Glossary of Energy Market Terms C-D

Calendar spread - An options position comprised of the purchase and sale of two option contracts of the same type that have the same strike prices but different expiration dates. Also known as a horizontal, or time spread.

Call Center - A telecommunications facility operated by, or on behalf of, an energy services supplier to receive customer inquiries and perform telemarketing tasks.

Call Option - An option which gives the buyer, or holder, the right, but not the obligation, to buy 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 sell the underlying futures contract at the designated price, should an option be exercised at that price. See also Put Option.

Capability - The maximum load that a generating unit, generating station, or other electrical apparatus can carry under specified conditions for a given period of time without exceeding approved limits of temperature and stress.

Capacity (Delivery or Receipt) - The amount of electric power delivered or required for which a generator, turbine, transformer, transmission circuit, station, or system is rated by the manufacturer.

Capacity (Generating or Supply) - The rated continuous load-carrying ability, expressed in megawatts (MW) or megavolt-amperes (MVA) of generation, transmission, or other electrical equipment. Types of capacity include:

Baseload Capacity - Capacity used to serve an essentially constant level of customer demand. Baseload generating units typically operate whenever they are available, and they generally have a capacity factor that is above 60%.
Peaking Capacity - Capacity used to serve peak demand. Peaking generating units operate a limited number of hours per year, and their capacity factor is normally less than 20%.
Net Capacity - The maximum capacity (or effective rating), modified for ambient limitations, that a generating unit, power plant, or electric system can sustain over a specified period, less the capacity used to supply the demand of station service or auxiliary needs.
Intermediate Capacity - Capacity intended to operate fewer hours per year than baseload capacity but more than peaking capacity. Typically, such generating units have a capacity factor of 20% to 60%.
Firm Capacity - Capacity that is as firm as the seller's native load unless modified by contract. Associated energy may or may not be taken at option of purchaser. Supporting reserve is carried by the seller.
Installed Capacity - Also called ICAP, the total wattage of all generators able to be scheduled to serve a given service or control area.
Unconstrained Capacity - Also called UCAP, the total wattage of all generators that actually deliver power to serve a given service or control area. UCAP may be determined through a derating process that corrects for loss of capacity due to high air temperatures (which may reduce capacity of combustion turbines), past failure probabilities for specific generators, or other means.

Capacity (Purchased) - The amount of energy and capacity available for purchase from outside the system.

Capacity Benefit Margin (CBM) - That amount of transmission transfer capability reserved by load serving entities to ensure access to generation from interconnected systems to meet generation reliability requirements. Reservation of CBM by a load serving entity allows that entity to reduce its installed generating capacity below that which may otherwise have been necessary without interconnections to meet its generation reliability requirements. See Available Transfer Capability (ATC).

Capacity Charge - An element in a two-part pricing method used in capacity transactions (energy charge is the other element). The capacity charge, sometimes called Demand Charge, is assessed on the amount of capacity being purchased.

Capacity Emergency - A state when a system's or pool's operating capacity plus firm purchases from other systems, to the extent available or limited by transfer capability, is inadequate to meet the total of its demand, firm sales, and regulating requirements. See Energy Emergency.

Capacity Factor - The ratio of the total energy actually generated by a generating unit for a specified period to the maximum possible energy it could have generated if operated at the maximum capacity rating for the same specified period, expressed as a percent; not to be confused with availability which addresses how often that same plant could have generated such energy. See Availability.

Capacity Release - A secondary market for capacity that is contracted by a customer which is not using all of its capacity.

Captive Customer - A customer who does not have realistic alternatives to buying power from the local utility, even if that customer had the legal right to buy from competitors.

Carrying charge - The total cost of storing a commodity; includes actual storage charges, insurance, interest on loans, and opportunity loss on committed capital.

Cascading

The uncontrolled successive loss of system elements triggered by an incident at any location. Cascading results in widespread service interruption, which cannot be restrained from sequentially spreading beyond an area predetermined by appropriate studies.
In the analysis of energy-efficiency measures, the accounting for interactions that may change the impact of measures that follow others; e.g., the calculated savings due purely to the installation of occupancy sensors will be lessened if "cascaded" after a lamp/ballast upgrade that reduces the wattage left to save by automatically shutting off lights in unoccupied rooms.

Cash commodity - The actual physical commodity. Sometimes called a spot commodity or actuals.

Cash Desk - A trading group that handles hourly or daily trades. See also Term Desk.

Cash market - The market for a cash commodity where the actual physical product is traded.

CAVEE (Customer Association, Validation, Editing and Estimation) - CAVEE is the process in which meter data, which has been translated into a common format, is processed and readied for bill generation and other operations that require validated usage data. In CAVEE meter data are associated with the correct customer through reference to the service provider's database. The data are then subjected to a number of tests for reasonableness, compared to stored usage history and transmitted to billing and other appropriate functions. If data are missing, usage estimations are made according to fixed rules. If anomalies are found error reports are generated.

Certification - The process of granting permission to do business or to sell a particular product. A device states can use to enforce standards of conduct and quality on competitive suppliers, on pain of penalties including civil fines, suspension of certification, and revocation of certification to do business. Similar to licensor. Contrast registration, which requires providing information, including perhaps proof of financial and technical capability to the state, but does not provide for penalties or revocation of the right to do business upon violation of the norms of conduct.

CF/D - Cubic feet per day. Usually used to quantify the rate of flow of a gas well or pipeline.

(CfD) - See Contracts for Differences (CfD)

CFTC - Commodity Futures Trading Commission. The federal regulatory body which oversees commodity futures trading activities, standards, and practices.

CHP - See Cogeneration.

Churn - Action during which a single contract changes hands and pricing many times, indicating liquidity; also describes changeover of personnel or contractors within a given firm.

CIF - Cost, insurance, freight. Term refers to a sale in which the buyer agrees to pay a unit price that includes the FOB value at the port of origin plus all costs of insurance and transportation. This type of transaction differs from a "delivered" agreement in that it is generally exclusive of duties, and the buyer accepts the quantity and quality at the loading port rather than at the unloading port.

Circuit - A conductor or a system of conductors through which electric current flows.

Circular Scheduling - A wholesale transaction technique for creating false congestion on power lines to drive up the cost of wholesale power for short periods. See also Death Star.

C/I - Abbreviation for "Commercial and Industrial" customers; also C&I.

CIS - See Customer Information System.

City Gate - The point where the systems of an interstate pipeline and a local gas distribution company meet. Pricing for natural gas bought from a marketer is often set at a City Gate, to which local distribution (and possibly balancing) charges must be added.

Class of options - All call options, or all put options, exercisable for the same underlying futures contract and which expire on the same expiration date.

Clearinghouse - An exchange-associated body charged with the function of insuring the financial integrity of each trade. Orders are "cleared" by means of the clearinghouse becoming the buyer to all sellers and the seller to all buyers.

Clearing member - Member of an exchange. Also known as an exchange member.

Close - The price of the last transaction completed for the commodity trading session.

Closing range - A range of prices at which transactions took place at the closing of the market.

CMH - Ceramic Metal Halide technology, used in high-efficiency lighting, that exploits advances in gases, containment, ballasts, etc., to create small HID lamps (down to 20 watts) that rival incandescent light sources in output and concentration, at a fraction of incandescent wattage.

CMR - See Customer Relationship Management.

CMS - See Congestion Management System; see also transmission congestion contract (TCC), firm transmission rights (FTR), financial congestion rights (FCR)

CMT - Cost management technique.

Cogeneration - Production of electricity from steam, heat, or other forms of energy produced as a by-product of another process. Also called Combined Heat and Power (CHP).

Cogenerator - A generating facility that produces electricity and another form of useful thermal energy (such as heat or steam) used for industrial, commercial, heating, or cooling purposes. Many cogeneration systems are also Qualifying Facilities (QF). To receive status as a qualifying facility (QF) under the Public Utility Regulatory Policies Act (PURPA), the facility must produce electric energy and "another form of useful thermal energy through the sequential use of energy," and meet certain ownership, operating, and efficiency criteria established by the Federal Energy Regulatory Commission (FERC). (See the code of Federal Regulations, Title 18, Part 292.)

Coincident Demand - The sum of two or more demands that occur in the same time interval.

Coincident Peak Load - The sum of two or more peak loads that occur in the same time interval.

Collar - A commodity supply contract between a buyer and a seller in which the buyer is assured of a defined maximum price and the seller is assured of a defined minimum price. This is analogous to an options fence, also known as a range forward.

Combined Cycle - An electric generating technology in which electricity and process steam is produced from otherwise lost waste heat exiting from one or more combustion turbines. The exiting heat is routed to a conventional boiler or to a heat recovery steam generator for use by a steam turbine in the production of electricity. This process increases the efficiency of the electric generating unit.

Combined Cycle Unit - An electric generating unit that consists of one or more combustion turbines and one or more boilers with a portion of the required energy input to the boiler(s) provided by the exhaust gas of the combustion turbine(s).

Combined Pumped-Storage Plant - A pumped-storage hydroelectric power plant that uses both pumped water and natural stream flow to produce electricity.

Combined Heat and Power (CHP) - see Cogeneration.

Combustion Turbine - Any of several types of high speed (usually gas-fired) generators using principles and designs of jet engines to produce low cost, high efficiency power

Commercial - The commercial sector is generally defined as nonmanufacturing business establishments, including hotels, motels, restaurants, wholesale businesses, retail stores, and health, social, and educational institutions. A utility may also classify the commercial sector as all consumers whose demand or annual use exceeds some specified limit. The limit may be set by the utility based on the rate schedule of the utility.

Commercial Information - Information that can be used in the marketplace.

Commercialization - Programs or activities that increase the value or decrease the cost of integrating new products or services into the electricity sector. See Sustained Orderly Development.

Commercial Operation - Commercial operation begins when control of the loading of the generator is turned over to the system dispatcher.

Commission - Used in energy markets as a shorthand reference to The Federal Energy Regulatory Commission (FERC) or a local (usually state) regulatory commission, typically called a Public Utility Commission or PUC. See Federal Energy Regulatory Commission and Public Utility Commission. In futures, the fee charged by a futures broker for the execution of an order for a futures trade.

Commission House - An organization that buys and sells actual commodities and/or futures contracts for the accounts of its customers in return for a fee. See also Wire House.

Commitment - Total number of contracts in a commodity or options market that are still open, meaning they have not been exercised, closed out, or allowed to expire. Also called "open interest."

Commodity - A standardized product for sale, generally not very differentiable by vendor.

Commodity Cost - The cost of a commodity (natural gas or electricity) and related charges to deliver it to the marketplace.

Common carrier - A person or company having state or federal authority to perform public transportation for hire.

Commonly Owned Unit - A generating unit whose capacity is owned or leased and divided among two or more entities. Synonym: Jointly Owned Unit.

Community Choice - A movement to allow municipalities to aggregate their members (including all rate classes) into a single energy buying group.

Competitive Franchise - A process whereby a municipality (or group of municipalities) issues a franchise to supply electricity in the community to the winner of a competitive bid process. Such franchises can be for bundled electricity and transmission/distribution, or there can be separate franchises for the supply of electricity services and the transmission and distribution function. Franchises can be, but typically are not, exclusive licenses. Through the terms of the request for proposals and the negotiation of the franchise agreement, the community can seek suppliers willing to provide electricity consistent with local values, such as energy efficiency, renewable resource development, job creation, and the like. See Value-driven Aggregator. Sometimes called a biddable franchise.

Competitive Market - An environment that allows many sellers and buyers to buy and sell goods or services from each other, unfettered by heavy regulation.

Competitive Retail Energy Supplier (CRES) - Ohio term for an unregulated retail electricity supplier. Compare Retail Electricity Supplier (REP) in Texas and Alternative Retail Electric Supplier (ARES) in Illinois.

Competitive Transition Charge (CTC) - A nonbypassable charge generally placed on distribution services to recover utility costs incurred as a result of restructuring (stranded costs - usually associated with generation facilities and services) and not recoverable in other ways. See also Nonbypassable Charge.

Congestion - Congestion (also called "line congestion") is the condition which pertains when the available capacity of a transmission line is being closely approached (or exceeded) by the power that Load Serving Entities (LSEs) seek to transmit through it. At such times, alternative power line pathways (or local generators near the load) must be used instead. Congestion need not actually be occurring: the ISO need only believe that it may occur at a defined time in order to declare a line congested, thus forcing others wishing to use it to resort to alternatives means of power delivery.

To create congestion (and thus force up prices and/or force use of more expensive local generation), some marketers schedule fictitious load to make it appear that a line will be fully needed or overloaded. They then drop that schedule after others have already arranged for alternative delivery means. They either sell that local power at a higher price (if they had control of it), and/or get paid to drop the fictitious load that caused the problem in the first place, thus making money through nothing except chicanery. Enron referred to this general tactic as Death Star or Load Shift, depending on how money was made.

Congestion Revenue Rights (CRRs) - Also called financial transmission rights, or transmission congestion contracts/auctions)

Congestion Management System (CMS) - Any of several methods to control the cost of transmission congestion.

Connection - The physical contact point (e.g. transmission lines, transformers, switch gear, etc.) between two electric systems permitting the transfer of electric energy in one or both directions.

Construction Work In Progress (CWIP) - The charge shown on a utility's balance sheet for construction work not yet completed but in process. This balance line item may or may not be included in the rate base.

Consumption

The amount of fuel used for gross generation, providing standby service, start-up and/or flame stabilization.
The quantity of electricity or natural gas consumed during a utility billing period.

Contango Market - A futures market that is deemed "normal" when carrying charges are reflected in proportionately higher prices for increasingly distant futures contracts. The opposite of Backwardation.

Contingency - The unexpected failure or outage of a system component, such as a generator, transmission line, circuit breaker, switch, or other electrical element. A contingency also may include multiple components, which are related by situations leading to simultaneous component outages.

Contingency Order - An order which becomes effective when a set of specified conditions are met.

Contract Documents - Documents that comprise an agreement between two parties to deliver and/or accept a product or service.

Contract Expiration Date - The last date on which the contract can be exercised.

Contracts for Differences (CfD) - A type of bilateral contract where the electric generation seller is paid a fixed amount over time based on a combination of the short-term market price and an adjustment from a defined pricing level. For example, a generator may sell a distribution company power for ten years at $.06/kWh. That power is bid into PoolCo at some low kWh price (to ensure it is always taken). The seller then receives the market clearing price from the pool and the purchaser pays the producer the difference between the PoolCo selling price and $.06/kWh (or vice versa if the pool price should go above the contract price).

Contract Grade - That grade of product established in the rules of a commodity futures exchange as being suitable for delivery against a futures contract.

Contract High - The highest intra-day price within the life of the contract.

Contract Low - The lowest intra-day price within the life of the contract

Contract Path - The most direct physical transmission tie between two interconnected entities. When utility systems interchange power, the transfer is presumed to take place across the contract path, notwithstanding the electrical fact that power flow in the network will distribute in accordance with network flow conditions, generally along the path of least resistance. This term can also mean to arrange for power transfer between systems. See also Parallel Path Flow.

Contract Price - Price of fuels marketed on a contract basis covering a period of 1 or more years. Contract prices reflect market conditions at the time the contract was negotiated and therefore remain constant throughout the life of the contract or are adjusted through escalation clauses. Generally, contract prices do not fluctuate widely.

Contract Receipts - Purchases based on a negotiated agreement that generally covers a period of 1 or more years.

Control Area - An electric power system or combination of electric power systems in which a common automatic control scheme is applied to: (1) match, at all times, the load in the electric power system(s) by dispatching generators within the electric power system(s) and capacity and energy purchased from entities outside the electric power system(s); (2) maintain, within the limits of Good Utility Practice, scheduled interchange with other Control Areas; (3) maintain the frequency of the electric power system(s) within reasonable limits in accordance with Good Utility Practice; and (4) provide sufficient generating capacity to maintain operating reserves in accordance with Good Utility Practice. Regional Transmission Organizations (such as an ISO) are becoming the mega-control areas of the future.

Convergence - The allying and/or merging of electric and natural gas suppliers/marketers due to common goals and business interests.

Conversion - A delta-neutral arbitrage transaction involving a long futures, a long put option, and a short call option. The put and call options have the same strike price and same expiration date.

Co-op - See Cooperative Electric Utility.

Cooperative Electric Utility - Often abbreviated to Co-op, any electric utility legally established to be owned by and operated for the benefit of those using its service. Such entities may generate, transmit, and/or distribute supplies of electric energy to a specified area not being serviced by another utility. Such ventures are generally exempt from Federal income tax laws. Most electric cooperatives were initially financed by the Rural Electrification Administration, a division of the U.S. Department of Agriculture. Rural electric cooperatives may generate and purchase wholesale power, arrange for the transmission of that power, and then distribute the power to serve the demand of rural customers.

Core Customer - A customer who depends on a utility for the delivery of energy or services. This customer generally does not have alternatives to buy energy from a non-utility supplier.

Cost-Based Pricing - Prices controlled by the fees charged by a provider, as versus market-based pricing.

Cost-Based Regulation - Adjustment of rates based on costs rather than market prices.

Cost of Service - The cost claimed by a utility to provide service to its customers.

Cover - To close out a short futures position by purchasing either a physical commodity or futures for it.

Covered Writing - The sale of an option against an existing position in the underlying futures contract; e.g., short call and long futures.

Crack Spreads - The simultaneous purchase or sale of crude oil against the sale or purchase of refined petroleum products, such as fuel oil. These spread differences, which represent refining margins, are normally quoted in dollars per barrel.

CRRs - See Congestion Revenue Rights (CRRs).

CT - Abbreviation for Combustion Turbine or Current Transformers.

Current (Electric) - A flow of electrons in an electrical conductor. The strength or rate of movement of the electricity is measured in amperes.

Current Transformers - Small doughnut-shaped units that fit around power conduits to assist the measurement of the current passing through such power lines.

Curtailability - The right of a transmission provider to interrupt all or part of a transmission service due to constraints that reduce the capability of the transmission network to provide that transmission service. Transmission service is to be curtailed only in cases where system reliability is threatened or emergency conditions exist. May also be called Interruptibility.

Curtailable 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 Price Responsive or Price Sensitive Load.

Curtailment - A reduction in the scheduled capacity or energy delivery.

Customer Obligations - The responsibilities that a customer has, such as paying bills, maintaining safety of a natural gas or electric hookup, and preventing theft of service.

Customer Relationship Management (CMR) - CMR involves finding ways to maximize the value of the contact between supplier and customer, primarily by leveraging that relationship to offer and sell other services - such as telecommunications, Internet access, and building security - and/or brokering that contact with others who wish to access that same customer base.

Customer Service Protections - The rules governing grounds for denial of service, credit determinations, deposit and guarantee practices, meter reading and accuracy, bill contents, billing frequency, billing accuracy, collection practices, notices, grounds for termination of service, termination procedures, rights to reconnection, late charges, disconnection/reconnection fees, access to budget billing and payment arrangements, extreme weather, illness or other vulnerable customer disconnection protections, and the like. In a retail competition model, would include protections against slamming and other hard-sell abuses.

Daily Limit - Maximum price variation that commodities and options markets are allowed to experience in one day.

Date of Contract High - The date of the lifetime contract high.

Date of Contract Low - The date of the lifetime contract low.

Date of Last Report - For mutual funds this is the date of the most recent update of net asset value (NAV) provide by NASDAQ. For money market funds this is the most recent yield provided by NASDAQ. For indexes this is the date of the most recent update.

Day-Ahead Market (DAM) - Wholesale power pricing provided in 24-hour blocks.

Daylighting - The use of natural light in conjunction with adjustable electric lighting to reduce power used by the electric lighting, typically through the use of automatic light sensing controls (e.g., photosensors).

Day Trade - The purchase and sale of a futures contract on the same day.

DBOOM - Design, Build, Own, Operate, Maintain.

DC - Direct customer (e.g. large industrial) that buys power directly from an ISO-managed wholesale market.

Death Star - An Enron term for taking advantage of transmission congestion. Line congestion (such as between northern and southern California) may be caused by scheduling transmission (i.e., planning to send power) in the direction opposite to that of the congestion. Doing so reduces the congestion, thus earning a trader a payment from the ISO. No energy, however, was actually put on the grid or taken off. Even if power had been provided (possibly by others being paid by the trader to generate) to relieve that congestion, the cost to do so was often much lower than the congestion payment, thus still earning a profit while doing very little.See also Circular Scheduling.

DEC Bid - Short for decremental bid; a DEC bid is submitted by a generator to the ISO during congestion situations to determine how much he should be paid to reduce the output of a generation unit. The ISO then pays the generator to decrease the amount of energy his plant is producing on one side of a congested point at the same time it pays less-efficient units on the other side of the congested point to increase output.

Deficiency Charge - See ICAP Deficiency Charge.

Degree-Day (DD) - A unit describing a temperature difference, maintained over a 24-hour period, of 1 degree Fahrenheit (1ºF). Degree-days are typically calculated as occurring between the average drybulb outdoor temperature and a base drybulb temperature (typically 65ºF). For example, an average outdoor temperature of 40ºF occurring across a 24-hour period would result in 65ºF - 40ºF = 25 degree-days. When occurring below that base temperature, such degree-days are called "heating degree-days" (HDD). When occurring above that base temperature, such degree-days are called "cooling degree-days" (CDD).

Deintegration - See Disaggregation.

Deliverability - The amount of natural gas that a well, production field, pipeline, or distribution system can deliver in a given period.

Delivering Party - The entity supplying the capacity and/or energy to be transmitted at Point(s) of Receipt.

Delivery - The satisfaction of a futures contract position through the tendering and receipt of the actual commodity.

Delivery Month - The month specified in a given futures contract for delivery of the actual spot or cash commodity.

Delivery Notice - A notice presented through an exchange clearinghouse by a clearing member advising of the intention to deliver the actual commodity in satisfaction of contract obligations.

Delivery of Natural Gas and Electric Service

Economy - Energy provided at a lower price when a supplier has excess available capacity.
Firm - Energy provided to customers on a continuous basis without interruption.
Interruptible - Energy provided to customers with a provision that permits curtailment or cessation of service at the discretion of the distributing company under certain circumstances, as specified in the service contract.
Off-Peak - Energy provided to customers in accordance with contractual arrangements to interrupt consumer load at times of peak load by direct control of the utility system operator or by action of the consumer at the direct request of the system operator.
Seasonal - Energy provided to customers in accordance with contractual arrangements to interrupt consumer load at times of seasonal (i.e., summer and winter) peak load by direct control of the utility system operator or by action of the consumer at the direct request of the system operator.

Delivery Point - See Point(s) of Delivery.

Delta - The sensitivity of an option s value to a change in the price of the underlying futures contract, also referred to as an option s futures-equivalent position. Deltas are positive for bullish options positions, or calls, and negative for bearish options positions, or puts. Deltas of deep in-the-money options are approximately equal to one; deltas of at-the-money options are 0.5; and deltas of deep out-of-the-money options approach zero.

Delta Neutral Spread - A spread where the total delta position on the long side and the total delta position on the short side add up to approximately zero. Also known as neutral spread.

Demand - The rate at which electric energy is delivered to or by a system or part of a system, generally expressed in kilowatts or megawatts, at a given instant or averaged over any designated interval of time. Demand should not be confused with Load. Types of Demand include:

Instantaneous Demand - The rate of energy delivered at a given instant.
Average Demand - The electric energy delivered over any interval of time as determined by dividing the total energy by the units of time in the interval.
Integrated Demand - The average of the instantaneous demands over the demand interval.
Interruptible Demand - The magnitude of customer demand that, in accordance with contractual arrangements, can be interrupted by direct control of the system operator or by action of the customer at the direct request of the system operator. In some instances, the demand reduction may be initiated by the direct action of the system operator (remote tripping) with or without notice to the customer in accordance with contractual provisions. Interruptible Demand as defined here does not include Direct Control Load Management.
Demand Interval - The time period during which electric energy is measured, usually in 15-, 30-, or 60-minute increments; peak demand is then the kWh during that interval divided by the length of that interval in hours (e.g., for billing purposes, the peak demand seen in a 15-minute interval in which 100 kWh is consumed could be found by dividing 100 kWh by 1/4 hour, yielding a peak billable demand of $00 kW).
Peak Demand - The highest electric requirement occurring in a given period (e.g., an hour, a day, month, season, or year). For an electric system, it is equal to the sum of the metered net outputs of all generators within a system and the metered line flows into the system, less the metered line flows out of the system.
Coincident Demand - The sum of two or more demands that occur in the same demand interval.
Non-coincident Demand - The sum of two or more demands that occur in different demand intervals.
Contract Demand - The amount of capacity that a supplier agrees to make available for delivery to a particular entity and which the entity agrees to purchase.
Firm Demand - That portion of the Contract Demand that a power supplier is obligated to provide except when system reliability is threatened or during emergency conditions.
Billing Demand - The demand upon which customer billing is based as specified in a rate schedule or contract. It may be based on the contract year, a contract minimum, or a previous maximum and, therefore, does not necessarily coincide with the actual measured demand of the billing period.

Demand Charge - A fee based on the peak amount of electricity used during the billing cycle. Residential customers are generally not levied a demand charge.

Demand Destruction - Reductions in demand that involve more than momentary responses to pricing; e.g., drop in demand for natural gas by fertilizer plants when they shut down due to sustained high gas pricing.

Demand Response - Ability of end user to cut back on power use when called by an RTO or Load Serving Entity.

Demand-Side Management - Often abbreviated DSM, it refers to the planning, implementation, and monitoring of activities designed to encourage consumers to modify patterns of electricity usage, including the timing and level of electricity demand. DSM covers the complete range of load-shape objectives, including strategic conservation and load management, as well as strategic load growth. Indirect Demand-Side Management includes such programs as conservation, improvements in efficiency of electrical energy use, rate incentives, rebates, and other similar activities to influence electricity use.

Demand-Side Management Costs - When applied to a utility, they are the costs incurred to achieve the capacity and energy savings from a Demand-Side Management Program. When applied to a customer, they may include all costs to control demand, especially peak demand.

Demonstration - The application and integration of a new product or service into an existing or new system. Most commonly, demonstration involves the construction and operation of a new electric technology interconnected with the electric utility system to demonstrate how it interacts with the system. This includes the impacts the technology may have on the system and the impacts that the larger utility system might have on the functioning of the technology.

Demurrage - Compensation paid for detention of a ship during loading or unloading beyond the scheduled time of departure.

Derating (Generator) - A reduction in a generating unit's Net Dependable Capacity. Types of derating include:

Forced Derating - An unplanned component failure (immediate, delayed, postponed) or other condition that requires the output of the unit be reduced immediately or before the next weekend.
Maintenance Derating - The removal of a component for scheduled repairs that can be deferred beyond the end of the next weekend, but requires a reduction of capacity before the next planned outage.
Planned Derating - The removal of a component for repairs that is scheduled well in advance and has a predetermined duration.
Scheduled Derating - A combination of maintenance and planned deratings.

Deregulation - The elimination of regulation from a previously regulated industry or sector of an industry.

Derivatives - A specialized security or contract that has no intrinsic overall value, but whose value is derived from an underlying security (e.g., stock, bond, currency, or commodity) or factor (such as an index). A generic term that, in the energy field, may include options, futures, swaps, forwards, etc.

DG - See Distributed Generation.

Differential -The amount/degree of a difference, or a change in an amount.

Differentials - Price differences between classes, grades and locations of different stocks of the same commodity. In futures, the discounts (or premiums) allowed for grades or locations of a commodity lower (or higher) than the par or a basis grade or location specified in the futures contract; also called allowances.

Direct Access - The ability of a retail customer to purchase commodity electricity directly from the wholesale market rather than through a local distribution utility. See also Retail Competition.

Direct Control Load Management - The customer demand that can be interrupted by direct control of the system operator controlling the electric supply to individual appliances or equipment on customer premises. This type of control, when used by utilities, usually involves residential customers. Direct Control Load Management as defined here does not include Interruptible Demand.

Direct Load Control - Refers to program activities that can interrupt consumer load at the time of annual peak load by direct control of the utility system operator by interrupting power supply to individual appliances or equipment on consumer premises. This type of control usually involves residential consumers. Direct Load Control excludes Interruptible Load and Other Load Management effects. One of the most common control methods involves the cycling or temporary shutdown of electric domestic hot water heaters through automatic remote control.

Disaggregation - The functional separation of the vertically integrated utility into smaller, individually owned business units (i.e., generation, dispatch/control, transmission, distribution). The terms "deintegration," "disintegration" and "delamination" are sometimes used to mean the same thing. See also Divestiture.

Disco - See Distribution Utility.

Discounting - Recalculation of the value of a trade or contract based on the time value of money or other factors.

Discretionary Account - An arrangement by which the holder of an account gives written power of attorney to someone else, often a broker, to buy or sell without prior approval of the account holder.

Dispatch/Economic Redispatch - Choosing and/or deploying generators based on their cost of operation or posted market price for power

Dispatchable Generation - Generation available physically or contractually to respond to changes in system demand or to respond to transmission security constraints. See Must-Run Generation.

Distillate Fuel Oil - A general classification for one of the petroleum fractions produced in conventional distillation operations. It is used primarily for space heating, on-and-off-highway diesel engine fuel (including railroad engine fuel and fuel for agriculture machinery), and electric power generation. Included are Fuel Oils No. 1, No. 2, and No. 4; and Diesel Fuels No. 1, No. 2, and No. 4. Heavier oils are commonly referred to as No. 5, No.6, and/or Bunker C.

Distributed Generation (DG) - A system utilizing small generators located on a utility's distribution system for the purpose of meeting local (substation level) peak loads and/or displacing the need to build additional (or upgrade) local distribution lines. With the advent of small (< 100 kW) microturbine generators, distributed generation is beginning to include customer and/or marketer-owned capacity feeding single loads (e.g., a chiller plant), customers or small groups of customers.

Distribution - The delivery of electricity to the retail customer's home or business through low voltage distribution lines (typically in the 120 volt to 69,000 volt range).

Distribution System - The portion of an electric system that is dedicated to delivering electric energy directly to an end user.

Distribution Utility (Disco) - The regulated electric utility entity that constructs and maintains the distribution wires connecting the transmission grid to the final customer. The Disco can also perform other services such as aggregating customers, purchasing power supply and transmission services for customers, billing customers and reimbursing suppliers, and offering other regulated or non-regulated energy services to retail customers. The "wires" and "customer service" functions provided by a distribution utility could be split so that two totally separate entities are used to supply these two types of distribution services.

Disturbance - An unplanned event that produces an abnormal system condition.

Diversity Exchange - An exchange of capacity or energy, or both, between systems whose peak loads occur at different times.

Diversity Factor - The ratio of the sum of the coincident maximum demands of two or more loads to their non-coincident maximum demand for the same period.

Divestiture - The stripping off of one utility function from the others by selling (spinning-off) or in some other way changing the ownership of the assets related to that function. Most commonly associated with spinning-off generation assets so they are no longer owned by the shareholders that own the transmission and distribution assets. See also Disaggregation.

Dividend Yield - Percentage derived by dividing the latest indicated annual dividend by the closing price of the security, and then multiplying by 100.

DMNC (Demonstrated Maximum Net Capacity) - Maximum net generation output of a generation source, averaged over an ISO-defined period.

DOE - Department of Energy - The federal government agency engaged in establishing policies and programs relating to national energy matters.

Doji - A commodity trading term indicating that the daily opening and closing price of a commodity (such as oil) were the same.

Drafting - Release of water through turbines other than those used to produce hydropower.

DSM - See Demand-Side Management.

DSR (Demand-Side Resources) - See EDRP (Emergency Demand Response Program).

Dual-Fuel - Ability to use more than one fuel to operate a boiler, chiller, generator, or other energy-related equipment.

Dynamic Rating - The process that allows a system element rating to vary with the changing environmental conditions in which the element is located.

Dynamic Schedule - A telemetered reading or value that is updated in real time and used as a schedule in the Automatic Generation Control/Area Control Error equation and the integrated value of which is treated as a schedule. Commonly used for "scheduling" commonly owned generation or remote load to or from another Control Area.

Dynamic Scheduling Service - See Ancillary Services.

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