The following are explanations of some of the electric industry's more frequently-used terms.
Aggregator An aggregator is an entity that brings customers together to buy electricity in bulk in order to increase customers' buying power. Aggregators can serve homes, businesses, or entire communities. They facilitate the sale of power but are not usually the sellers.
Basic Service Basic service provides customers with a continuous power supply through their distribution company when, for whatever reason, they are not receiving power through an aggregator or a competitive power supplier. The price for basic service is variable, and as such, will move up and down based on the market price for power. All customers are eligible to receive basic service at any time and may stay with this service indefinitely, though it may not be the most cost efficient means of buying power.
Competitive Power Supplier A competitive power supplier (also known as an electricity supplier, power producer, power generator, power seller, power marketer or power broker) is a company or group that sells electricity. Some suppliers generate and sell their own power, while others buy it and then resell it. In any case, the electricity sold by a competitive power supplier is delivered to your home by your distribution company. How much a competitive power supplier charges for electricity is set by the individual supplier.
Contract Terms Contract terms is the agreement between a competitive power supplier and a consumer specifying the length of service and whether penalties exist for early termination. The terms of a supplier's contract can be found in the disclosure label that the supplier must furnish starting in September 1998.
Disclosure Label A disclosure label is a standard format of information detailing a competitive power supplier's prices, the terms of their contract with a customer, the types of power sources used, their air emissions and their labor practices. Starting in September 1998, competitive power suppliers and distribution companies providing standard offer service must furnish potential customers with a disclosure label prior to providing service and then on a quarterly basis. The same format is to be used by every supplier and distribution company, making it easier to compare the various offers.
Discount Rate Customers Income-eligible customers are individuals and families whose household income is at or below 175% of the federal poverty level. The discount for these customers is approximately 25%-35% off the bill.
You may qualify if you are receiving benefits administered through the Department of Transitional Assistance (for example, TAFDC, EAEDC, Food Stamps), or if you receive Mass. Health (Medicaid), Supplemental Security Income (SSI), Veterans Benefits, live in public or subsidized housing, or are certified eligible for Fuel Assistance.
Distribution Distribution is the process by which your distribution company uses wires and poles to deliver electricity to your home or business. This portion of the electric utility industry has not been opened to competition and will continue to be regulated by state government.
Distribution Company A distribution company, formerly known as an electric utility company, is the local company that delivers electricity to your home or business. Your distribution company will continue to read your meter, maintain local wires and poles, and restore your power in the event of an outage.
Efficiency Programs Efficiency programs are services aimed at reducing a customer's energy use, such as installing insulation, weather-stripping or compact fluorescent light bulbs. In addition to energy efficiency companies, these services may be offered by distribution companies, aggregators, and competitive power suppliers. Although some of the companies offering efficiency programs may charge a higher rate for electricity, it is possible that by reducing your energy use, you could save more money than if you bought electricity at a lower rate without these programs. The advantage of energy efficiency is that in addition to reducing your bill, it helps reduce harmful environmental impacts.
Electricity Broker An electricity broker is a company or individual that facilitates the sale of power to customers, but does not take title to the power and is therefore not the seller.
Generation is the only part of the electric industry that has been opened to competition. The transmission and distribution of your electricity will continue to be regulated by the Government.
Kilowatt-Hour A kilowatt-hour (kWh) is the standard unit of measure for electricity. One kilowatt-hour is equal to 1,000 watt-hours. The total number of kilowatt-hours charged to your bill is determined by your electricity use. For example, if you used a 100-watt light bulb for 10 hours, you would be billed for one kilowatt-hour (100-watts x 10 hours = 1,000 watt-hours).
Municipal Utility A municipal utility is a non-profit utility that is owned and operated by the community it serves. Whether or not a municipal utility is open to customer choice and competition is decided by the municipality's public officials.
Power Sources Power sources are the types of fuels used to produce electricity such as nuclear, fossil fuels (natural gas, oil and coal) and renewable energy resources (hydro, wind, biomass and solar).
Pricing Options Among the different competitive power suppliers there are several types of pricing options being offered. Some may charge the same price for every kilowatt-hour of electricity that you use; whereas others will charge different rates depending on the time of consumption or the amount consumed. Prices may be determined in accordance with whether you purchase other services along with electricity such as cable television.
Public Aggregator A public aggregator is an organization established by a city, town, or county to purchase electricity in bulk for its citizens in order to increase their buying power. Participation is voluntary; consumers can opt-out if they choose and return to the standard offer service within 180 days.
Restructuring Restructuring is a term used for opening a market, whose prices and practices were formerly fully regulated by government, to competition. In this case, the power supply portion of the electric industry has been opened to competition.The delivery portion remains regulated.
Transition Charge The transition charge, also known as stranded costs, are the costs of past utility investments including power plants and power contracts. These charges were included in electric rates before competition. Because these costs cannot be fully recovered in a competitive market, stranded costs are temporary expenses that are included in the transition charge on your electric bill. These charges will be reduced over time.
Transmission Transmission is the delivery of electricity from a power generator to a local distribution company over high-voltage power lines. This portion of the electric utility industry has not been opened to competition and will continue to be regulated by state and federal government.
This information is provided by the Department of Energy Resources.