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Glossary of Energy Market TermsCompiled by Energybuyer.org Pancake - The addition of multiple transmission charges ("pancaking") to the cost of power as it passes through many control areas. Paper Barrels - A term used to denote trade in non-physical (futures, forward, swaps, etc.) oil markets which gives a buyer or seller the right to a certain quantity and quality of crude oil or refined products at a future date, but not any specific physical lot. Parallel Path Flow - As defined by NERC, this refers to the flow of electric power on an electric system's transmission facilities resulting from scheduled electric power transfers between two other electric systems. (Electric power flows on all interconnected parallel paths in amounts inversely proportional to each path's resistance.) During the Blackout of 2003 (in New York, Ohio, Michigan, and Canada), such flow around what was referred to as the "Lake Erie Loop" apparently resulted in a voltage overload which caused many systems to disconnect to protect themselves. Parol Evidence - Oral or verbal testimony, especially relating to the terms of a written agreement Par or Basis Grade - The grade or grades specified in a given futures contract for delivery. A contract may permit deviations from the par grade subject to appropriate premiums or discounts. Parties - Any two entities, such as a Transmission Provider and a Transmission Customer, entering into a contract for services between them. Peak Demand or Peak Load The electric load that corresponds to a maximum level of electric demand in a specified time period. For billing purposes, many utilities measure the highest level of consumption during a 15 or 30-minute time period in a month and divide it by a quarter or half-hour to derive an averaged peak demand for that month. This is not to be confused with the instantaneously high (and typically brief) demand in kilowatts that occurs when a device is first started. Peaking Capacity - Capacity of generating equipment normally reserved for operation during the hours of highest daily, weekly, or seasonal loads. Some generating equipment may be operated at certain times as peaking capacity and at other times to serve loads on an around-the-clock basis. Peak Load Plant - A plant usually housing old, low-efficiency steam units, gas turbines, diesels, or pumped storage hydroelectric equipment normally used during the peak-load periods. Performance-Based Regulation (PBR) - Any rate-setting mechanism which attempts to link rewards (generally profits) to desired results or targets. PBR sets rates, or components of rates, for a period of time based on external indices rather than a utility's cost-of-service. A form of rate regulation which provides utilities with better incentives to reduce their costs than does cost-of-service regulation. Petroleum - A mixture of hydrocarbons existing in the liquid state found in natural underground reservoirs often associated with gas. Petroleum includes fuel oil No. 2, No. 4, No. 5, No. 6; topped crude; kerosene; and jet fuel. Phasor Diagrams – Diagrams that show all vectors for three phase current and voltage. Physical Asset - A generating plant or transmission line, or other object, as versus a financial asset that exists only in monetary form. Pin Risk - The risk to a trader who has sold an option that, at expiration, has a strike price identical to, or pinned to, the underlying futures price. In this case, the trader will not know whether he will be required to assume his options obligations Pipeline - A pipe through which oil, its products, or gas is pumped between two points, either offshore or onshore. PJM - Name of wholesale power pool that serves most of Pennsylvania, Maryland, Delaware, and New Jersey; the PJM Interconnection is the official name of the ISO covering that region Planned Generator - A proposal by a company to install electric generating equipment at an existing or planned facility or site. The proposal is based on the owner having obtained (1) all environmental and regulatory approvals, (2) a signed contract for the electric energy, or (3) financial closure for the facility. Planning (System) - The process by which the performance of the electric system is evaluated and future changes and additions to the bulk electric systems are determined. Planning Guides Good planning practices and considerations that Regions, subregions, power pools, or individual systems should follow. The application of Planning Guides may vary to match local conditions and individual system requirements. Planning Policies - The framework for the reliability of interconnected bulk electric supply in terms of responsibilities for the development of and conformance to NERC Planning Principles and Guides and Regional planning criteria or guides, and NERC and Regional issue resolution processes. NERC Planning Procedures, Principles, and Guides emanate from the Planning Policies. Planning Principles - The fundamental characteristics of reliable interconnected bulk electric systems and the tenets for planning them. Planning Procedures - An explanation of how the Planning Policies are addressed and implemented by the NERC Engineering Committee, its subgroups, and the Regional Councils to achieve bulk electric system reliability. Plant - A facility at which are located prime movers, electric generators, and auxiliary equipment for converting mechanical, chemical, and/or nuclear energy into electric energy. A plant may contain more than one type of prime mover. Electric utility plants exclude facilities that satisfy the definition of a Qualifying Facility under the Public Utility Regulatory Policies Act of 1978. Plant Use - The electric energy used in the operation of a plant. Included in this definition is the energy required for pumping at pumped storage plants. Plant-Use Electricity - The electric energy used in the operation of a plant. This energy total is subtracted from the gross energy production of the plant; for reporting purposes the plant energy production is then reported as a net figure. The energy required for pumping at pumped storage plants is, by definition, subtracted, and the energy production for these plants is then reported as a net figure. Point - The smallest unit of measurement of a futures price. Point(s) of Delivery (POD)- Point(s) of interconnection on the transmission or distribution system where capacity and/or energy will be made available to the Receiving Party. The Point(s) of Delivery shall be specified in the Customer's Service Agreement. Point(s) of Receipt - Point(s) of interconnection on the Transmission Provider's Transmission System where capacity and/or energy will be made available to the Transmission Provider by the Delivering Party. This point could include an interconnection with another system or generator bus bar. The Point(s) of Delivery shall be specified in the Service Agreement. Points on a Transmission System - Locations where power is delivered (POD), injected (POI), received (POR), or withdrawn (POW). Point-to-Point Transmission Service - The reservation and/or transmission of energy on either a firm basis and/or a non-firm basis from Point(s) of Receipt to Point(s) of Delivery, including any Ancillary Services that are provided by the Transmission Provider in conjunction with such service. Point-to-Point Transmission Service Tariff - The Transmission Provider's Point-to-Point Transmission Service Tariff as such tariff may be amended and/or superseded from time to time. POLR (Provider of Last Resort) – Provider of electric service that is required to serve any customer requesting service in accordance with the Commission's consumer protection rules and statutes. The POLR provides service to customers that do not choose an ESCO, customer that choose to leave service from a ESCO, and customers to whom an ESCO will not or can not provide service. Pool - See Power Pool. PoolCo - A specialized, centrally dispatched spot market power pool that functions as a short-term market. It establishes the short-term market clearing price and provides a system of long-term transmission compensation contracts. It is regulated to provide open access, comparable service and cost recovery. A PoolCo would make ancillary generation services, including load following, spinning reserve, backup power, and reactive power, available to all market participants on comparable terms. In addition, the PoolCo provides settlement mechanisms when differences in contracted volumes exist between buyers and sellers of energy and capacity. Portfolio Management - The functions of resource planning and procurement under a traditional utility structure. Portfolio management can also be defined as the aggregation and management of a diverse portfolio of supply (and demand-reduction) resources which will act as a hedge against various risks that may affect specific resources (i.e., fuel price fluctuations and certainty of supply, common mode failures, operational reliability, changes in environmental regulations, and the risk of health, safety, and environmental damages that may occur as a result of operating some supply resources). Under a more market-driven power sector with a power pool or PoolCo wholesale market structure, a portfolio manager would aggregate and manage a diverse portfolio of spot-market purchases, contracts-for-differences, futures contracts and other market-hedging-type contracts and mechanisms. Portfolio Requirements - Requirements on suppliers of electricity that the set of generators from which they obtain power meets certain standards. Typically refers to requirements that a minimum percentage or amount of supply be from renewable sources. Occasionally loosely applied to the more general concept of requirements or standards applying to supplier behavior. Postage Stamp Rates - Transmission rates based on a single charge (usually $/MWh) to move power anywhere within a given region for the same price, much as a letter may be sent for a single postage stamp charge regardless where it originated or was sent within the U.S. Posted Price - The price a purchaser will pay for a specified product at a specified location. Post Transition Ratemaking (PTR) - regulatory efforts after the transition to full competition occurs (generally considered to start once all stranded costs have been paid off) Power - The rate at which energy is transferred. Electrical energy is usually measured in watts. Also used for a measurement of capacity.
Power Authorities - Quasi-governmental agencies that perform all or some of the functions of a public utility. Power Exchange - A spot price pool that is governed and operated separately from the independent system operator (ISO). In a Power Exchange/ISO model, the spot price pool schedules generation and provides price bids to the ISO. The ISO may then use the sets of price bids provided by the Power Exchange to establish congestion prices, match actual demand to available supply, and facilitate the efficient short-term operation of the integrated generation and transmission system. See also Spot Price Pool. Power Flow Program - A computerized algorithm that simulates the behavior of the electric system under a given set of conditions. Power Marketers - Business entities engaged in buying and selling electricity, but do not own generating or transmission facilities. Power marketers, as opposed to brokers, take ownership of the electricity and are involved in interstate trade. These entities file with FERC for status as a power marketer. Power Marketing Administration (PMA) Any of five federal agencies charged with marketing power from hydroelectric plants built under federal flood control programs. Power Pool - An entity established to coordinate short-term operations to maintain system stability and achieve least-cost dispatch for two or more utilities. The dispatch provides backup supplies, short-term excess sales, reactive power support, and spinning reserve. Historically, some of these services were provided on an unpriced basis as part of the members' utility franchise obligations. Coordinating short-term operations includes the aggregation and firming of power from various generators, arranging exchanges between generators, and establishing (or enforcing) the rules of conduct for wholesale transactions. The pool may own, manage and/or operate the transmission lines ("wires") or be an independent entity that manages the transactions between entities. Often, the power pool is not meant to provide transmission access and pricing, or settlement mechanisms if differences between contracted volumes among buyers and sellers exist. Power pools are expected to be converted to, or supplanted by, ISOs and/or transcos. Power Quality - The types and levels of distortions of the pure 60-cycle power waveform, such as harmonics, transients, spikes, sags, and voltage reductions. Such quality may be defined by the acceptable level of such variations as delineated in a standardized curve such as that provided by the Information Technology Industry Council (ITIC), formerly known as CBEMA. More information may be found at www.itic.org. PPA - See Purchased Power Agreement (PPA) Premium - The price paid by the buyer of a commodity option to the seller of the option. Prepayment Meters - Prepayment meters are electric meters that allow the customer to pay a specified amount of money in advance of service to guarantee some level of minimum service while allowing low-income customers to keep within their budget. Such meters may be accompanied by a discount reflecting the lower level of service and reduced collection costs to the utility. Price - The amount of money or consideration-in-kind for which a service is bought, sold, or offered for sale. See also Shadow Price. Price Earnings Ratio - The price of a stock divided by its earnings per share. The P/E ratio may either use the reported earnings from the latest year, trailing P/E, or a forecast of next year's earnings, forward. Price Responsive Load or Price Sensitive Load - Any electrical load that may be curtailed with a user's permission, in exchange for a financial incentive from either an LDC, ISO, energy vendor, or state agency. Also called Curtailable Load. Price Signals - Euphemism for changes to pricing designed to attract attention and/or action by suppliers and customers, such as Demand Response. Prime Mover - The engine, turbine, water wheel, or similar machine that drives an electric generator; or, for reporting purposes, a device that converts energy to electricity directly (e.g., photovoltaic solar and fuel cells). Profit - The income remaining after all business expenses are paid. Prompt Month - The next full month about to appear. Provider of Last Resort - See POLR (Provider of Last Resort). Pseudo-Tie - A telemetered reading or value that is updated in real time and used as a tie line flow in the Automatic Generation Control/Area Control Error equation but for which no physical tie or energy metering actually exists. The integrated value is used as a metered megawatt hour (MWH) value for interchange accounting purposes. PTO - Participating Transmission Owner; a utility holding the controlling transmission assets in a given area, possibly as part of a transco or ISO Public Authority Service to Public Authorities - Public authority service includes electricity supplied and services rendered to municipalities or divisions or agencies of State or Federal governments, under special contracts or agreements or service classifications applicable only to public authorities. Public Good - A good (or a service) that will not be produced and delivered if we rely solely on the free market. These are called public goods by economists because they are consumed by the public, and their use cannot be restricted to the benefit of a single buyer or group of buyers. Economists call this characteristic "non-excludability." There is no way to produce a public good without producing a value to society at large. This in turn makes it all the more unlikely that an individual would pay out of his own pocket to see that the good is produced. Public Interest Goals - Public interest goals of electric utility regulation include: 1) inter-and intra-class and intergenerational equity); 2) the equal treatment of equals (horizontal equity); 3) balancing long- and short-term goals that have the potential to affect intergenerational balance; 4) protecting against the abuse of monopoly power; and 5) general protection of the health and welfare of the citizens of the state, nation, and world. Environmental and other types of social costs are subsumed under the equity and health and welfare responsibilities. Publicly Owned Utilities (POU) - Municipal utilities (utilities owned by branches of local government) and/or co-ops (utilities owned cooperatively by customers). Public Utility - Utility operated by a non-profit governmental or quasi-governmental entity. Public utilities include municipal utilities, cooperatives, and power marketing authorities. Public Utility Commission (PUC) - Generic term for a state agency holding regulatory power over energy pricing, and issues related thereto. PUHCA - The Public Utility Holding Company Act of 1935. This act prohibits acquisition of any wholesale or retail electric business through a holding company unless that business forms part of an integrated public utility system when combined with the utility's other electric business. The legislation also restricts ownership of an electric business by non-utility corporations. Pumped Storage Hydroelectric Plant - A plant that usually generates electric energy during peak-load periods by using water previously pumped into an elevated storage reservoir during off-peak periods when excess generating capacity is available to do so. When additional generating capacity is needed, the water can be released from the reservoir through a conduit to turbine generators located in a power plant at a lower level. Purchased Power Adjustment - A clause in a rate schedule that provides for adjustments to the bill when energy from another electric system is acquired and it varies from a specified unit base amount. Purchased Power Agreement (PPA) - Typical name for bilateral wholesale or retail power contract. Pure Pumped Storage Hydroelectric Plant - A plant that produces power only from water that has previously been pumped to an upper reservoir. PURPA - The Public Utility Regulatory Policy Act of 1978. Among other things, this federal legislation requires utilities to buy electric power from private qualifying facilities, at an avoided cost rate. This avoided cost rate is equivalent to what it would have otherwise cost the utility to generate or purchase that power themselves. Utilities must further provide customers who choose to self-generate a reasonably priced back-up supply of electricity. Put Option - An option which gives the buyer, or holder, the right, but not the obligation, to sell a futures contract at a specific price within a specific period of time in exchange for a one-time premium payment. It obligates the seller, or writer, of the option to buy the underlying futures contract at the designated price, should an option be exercised at that price. See also Call Option.
Qualifying Facility (QF) - A cogeneration or small power production facility that meets certain ownership, operating, and efficiency criteria established by the Federal Energy Regulatory Commission (FERC) pursuant to the Public Utility Regulatory Policies Act (PURPA). (See the Code of Federal Regulations, Title 18, Part 292.) Systems obtaining power through renewable sources such as wind may also qualify as QFs.
Rainbow Option - An option whose value is determined by more than one variable. Rally - An advancing price movement following a decline. Ramp Period - The time between ramp start and end times usually expressed in minutes. Ramp Rate (Schedule) - The rate, expressed in megawatts per minute, at which the interchange schedule is attained during the ramp period. Random Walk - See Brownian Motion. Ratchet Charge - A charge on some commercial/industrial electric bills either in addition to standard monthly demand charges or in lieu of them. It is typically a percentage (e.g. 50%) of the highest peak seen at any point during a running 12-month (or longer) period, and is charged in all months when demand is lower than that peak. It is designed to recover utility costs incurred in building and maintaining capacity used for only brief periods during a year. If peak demand drops to a lower point during the 12 months following the setting of a ratchet demand level, the ratchet charge is lowered to reflect the lowest peak seen during those 12 months. Rate Base - The value of property upon which a utility is permitted to earn a specified rate of return as established by a regulatory authority. The rate base generally represents the book value of property used by the utility in providing service and may be calculated by any one or a combination of the following accounting methods: fair value, prudent investment, reproduction cost, or original cost. Depending on which method is used, the rate base includes cash, working capital, materials and supplies, and deductions for accumulated provisions for depreciation, contributions in aid of construction, customer advances for construction, accumulated deferred income taxes, and accumulated deferred investment tax credits. Ratemaking Authority - A utility commission's legal authority to fix, modify, approve, or disapprove rates, as determined by the powers given the commission by a State or Federal legislature. Rating - The operational limits of an electric system, facility, or element under a set of specified conditions.
RCA - Receiving control area: typically the area bounded by a utility’s distribution system. RD&D - Research, development and demonstration. See Research and Development; Demonstration. Reactance - Technical term to describe voltage drop in an alternating current transmission line; analogous to resistance in a direct current transfer of power. Reactive Supply and Voltage Control From Generating Sources Service - Provides reactive supply through changes to generator reactive output to maintain transmission line voltage and facilitate electricity transfers. Real-Time Pricing (RTP) - The pricing of electricity based on the cost of the electricity available for use at the time the electricity is demanded by the customer. As distinguished from market-based pricing, RTP is usually applied to that power demand above a defined base usage for a given customer, and not to all power consumed by that customer. RTP may also encompass charges for transmission and distribution whereas market-based rates cover only the energy (and possibly capacity) portion of an electric bill. REC/REMC (Rural Electric Cooperative, Rural Electric Member Cooperative). See Cooperative Electric Utility. Recallability - The right of a transmission provider to interrupt all or part of a transmission service for any reason, including economic, that is consistent with Federal Energy Regulatory Commission policy and the transmission provider's transmission service tariffs or contract provisions. Receipts - Purchases of fuel. Receiving Party - The entity receiving the capacity and/or energy transmitted by the Transmission Provider to the Point(s) of Delivery. Refiner-Marketer - A marketer of gasoline and/or heating oil who operates his own refinery. Refinery - A plant used to separate the various components present in crude oil and convert them into usable products or feedstock for other processes. Refunctionalization - Relabeling of transmission facilities as assets with a distribution function. Often done by utilities to gather more assets under state rate-of-return regulation and away from federal (i.e., FERC) jurisdiction. Region - One of the NERC Regional Reliability Councils or Affiliate. Regional Reliability Council - One of eleven Electric Reliability Councils that form the North American Electric Reliability Council (NERC). Regional Transmission Group (RTG) - Voluntary organization (chartered by FERC) of transmission owners, transmission users, and other entities interested in coordinating transmission planning and expansion and use on a regional and interregional basis. ISOs are considered RTGs, but RTG as a term is being supplanted by Regional Transmission Organization (RTO) as a generic name that includes ISOs and transcos. Regional Transmission Organization (RTO) - Term coined by FERC Chairman Hoecker in 1998 to describe any of several types of transmission overseers, including ISOs, ISAs, RTGs, and transcos. Under the terms of FERC's proposed Standard Market Design, RTOs will be called "Independent Transmission Providers." See also Independent System Operator (ISO) and Control Area. Regression Modeling - Process by which a graphic trendline is developed and interpolated backward to cross either the X or Y axis (e.g., to reveal energy used at a balance point temperature). Regulation - The government function of controlling or directing economic entities through the process of rulemaking and adjudication. Regulation and Frequency Response Service - Provides for following the moment-to-moment variations in the demand or supply in a Control Area and maintaining scheduled Interconnection frequency. Reliability - The degree of performance of the elements of the bulk electric system that results in electricity being delivered to customers within accepted standards and in the amount desired. Reliability may be measured by the frequency, duration, and magnitude of adverse effects on the electric supply. Electric system reliability can be addressed by considering two basic and functional aspects of the electric system, Adequacy and Security.
See also RMR (Reliability Must Run). Reliability Councils - Regional reliability councils were organized after the 1965 northeast blackout to coordinate reliability practices and avoid or minimize future outages. They are voluntary organizations of transmission-owning utilities and in some cases power cooperatives, power marketers, and non-utility generators. Membership rules vary from region to region. They are coordinated through the North American Electric Reliability Council (NERC). There are nine major regional councils plus the Alaska Systems Coordinating Council. Reliability Criteria - Principles used to design, plan, operate, and assess the actual or projected reliability of an electric system. Reliability Pricing Model (RPM) - A process for pricing generation capacity based on overall system reliability requirements. Using multi-year forward auctions, participants could bid capacity in the form of generation, demand response, or transmission to meet reliability needs by location and/or an ISO market. RMR (Reliability Must Run) - Designation of a power plant whose output is needed to maintain local reliability regardless of its operating cost or market price. Renewable Portfolio (or Power) Standard (RPS) - State regulatory requirement that, by a defined date, a defined percentage of generation must be supplied by renewable energy sources, such as hydroelectric, solar, wind, geothermal, or biogas. Renewable Resources - Renewable energy resources are naturally replenishable, but flow-limited. They are virtually inexhaustible in duration but limited in the amount of energy that is available per unit of time. Some (such as geothermal and biomass) may be stock-limited in that stocks are depleted by use, but on a time scale of decades, or perhaps centuries, they can probably be replenished. Renewable energy resources include: biomass, hydro, geothermal, solar and wind. In the future they could also include the use of ocean thermal, wave, and tidal action technologies. Utility renewable resource applications include bulk electricity generation, on-site electricity generation, distributed electricity generation, non-grid-connected generation, and demand-reduction (energy efficiency) technologies. REP - See Retail Electricity Provider. Request for Information (RFI) - See Request for Qualifications. Request for Proposal (RFP) - Document distributed by a customer seeking offerings and bids from suppliers of services. Sometimes also known as a Request for Quotes (RFQ). Request for Qualifications (RFQ) - Document distributed by a customer seeking delineation of credentials for suppliers of specific types of services. Sometimes also known as a Request for Information (RFI). Request for Quote - See Request for Proposal. Rerating - A change in the capability of a generator due to a change in conditions such as age, upgrades, auxiliary equipment, cooling, etc. Reregulation - The design and implementation of regulatory practices to be applied to the remaining regulated entities after restructuring of the vertically-integrated electric utility. The remaining regulated entities would be those that continue to exhibit characteristics of a natural monopoly, where imperfections in the market prevent the realization of more competitive results, and where, in light of other policy considerations, competitive results are unsatisfactory in one or more respects. Reregulation could employ the same or different regulatory practices as those used before restructuring. Research and Development (R&D) - Research is the discovery of fundamental new knowledge. Development is the application of new knowledge to develop a potential new service or product. Basic power sector R&D is most commonly funded and conducted through the Department of Energy (DOE), its associated government laboratories, university laboratories, the Electric Power Research Institute (EPRI), and private sector companies. Reserve:
Reserve Margin (Operating) - The amount of unused available capability of an electric power system at peak load for a utility system as a percentage of total capability. Such capacity may be maintained for the purpose of providing operational flexibility and for preserving system reliability. Residential - The residential sector is defined as private household establishments which consume energy primarily for space heating, water heating, air conditioning, lighting, refrigeration, cooking, and clothes drying. The classification of an individual consumer's account, where the use is both residential and commercial, is based on principal use. Residual Fuel Oil - The topped crude of refinery operation, includes No. 5 and No. 6 fuel oils as defined in ASTM Specification D396 and Federal Specification VV-F-815C; Navy Special fuel oil as defined in Military Specification MIL-F-859E including Amendment 2 (NATO Symbol F-77); and Bunker C fuel oil. Residual fuel oil is used for the production of electric power, space heating, vessel bunkering, and various industrial purposes. Imports of residual fuel oil include imported crude oil burned as fuel. Resource Efficiency- The use of smaller amounts of physical resources to produce the same product or service. Resource efficiency involves a concern for the use of all physical resources and materials used in the production and use cycle, not just the energy input. Response Rate:
Resting Order - An order away from the market, waiting to be executed. Restricted-Universe Census - This is the complete enumeration of data from a specifically defined subset of entities including, for example, those that exceed a given level of sales or generator nameplate capacity. Restructuring - The reconfiguration of the vertically-integrated electric utility. Restructuring usually refers to separation of the various utility functions into individually-operated and -owned entities. Retail - Sales covering electrical energy supplied for residential, commercial, and industrial end-use purposes. Other small classes, such as agriculture and street lighting, also are included in this category. Retail Competition - A system under which more than one electric provider can sell to retail customers, and retail customers are allowed to buy from more than one provider. See also Direct Access. Retail Customer - Any customer receiving power for end usage on his side of the meter, and not for redistribution/resale to others. Retail Electricity Provider - Texas term for an unregulated provider of retail power (often called an REP). Compare Competitive Retail Energy Supplier (CRES) in Ohio and Alternative Retail Electric Supplier (ARES) in Illinois. Retail Market - A market in which electricity and other energy services are sold directly to the end-use customer. Retail Service Company - A company that provides the ultimate consumer of electricity with end-use services such as power, energy efficiency services, metering and billing, on-site generation, and other unbundled services. Retail Supplier - An entity, other than the LDC, that can perform energy and customer service functions in a competitive environment, including provision of energy and assistance in the efficiency of its use. Retail Wheeling - See Direct Access. Revenue - The total amount of money received by a firm from sales of its products and/or services, gains from the sales or exchange of assets, interest and dividends earned on investments, and other increases in the owner's equity except those arising from capital adjustments. Ricochet - An Enron term for taking advantage of regional market price differentials and a lack of uniform price regulations. Prior to coining of this term by Enron personnel, this technique was known as "megawatt laundering." Similar to the Fat Boy strategy, a wholesale power marketer buys electricity at a low price (possibly capped by state regulators or the ISO) and sells it to an out-of-state customer (possibly its own subsidiary). Whereas in Fat Boy the deal would simply end, with the profit being made on the differential between the two markets' prices, under Ricochet that expensive power is then brought back into the originating state and sold to the ISO (which needs it to meet immediate demand) at a higher price, potentially generating an even higher profit. Ringfencing - The financial and corporate isolation of a regulated public utility from the risks of unregulated activities carried out by its affiliates. Regulators ringfence in order to keep down the utility's cost of capital and to prevent the utility from buying services at above-market prices from affiliates (and thereby passing on those costs to consumers). Roll-Over - A special straddle trading procedure involving the shift of one month of a straddle into another futures month while holding the other contract month. The shift can take place in either the long or short straddle month. Round Trip - The practice of selling power to either an affiliate or another company and then buying it back for the same price for the sole purpose of artificially increasing trading volume to support claims of corporate growth or financial strength. This term became popular during the Enron controversy. Example: Company A might sell 100 megawatts of power to Company B on an online exchange at $10 per megawatt. Company B then turns around and sells an identical volume to Company A at the same price. No power is transferred between parties, no money is exchanged and the trades don't have any economic value -- but the trades show up on each party's books as sales.Also called Wash and Back-to-Back Trading. See also Bragawatts. Round Turn - The execution for the same customer of a purchase and sale which offset each other. RPS - See Renewable Portfolio (or Power) Standard. RTG - See Regional Transmission Group. RTO - See Regional Transmission Organization (RTO). (RTP) - See Real-Time Pricing (RTP). Rules of Conduct - Rules set in advance to delineate acceptable activities by participants, particularly participants with significant market power. Running and Quick-Start Capability - The net capability of generating units that carry load or have quick-start capability. In general, quick-start capability refers to generating units that can be available for load within a 30-minute period. Rural Electric Cooperatives - These are electric cooperatives located in rural areas of the country and established and operating under rules established by Congress. See also Cooperative Electric Utility.
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