Business and Regulation

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Administrative and general expenses

Administrative and general (A&G) expenses are a sub-category of expenses incurred in the normal day-to-day operations of a business.

Administrative ratemaking

Administrative ratemaking is an alternative to cost-of-service ratemaking where a government agency determines rates rather than setting them in …

Aggregator

An aggregator is an entity that combines end-use customers or distributed energy assets into groups for the purpose of participating in wholesal …

Allowance for funds used during construction (AFUDC)

Allowance for funds used during construction, commonly called AFUDC, is a regulatory method of compensating a utility for the financing costs it …

Amortization

Amortization is the process of reducing or paying off a financial obligation with regular payments.

Avoided cost of electricity

The term ‘avoided cost’ is used to describe the incremental cost to an electric utility to generate or purchase power.

Balance sheet

A balance sheet is a financial snapshot of the value of the assets owned by a company and the liabilities owed by a company at a point in time.

Balancing account

A balancing account is an accounting mechanism used by regulated utilities to keep track of the difference between projected expenses and actual …

Basis

Basis is a term used in energy trading to describe the difference between two methods of setting prices.

Bilateral electric contract

A bilateral contract is a private trade between two parties. Bilateral transactions usually occur on the phone with two individuals negotiating …

Bundled service

The service that gas and electric end users receive is actually two services: commodity and delivery. Bundled service happens when the distribut …

Bypass

Bypass is the act of connecting an end-use customer directly to a gas or electric delivery system other than the customer’s utility distributi …

California energy crisis

In the early 2000s, California had a shortage of electricity supply caused by market manipulations and capped retail electricity prices. This ca …

Cap and Trade

Cap and Trade is a regulatory mechanism tied to reducing emissions by power plants or other industries.

Capacity (contractual)

When market participants contract to use specific facilities, they often contract for rights to use a specific amount of capacity on the facilit …

Capacity (natural gas)

In the natural gas industry, capacity measures the capability of a well, processing plant, pipeline, storage facility, or LNG facility to provid …

Capacity payment

A capacity payment is made by a user of an energy asset to the owner of that asset in return for the rights to utilize the asset’s capacity.

Capacity release

In the U.S., holders of firm natural gas pipeline transportation or storage capacity can resell their capacity rights to other market participan …

Capital

Monetary capital is the money required to acquire and construct long-term assets necessary to build and reliably operate an electric or natural …

Capital expenditure

Capital expenditures refer to money spent to buy or build assets with a life longer than one year.