Energy Terminology

The energy world is full of words and abbreviations that have little meaning to the uninitiated. Here is a compilation of some terms you will hear:

Electricity Terms:

KWH: kilowatt-hours, the most common measure of electricity usage which is the number of kilowatts used in an hour.

Demand: a measure of the highest amount of electricity used during a single moment during a month.

RMR: Reliability Must Run: This fee was created to meet the demands on the grid that might be needed only during energy emergencies. These needs can be during very hot weather or if another regular power plant stops generating electricity. As a result,. there are generators that have to sit idle to be available for these peak periods. When they run, their cost is much higher than the normal generation. Since there is no way to know how often these generators must run, the real cost is unknown and changes. It can be zero for a month or it can be high during another month. RMR varies by your location.

Congestion: In crowded areas, the cost to get electricity through the grid. This is an undefined cost.

Capacity: A slush fund mandated by FERC to get money from users to build more generation capability, long term, to meet our generation demand. It is a fixed number.

Clearance Price: A number in kilowatts, charged once a year. $3.05 per kw for the year.

Capacity Reserve Price : 25% more than the Clearance Price

ICAP Tag: Everyone has a number determined by the utility company based on the capacity demands on the grid as of August of the previous year, revised on June 1st of each year moving forward.

Interval Data File: see Load Profile Data below.

LFR: Locational Forward Reserves: A NEMA fee charged only by Constellation New Energy.

Load Factor: the average power divided by the peak power over a period of time. For interval meter customers, the load factor has an effect on what your electricity price will be.

Load Profile Data: a data file obtained from the utility that displays electricity usage in intervals of every fifteen minutes (or 60 minutes) over the course of 365 days. This file is used by electricity generation companies to model your usage on their computers to determine what price to charge. Electricity is less expensinve at night and on weekends, so higher use at these times results in a lower fixed price contract rate, since the fixed price is an average based on your load profile.

Natural Gas Terms:

Therm: A unit of measurement for natural gas equal to 100,000 BTU of energy.

Dekatherm: One million BTU of energy, or ten therms.

CCF: Hundred Cubic Feet. Roughly equal to 1 Therm +- 5%. Each month, the conversion factor from CCF to therms varies. This value is typically listed on your bill.

Swing Commodity Credit: a term used on some gas contracts, where the customer is charged for a contracted amount of natural gas, but if they don't use the contracted amount, a credit is applied to the account, for a portion of the unused, but contracted gas. This is a common method for gas sales people to give the perception of the lowest price in a competitive situation, when in fact, the price may be much higher if actual usage varies from the contract, which is almost always the case.

Basis: an amount of money added to the NYMEX natural gas price to account for the pipeline and delivery costs of getting gas from the well-head to the local distribution center.

NYMEX Plus Basis: A method of contracting gas where the contract specifies a fixed Basis number that is added to the NYMEX market price. This approach makes sense for customers who expect energy prices to remain stable or go down.

As a licensed energy broker, Better Cost Control can negotiate the best prices for electricity and natural gas. We represent you, our customers. Using our regulatory knowledge and experience, you can be confident of securing the best energy options, regardless of your annual energy budget. There is NO CHARGE for our services. For more information, contact us via email or call 617-332-7767 x150.

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