity from any supplier in their market. This allows consumers to buy power from any generator and use their utility’s transmission and distribution network.
Fixed rate: Your rate is the amount you pay, typically per kilowatt-hour. Fixed rates allow consumers to lock in their price so that the rate doesn’t change during the term of your contract.
LNG: LNG stands for liquefied natural gas. It can both generate electricity or be used as a fuel. By cooling natural gas to negative 260 degrees Fahrenheit, the gas enters the liquid state.
Load management: Load management is the process by which consumers shift the use of electricity in their homes or facilities. This is generally done to shift from periods of high demand to lower demand. This helps to ease stress on the electric grid. By consuming electricity during periods when the cost of electricity is lower, customer may also see lower bills.
Purchased power adjustment: This is a clause in rate schedules that allows for adjustments to bills. This adjustment happens when energy from another electric system is acquired. For instance, you can generate electricity yourself with an on-site renewable energy system.
Variable rate: When your rates are variable, you don’t lock your prices in at the beginning of your contract. This means that your rates are subject to change throughout the duration of your contract.
To continue learning about energy to help you to make the smartest energy choices, check out Constellation here.