Glossary of Energy Market Terms, G - K

Gamma - The sensitivity of an option s delta to changes in the price of the underlying futures contract.

Gas - Typically natural gas (which consists primarily of methane); a fuel burned by boilers and by internal combustion engines for electric generation. May also include manufactured, waste and coal gas.

Gas oil - European designation for No. 2 heating oil and diesel fuel.

Gas Turbine Plant - A plant in which the prime mover is a gas turbine. A gas turbine consists typically of an axial-flow air compressor, one or more combustion chambers, where liquid or gaseous fuel is burned and the hot gases are passed to the turbine and where the hot gases expand to drive the generator and are then used to run the compressor.

Generating Unit - Any combination of physically connected generator(s), reactor(s), boiler(s), combustion turbine(s), or other prime mover(s) operated together to produce electric power.

Generation (Electricity) - The process of producing electrical energy from other forms of energy; also, the amount of electric energy produced, usually expressed in kilowatt-hours (kWh) or megawatt hours (MWh).

Generation, Gross - The electrical output at the terminals of the generator, usually expressed in megawatts (MW).

Generation, Net - Gross generation minus station service or unit service power requirements, usually expressed in megawatts (MW).

Generation Company (Genco) - A regulated or non-regulated entity (depending upon the industry structure) that operates and maintains existing generating plants. The Genco may own the generation plants or interact with the short term market on behalf of plant owners. In the context of restructuring the market for electricity, Genco is sometimes used to describe a specialized marketer for the generating plants formerly owned by a vertically-integrated utility.

Generation Dispatch and Control - Aggregating and dispatching (i.e., directing to specific locations and/or loads) generation from various generating facilities, providing backup and reliability services.

Generator A machine that converts mechanical energy into electrical energy.

Generator Nameplate Capacity The full-load continuous rating of a generator, prime mover, or other electric power production equipment under specific conditions as designated by the manufacturer. Installed generator nameplate rating is usually indicated on a nameplate physically attached to the generator.

Geothermal Plant - A plant using heat generated from within the earth in which the prime mover is a steam turbine. The turbine is driven either by steam produced from hot water or by natural steam found at various depths beneath the earth's surface. The energy is extracted by drilling into pressurized areas and/or pumping fluids that transfer such heat to the turbine.

Get Shorty - An Enron term for manipulating pricing in ancillary service markets. Ancillary Services are required to move power and consist of such actions as running a generator at low speed even when it is not supplying power to the grid in order to have the ability to rapidly ramp up to meet a short term need. Such a service is called spinning reserve. The ISO must contract for such services to maintain balance between supply and demand, and separate submarkets exist to trade such services.

The Get Shorty tactic involved agreeing to provide ancillary services in the state's day-ahead market at a high price but doing so by buying those services from others at a lower price in the hour-ahead market. The tactic involved providing false information regarding the actual source (e.g., generator) of the actual ancillary service supply.

Gigajoule (GJ) - One billion joules, approximately equal to 948,211 British thermal units, which is approximately equivalent to the energy in 1 decatherm of natural gas.

Gigawatt (GW) - One billion watts. Same as 1000 megawatts or 1,000,000 kilowatts.

Gigawatt-hour (Gwh) - One billion watt-hours.

Good Till Canceled - An order to be held by a broker until it can be filled or until canceled.

Good Utility Practice - A regulatory concept covering the practices, methods, and acts engaged in or approved by a significant portion of the electric utility industry during a given time period, or any of the practices, methods, and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result of the lowest reasonable cost consistent with good business practices, reliability, safety and expedition. Good Utility Practice is not intended to be limited to the optimum practice, method, or act to the exclusion of all others, but rather to be acceptable practices, methods, or acts generally accepted in the region and consistently adhered to by the Transmission Provider.

Granularity - The level of detail under which data may be examined or analyzed.

Greenhouse Effect - The increasing mean global surface temperature of the earth caused by gases in the atmosphere (including carbon dioxide, methane, nitrous oxide, ozone, and chlorofluorocarbon). The greenhouse effect allows solar radiation to penetrate but absorbs the infrared radiation returning to space.

Green Markets/Marketing - Sales and purchases of power from renewable or otherwise environmentally desirable resources and efficiency services.

Grid - A system of interconnected power lines and generators that is managed so that the generators are dispatched as needed to meet the requirements of the customers connected to the grid at various points.

Gridco - An independent company responsible for the operation of a grid; now often called a transco.

Grid Management Charge - Fee charged by an ISO to owners of on-site generation (such as cogeneration plants) as a standby charge for possible use of the transmission system if such a plant goes down and must take power from the grid.

Gross Generation - The total amount of electric energy produced by the generating units at a generating station or stations, measured at the generator terminals. See also Net Generation.

GW (Gigawatt) - See Gigawatt.

HAM - Hour Ahead Market: wholesale power pricing provided in 1-hour blocks; effectively the same thing as Real Time Pricing (RTP)

Heating oil - Synonymous with No. 2 fuel oil, a distillate fuel oil for domestic heating use, or in moderate capacity commercial-industrial burners.

Heavy Oil - The fuel oils remaining after the lighter oils have been distilled off during the refining process. Except for start-up and flame stabilization, virtually all petroleum used in steam plants is heavy oil.

Hedge Bucket - Term coined in early 2000 to describe accounting procedure that matches investments in financial instruments (e.g., futures, options) with the specific gain or loss resulting from that investment, as required under FASB Statement 133.

Hedge ratio - 1) Ratio of the value of futures contracts purchased or sold to the value of the cash commodity being hedged, a computation necessary to minimize basis risk. 2) The ratio, determined by an options delta, of futures to options required to establish a riskless position. For example, if a $1/barrel change in the underlying crude oil futures price leads to a $0.25/barrel change in the option premium, the hedge ratio is 4 (four options contracts for each futures contract). See also Basis Risk.

Hedging - The simultaneous initiation of equal and opposite positions in the cash and futures markets. Hedging is employed as a form of financial protection against adverse price movement in the cash market.

Hedging Contracts - Contracts which establish future prices and quantities of electricity independent of the short-term market. Derivatives may be used for this purpose. See Contracts for Differences, Forwards, Futures Market, and Options.

Herfindahl-Hirschmann Index (HHI) -Widely used measure of market concentration which is calculated by summing the squares of the percentages of a market as represented by each competitor. For example, 5 equally sized generators each contributing 20% of a market would result in that market having an HHI of 2000 (5 x 202 = 2000). Federal agencies handling anti-trust issues consider a market having an HHI of 1800 or more to be highly concentrated. While useful when examining competition among generators, it is of limited use when dealing with interacting components (such as generation and transmission) where even a low HHI would not necessarily reveal monopolistic capabilities.

HHI - See Herfindahl-Hirschmann Index.

HID - A form of lighting ( high-intensity discharge) based on high voltage charging of various gases: typically used for outdoor and industrial illumination.

High - The highest price of the day of trading for a particular stock or commodity.

Horizontal spread - Calendar or time spread.

Host Control Area (HCA)

1. A Control Area that confirms and implements scheduled Interchange for a Transmission Customer that operates generation or serves customers directly within the Control Area's metered boundaries.
2. The Control Area within whose metered boundaries a commonly owned unit or terminal is physically located.

Hourly Metering - A type of interval metering where the measurement or recording of customer usage is collected in 60 minute intervals. The competitive metering model is based upon the implementation of hourly metering of customers or the application of load profiles, which average customer use over hourly periods.

Hourly Non-Firm Transmission Service - Point-to-point transmission that is scheduled and paid for on an as-available basis and is subject to interruption.

Hub - Point at which gas or electricity may be re-routed into major interstate pipelines or transmission lines; pricing for either commodity is typically based at a hub, with transportation to the customer's utility being an additional charge.

Hydroelectric Plant - A plant in which the turbine generators are driven by falling water.

ICAP - See Installed Capacity, under Capacity.

ICAP Deficiency Charge - Also called simply the "ICAP charge," this fee is levied by some ISOs on retail power marketers unable to serve their load with their own generation capacity. Such marketers may need to secure capacity from the ISO to ensure its committed availability to meet contracted load. If, for example, a marketer owned no generation and was serving a 100 MW load. He would need to either contract for capacity under a bilateral contract with a generator or buy that 100 MW of capacity from the ISO at its defined ICAP deficiency charge. This charge is determined in ways that differ among ISOs. Some portray the charge as a means to encourage construction of new capacity, but the success of that process is a matter of contention before FERC.

ICAP Tag - Reservation of generation capacity needed to serve a specified load (also known in some ISOs as a cap & trans tag).

Imbalance - A condition where the generation and interchange schedules do not match demand.

Inadvertent Energy Balancing - A Control Area's accounting of its inadvertent interchange, which is the accumulated difference between actual and scheduled interchange.

Inc-ing - Enron term for "increasing" prices when demand in a day-ahead spot market (operated by an ISO or power exchange) was underestimated by utilities and power traders scheduling load. When demand is underestimated, the day-ahead wholesale price of power is artificially driven down. When an ISO finds that demand is actually higher than it predicted based on faulty schedules submitted by some marketers (or by extreme weather or plant outages), the ISO must purchase enough extra power to maintain the balance between supply and demand. Since it must do so on short notice, marketers can then bid up power pricing, forcing the ISO to pay a higher price to maintain that balance.

Incremental Energy Cost - The additional cost that would be incurred by producing or purchasing the next available unit of electrical energy above the current base cost.

Incremental Heat Rate - The amount of additional heat that must be added to a thermal generating unit at a given loading to produce an additional unit of output. It is usually expressed in British thermal units per kilowatt hour (Btu/kWh) of output.

Independent Power Producers (IPP) - As used in NERC reference documents and reports, any entity that owns or operates an electricity generating facility that is not included in an electric utility's rate base. This term includes, but is not limited to, cogenerators and small power producers and all other non-utility electricity producers, such as exempt wholesale generators who sell electricity.

Independent System Operator (ISO) - A neutral, independent, and (typically non-profit) organization with no financial interest in generating facilities that administers the operation and use of the transmission system. ISOs exercise final authority over the dispatch of generation to preserve reliability and facilitate efficiency, ensure non-discriminatory access, administer transmission tariffs, ensure the availability of ancillary services, and provide information about the status of the transmission system and available transmission capacity. Under some proposals, an ISO may make some transmission investment decisions. See also Control Area.

Independent Transmission Provider (ITP) - Under FERC's proposed Standard Market Design, this would be the new term for RTOs, but ITPs might have broader powers and responsibilities than RTOs..

Industrial - The industrial sector is generally defined as manufacturing, construction, mining, agriculture, fishing, and forestry establishments (Standard Industrial Classification [SIC] codes 01-39). A utility may classify industrial service using the SIC codes, or based on demand or annual usage exceeding some specified limit. The limit may be set by the utility based on the rate schedule of the utility. See also Standard Industrial Classification.

Integrated Resource Planning (IRP) - A public planning process administered by regulatory agencies within which costs and benefits of both demand- and supply-side resources are evaluated to develop the least-total-cost mix of utility resource options. In many states, IRP includes a means for considering environmental damages caused by electricity supply/transmission and identifying cost-effective energy efficiency and renewable energy alternatives. IRP has become a formal process prescribed by law in some states and under some provisions of the Clean Air Act Amendments of 1992.

Integrated Resource Planning Principles - The underlying principles of IRP can be distinguished from the formal process of developing an approved utility resource plan for utility investments in supply- and demand-side resources. A primary principle is to provide a framework for comparing a variety of supply- and demand-side and transmission resource costs and attributes outside of the basic provision (or reduction) of electric capacity and energy. These resources may be owned or constructed by any entity and may be acquired through contracts as well as through direct investments. Another principle is the incorporation of risk and uncertainty into the planning analysis. The public participation aspects of IRP allow public and regulatory involvement in the planning rather than the siting stage of project development.

Interchange - Electric power or energy that flows from one entity to another. Some forms of interchange are:

• Actual Interchange - Metered electric power that flows from one entity to another.
• Interchange Scheduling - The actions taken by scheduling entities to arrange transfer of electric power. The schedule consists of an agreement on the amount, start and end times, ramp rate, and degree of firmness.
• Scheduled Interchange - Electric power scheduled to flow between entities, usually the net of all sales, purchases, and wheeling transactions between those areas at a given time.

Interconnected Operations Services (IOS) - Services that transmission providers may offer voluntarily to a transmission customer under Federal Energy Regulatory Commission Order No. 888 in addition to Ancillary Services. See also Ancillary Services.

Backup Supply Service - Provides capacity and energy to a transmission customer, as needed, to replace the loss of its generation sources and to cover that portion of demand that exceeds the generation supply for more than a short time.

Dynamic Scheduling Service - Provides the metering, telemetering, computer software, hardware, communications, engineering, and administration required to electronically move a transmission customer's generation or demand out of the Control Area to which it is physically connected and into a different Control Area.

Real Power Loss Service - Compensates for losses incurred by the Host Control Area(s) as a result of the interchange transaction for a transmission customer. Federal Energy Regulatory Commission's Order No. 888 requires that the transmission customer's service agreement with the Transmission Provider identify the entity responsible for supplying real power loss.

Restoration Service - Provides an offsite source of power to enable a Host Control Area to restore its system and a transmission customer to start its generating units or restore service to its customers if local power is not available.

Interconnected System - A system consisting of two or more individual electric systems that normally operate in synchronism and have connecting tie lines.

Interconnection - When capitalized, any one of the five major electric system networks in North America: Eastern, Western, ERCOT, Quebec, and Alaska. When not capitalized, the facilities that connect two systems or Control Areas. Additionally, an interconnection refers to the facilities that connect a non-utility generator to a Control Area or system.

Interdepartmental Service (Electric) - Interdepartmental service includes amounts charged by the electric department at tariff or other specified rates for electricity supplied by it to other utility departments.

Interface - The specific set of transmission elements between two areas or between two areas comprising one or more electrical systems.

Intermediary Control Area - A Control Area that has connecting facilities in the scheduling path between the sending and receiving Control Areas and has operating agreements that establish the conditions for the use of such facilities.

Intermediate Load (Electric System) - The range from base load to a point between base load and peak. This point may be the midpoint, a percent of the peak load, or the load over a specified time period.

Internal Combustion Plant - A plant in which the prime mover is an internal combustion engine. An internal combustion engine has one or more cylinders in which the process of combustion takes place, converting energy released from the rapid burning of a fuel-air mixture into mechanical energy. Diesel or gas-fired engines are the principal types used in electric plants. The plant is usually operated during periods of high demand for electricity.

Interruptibility - The right of a utility to interrupt power delivery to a customer based on an existing contract, tariff, or agreement, typically during a system emergency or when wholesale market prices exceed a defined level.

Interruptible Gas - Gas sold 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.

Interruptible Load - Refers to program activities that, in accordance with contractual arrangements, can interrupt consumer load at times of seasonal peak load by direct control of the utility system operator or by action of the consumer at the direct request of the system operator. It usually involves commercial and industrial consumers. In some instances the load reduction may be affected by direct action of the system operator (remote tripping) after notice to the consumer in accordance with contractual provisions.

Interval Meter - A meter that measures usage in time increments shorter than those used in billing (e.g., a month). Often synonymous with "hourly meter," "hourly interval meter," or "time-differentiated meter."

Interval Metering - Interval metering is the measurement of customer energy usage by fixed time periods or intervals. Typically, the interval time period is 15 minutes, but can vary according to the customer and/or T&D system needs. Today, interval metering is provided to commercial and industrial customers and some residential customers. In the future, in an unbundled environment, the residential market may require more frequent interval measurements.

In-the-Money - An option that can be exercised and immediately closed out against the underlying market for a cash credit. The option is in-the-money if the underlying futures price is above a call option s strike price, or below a put option s strike price.

Intrinsic Value - The amount by which an option is in-the-money. An option which is not in-the-money has no intrinsic value. For calls, intrinsic value equals the difference between the underlying futures price and the option s strike price. For puts, intrinsic value equals the option s strike price minus the underlying futures price. Intrinsic value is never less than zero.

Intra-Control Area Transaction - A transaction from one or more generating sources to one or more delivery points where all the sources and delivery points are entirely within the metered boundaries of the same Control Area.

Inverted Market - A futures market in which nearby months are trading at a premium to distant months. See also Backwardation.

Invitation to Bid (ITB) - Much like a Request for Proposals (RFP) except that the only item generally requested is a price, not a statement of services involving negotiation.

IOU (investor owned utility) - A company, owned by stockholders for profit, that provides utility services. A designation used to differentiate a utility owned and operated for the benefit of shareholders from municipally owned and operated utilities and rural electric cooperatives.

IPP (Independent Power Producer) - A private entity that operates a generation facility and sells power to electric utilities for resale to retail customers.

ISDN (Integrated Services Digital Network) - A 128 Kbps (kilobytes per second) digital telephone service available in many parts of the country though not universally available that may be able to substitute for fiber optic cable in every respect except possibly television transmission.

Island - A portion of a power system or several power systems that is electrically separated from the interconnection due to the disconnection of transmission system elements.

Islanding - Problem occurring when a distributed generation (DG) power source remains on-line during a utility grid failure, thereby energizing local distribution lines and creating a safety hazard.

ISO - See Independent System Operator (ISO).

Jet Fuel - Kerosene-type; quality kerosene product used primarily as fuel for commercial turbojet and turboprop aircraft engines.

Jobber - A middleman, buying from oil refiners/distributors and reselling to consumers/small distributors.

Joint Unit Control - Automatic generation control of a generating unit by two or more entities.

Jurisdictional - Utilities, ratepayers and regulators (and impacts on those parties) that are subject to state regulation in a state considering restructuring.

kW (Kilowatt) - One thousand watts

KWh (kilowatt-hour) – The basic unit of electric energy equal to one kilowatt of power supplied to, or taken from, an electric circuit steadily, for one hour. Also known as consumption.

Kirchhoff's Law - A description regarding how power moves among multiple electric paths (such as transmission lines) based on their equivalent resistance, regardless of any contractual or other theoretical arrangement. Such movement may result in parallel loop flows that can hinder or complicate the transfer of power from one location to another.

kVar (kilovar) – The unit of measure of reactive power – the power supplied to most types of electromagnetic equipment, such as motors.

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