Capacity (contractual)

When market participants contract to use specific facilities, they often contract for rights to use a specific amount of capacity on the facility. For electric transmission lines, the capacity is defined in units of MW.  For gas transmission or distribution lines, the capacity is defined in units of MMBtu/d, MMcf/d, or Dth/d. Capacity may be firm, meaning the capacity holder has high priority to use the facilities, or interruptible, meaning the holder has lower priority than firm holders of capacity. When contracting for firm capacity, the capacity holder typically pays a monthly capacity fee which is based on the amount of capacity held.