Commercial electricity glossary

A

Alternative retail supplier

A licensed company that sells the energy part of a bill where customers may choose who supplies them. The utility still delivers the power and bills for delivery. The name varies: retail electric provider in Texas, electric generation supplier in Pennsylvania, CRES provider in Ohio and ESCO in New York.

Also called: retail electric provider, REP, CRES provider, ESCO. Read more: Supply vs delivery.

Ancillary services

Grid services that keep supply and demand in balance, such as frequency regulation and operating reserves. Their cost is one of the components inside a retail supply price, alongside energy, capacity, transmission and losses.

Read more: How supply prices are built.

B

Billing demand

The kW or kVA figure a demand charge is applied to. It is often the highest metered demand in the month, but a tariff can set it higher through a ratchet, a minimum, a contract demand or a power-factor adjustment.

Read more: Demand charges · Ratchet clauses.

Bundled service

Energy and delivery bought together from the utility at one price. It is the opposite of buying energy from a supplier while the utility bills delivery alone. EIA’s utility data keeps the two apart because they are different parts of a bill.

Read more: Price by utility.

C

Capacity charge

The part of a supply price that pays for having enough generating capacity ready at the system’s peak. In some markets it follows the account’s own demand during a few peak hours, so a handful of hours can set a year of charges.

Read more: PJM capacity tags.

Capacity tag

In PJM, a figure for an account’s demand during the system’s highest-demand hours of the previous summer. It sets the account’s capacity charge for the following delivery year, which is why those hours matter far more than their number suggests.

Also called: peak load contribution, PLC. Read more: PJM capacity tags.

CBECS

The Commercial Buildings Energy Consumption Survey, run by the U.S. Energy Information Administration. Its 2018 survey of about 6,400 commercial buildings is the source of the kWh-per-square-foot ranges on this site.

Also called: Commercial Buildings Energy Consumption Survey. Read more: Cost per square foot · Cost estimator.

Contract demand

A kW amount named in a service agreement or tariff. It can set a floor under billing demand, so the account pays for it even in months when its actual demand is lower.

Read more: Demand charges.

Customer charge

A flat monthly amount that does not change with how much electricity is used. It is part of delivery and recovers customer-related costs such as metering and billing.

Also called: fixed charge, basic service charge. Read more: How to read a bill.

D

Default service

The supply an account receives from its utility when it has not chosen a supplier, or when its supplier contract ends. Names include standard offer service, basic generation service and standard service offer. Its price is set under the utility’s regulated rules rather than negotiated by the customer.

Also called: standard offer service, basic generation service, standard service offer. Read more: Holdover rates.

Delivery charge

What the local utility charges to carry power over its wires and keep the system running: distribution, often transmission, and fixed charges. A regulated tariff sets it, and it is the same whichever supplier provides the energy.

Read more: Supply vs delivery.

Delivery-only service

Service where the customer’s energy comes from a competitive supplier and the utility bills delivery alone. Revenue per kWh for these customers is a delivery price, and it cannot be compared with a bundled price.

Read more: Price by utility.

Demand charge

A charge in dollars per kW, sometimes per kVA, for the highest rate of draw in the billing period, usually measured over a 15- or 30-minute interval. The utility’s tariff sets it, so changing supplier does not change it.

Read more: Demand charges · Demand charge calculator.

Demand interval

The short block of time over which demand is averaged, commonly 15 or 30 minutes. Billing demand is the highest interval in the period, not the highest instant, so a brief surge that averages out within an interval does not set it.

Read more: Demand charges.

Demand meter

A meter that records the highest demand in an interval as well as total kWh. Many tariffs install one only when an account’s use or demand passes a threshold, so a small account may have no demand meter and no demand charge.

Read more: Rate schedules.

Demand ratchet

A tariff clause that bills the greater of the current demand and a percentage of the highest demand in an earlier period. One high interval can therefore set a floor under the demand charge for months afterwards.

Also called: ratchet clause. Read more: Ratchet clauses.

Demand response

A program that pays or credits a customer to reduce use when the utility or grid operator asks. The payments, the notice given and any penalty for not responding vary by program and region.

Distribution charge

The part of delivery that covers the local lines, poles, transformers and meters. Depending on the rate schedule it may be fixed, per kWh, per kW or a mix.

Read more: How to read a bill.

E

EIA-861

The annual survey of U.S. electric utilities run by the U.S. Energy Information Administration. It reports each utility’s commercial customers, sales and revenue, which is how this site gets average commercial prices by state and by utility.

Also called: Form EIA-861. Read more: Price by utility · Data and research.

Energy charge

A charge per kWh of electricity used. It appears in supply charges and, in many delivery tariffs, as a per-kWh distribution charge as well.

Read more: kW vs kWh.

ERCOT 4CP

In ERCOT, the four 15-minute intervals of highest system demand, one in each summer month. For accounts the rules cover, demand during them sets the transmission cost allocated to the account for the following year.

Also called: four coincident peak. Read more: ERCOT 4CP.

ESI ID

The identifier for a service point in Texas, printed on the bill. Whether an account can choose a supplier is confirmed from it and the utility territory, never from a ZIP code.

Also called: electric service identifier. Read more: Texas.

Excess reactive demand

A charge some tariffs add for reactive power above a set share of real power, billed per kVAR or per kVA. It is one way a tariff prices a low power factor.

Read more: Power factor.

F

Fixed-price contract

A supply contract that sets the energy price for its term. Pass-through clauses can still move parts of the bill, so a fixed price is not always a fixed bill.

Read more: Fixed vs index contracts · Pass-through clauses.

Franchise fee

A charge some cities add to bills in return for the utility’s use of public streets and rights-of-way. Whether one appears, and how large it is, depends on the utility and the municipality.

Also called: municipal fee. Read more: How to read a bill.

G

Global Adjustment

In Ontario, a charge that recovers the cost of the province’s electricity contracts and programs beyond what the market price covers. It is a separate line for accounts paying the wholesale price, is added on top of a retailer’s contract price, and is estimated inside Regulated Price Plan prices.

Read more: Ontario.

H

Holdover rate

The rate an account pays when its supply contract ends and nothing replaces it. It can be a month-to-month price, an automatic renewal or default service, and the contract decides which, not negotiation.

Also called: month-to-month rate. Read more: Holdover rates · Renewal window checker.

I

Index price

A supply price that moves with a market index or with the supplier’s costs instead of staying fixed. It passes market movement on to the customer, for better or worse.

Also called: variable price. Read more: Fixed vs index contracts.

Interval data

Electricity use, and often demand, recorded in short blocks such as 15 minutes rather than as a monthly total. It is usually available from the utility on request, and it shows the load shape that a monthly bill only summarises.

Read more: Interval data.

K

Kilovolt-ampere (kVA)

A measure of apparent power: the volts and amps an account draws, whether or not all of it does useful work. Some tariffs bill demand in kVA, and the gap between kVA and kW is the power factor.

Also called: kVA. Read more: Power factor.

Kilowatt (kW)

A rate of electricity use: how hard the account is drawing power at a moment. Demand charges are priced per kW of the highest demand in a period.

Also called: kW. Read more: kW vs kWh.

Kilowatt-hour (kWh)

A quantity of electricity: one kilowatt used for one hour. Energy charges are priced per kWh, and a bill’s kWh and its peak kW are separate numbers that can move independently.

Also called: kWh. Read more: kW vs kWh.

L

Load factor

Consumption divided by peak demand multiplied by the hours in the period, a measure of how steady use is. A low load factor means peaks are tall compared with average use, which tends to make demand charges a larger share of the bill.

Read more: Load factor · Load factor calculator.

Load shape

How an account’s demand rises and falls across a day or a year. Two accounts with the same kWh can have different load shapes and so different bills, because a bill prices the peaks as well as the total.

Also called: load profile. Read more: By industry.

M

Minimum bill

A tariff provision that sets the least an account can be billed in a month, often the customer charge plus a share of a past peak demand. It applies even in a month of little or no use.

Also called: minimum charge. Read more: Ratchet clauses.

N

Net metering

A billing arrangement that credits a customer for electricity its own generation sends to the grid. The value of the credit, and who qualifies, vary by utility and jurisdiction.

O

On-peak and off-peak

On-peak hours are the part of the day or season when system demand and prices are highest, as the tariff or market defines them. Off-peak is the rest. Time-of-use prices and some demand charges are built on these windows.

Read more: Demand charges.

P

Pass-through clause

A contract term that lets a supplier pass certain costs, such as capacity, transmission or a change in law, on to the customer even under a contract called fixed. Which costs pass through varies, and it is a main reason two quotes cannot be compared on price alone.

Read more: Pass-through clauses · Compare supplier quotes.

Peak demand

The highest demand an account reaches in a period, measured over the demand interval. It sets the demand charge directly or, through a ratchet or capacity tag, for months afterwards.

Read more: Demand charges.

Power factor

The ratio of real power in kW to apparent power in kVA. A low power factor means the account draws more current than its useful load needs, and many tariffs add a charge or raise billing demand below a set threshold.

Read more: Power factor.

Primary and secondary voltage

Secondary voltage is the lower voltage a utility delivers after its last transformer, and it serves most small and mid-size businesses. Primary voltage is higher, a customer taking it usually owns its transformers, and tariffs often price it on its own schedule.

Read more: Rate schedules.

R

Rate case

A proceeding in which a regulator reviews and approves changes to a utility’s rates. A tariff’s effective date usually follows a rate case or a scheduled step within one.

Read more: Utility tariffs.

Rate class

The group of customers a tariff prices alike, such as small general service. The schedule code is printed on the bill, and the right one depends on the account’s size, voltage and demand.

Also called: rate schedule, service classification. Read more: Rate schedules · Utility tariffs.

Regulated Price Plan

In Ontario, the prices the Ontario Energy Board sets each November 1 for residential and small business customers who buy electricity from their utility. It offers time-of-use, ultra-low overnight and tiered prices.

Also called: RPP. Read more: Ontario.

Retail choice

The legal right, where it exists, to buy energy from a competitive supplier instead of the utility. It is set state by state and, in Texas, by utility territory. Delivery stays with the utility either way.

Also called: supply choice, deregulated market. Read more: Rates by state.

Rider

An add-on charge or credit attached to a rate schedule for a specific purpose, such as recovering a program’s cost. A tariff lists the riders that apply, and the rider’s own page holds the rate.

Read more: How to read a bill.

S

Supply charge

The part of a bill for the electricity itself: energy, plus costs the supplier or utility builds in, such as capacity and losses. Where there is supplier choice, a competitive supplier can price it.

Also called: generation charge, energy supply. Read more: Supply vs delivery.

T

Tariff

The filed document that sets a utility’s rates, rules and rate schedules, approved by a regulator. The schedule code on the bill points to the part that applies to the account.

Read more: Utility tariffs.

Tiered rate

A price that steps up after a set number of kWh in a month. Ontario’s Regulated Price Plan has a tiered option, with a threshold for small business customers.

Read more: Ontario.

Time-of-use rate

A price that changes by time of day and season, usually in off-peak, mid-peak and on-peak periods. Ontario’s Regulated Price Plan offers time-of-use prices, and many demand and energy charges elsewhere use similar windows.

Also called: TOU. Read more: Ontario.

Transmission charge

The cost of moving power over the high-voltage grid. Depending on the market it is its own line, part of delivery or part of the supply price, and in some regions it follows an account’s demand at system peaks.

Read more: ERCOT 4CP · Supply vs delivery.

U

Utility

The company that owns the local lines and meters and stays responsible for delivery and outage response, whichever supplier provides the energy. The name varies by market: transmission and distribution utility in Texas, electric distribution company in Pennsylvania and New Jersey, and electric distribution utility in Ohio.

Also called: wires company, TDU, EDC, EDU. Read more: Rates by state · Price by utility.

Where the numbers are

A definition tells you what a line means; the figure on it comes from your utility’s tariff. The tariff index lists the utilities whose filed schedules are quoted on this site, price by utility shows what each billed its commercial customers on average, and the guides explain the mechanics in depth.