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Glossary - Words you'll need to know

ABM - Agent, Broker, Marketer. These are the three names for any company or individual who is in the business of selling gas or electricity to individual homeowners or businesses. Typically, they sign up customers to an energy supply term, then source that gas in one or more contracts with a gas producer. They charge you only for the commodity itself.

Agent - See ABM above.

Broker - See ABM above.

Cogeneration - This is electricity that is generated essentially as a by-product of an industrial process.

Commodity - This refers to any product that is essentially undifferentiated. This means that there is no difference in the product regardless of which company you buy from. Milk is generally said to be a commodity. As long as the product meets the provincial health guidelines for milk, there is really no difference between producers or sellers.

Default Supply - This is your supply of electricity if you do nothing and don't choose a deregulated marketer. It will be provided by the local utility. The utility is obliged to pass along the costs of this power purchased on the spot market without marking it up, except for administrative costs.

Delivery - Electricity and gas have to be delivered to your home or business through a fixed infrastructure, wires or pipes. Delivery charges pay for the construction and maintenance of those fixed links, and any costs associated with bringing the product to you.

Demand - This is the instantaneous use of electricity, measured in watts.

Energy - This is the use of electricity over a period of time, measured in watt-hours.

Kilowatt - This is a measure of electricity in an instant of time.

Kilowatt hour - This is a measure of how much electricity is used. For example, one 100 watt light bulb used for 10 hours is 1000 watt hours, or 1 kilowatt hour.

Marketer - See ABM above.

NSLS - Net System Load Shape - This is the aggregate consumption of all of the electricity consumers in a utility who do not have interval meters. If your facility does not have an interval meter, it is assumed to use electricity in the same pattern as the NSLS. The same pattern, not the same amount. Each facility will continue to be metered on the amount of electricity (kWh) they use each hour. For billing purposes, since there is a different price for each hour of each day, that consumption has to be distributed across the month. The NSLS pattern provides the percentage of electricity used in each hour of the month. The percentage on a weekday in mid afternoon would be larger than the percentage in the middle of the night. Your monthly consumption is multiplied by the percentage for an hour, and then multiplied by the price for electricity for that hour.

Spot Market / Spot Price - There is a North American market for buying and selling electricity and natural gas. It's essentially a commodity market that trades like soy beans or pork bellies. The price is set based on supply and demand for immediate requirements. The spot price is, for example the price of electricity at one point in time on that market. The price varies extensively in times of extreme heat or cold. In 1999, the spot price for electricity ranged from 4 cents / kilowatt hour to $100.

Stranded Cost / Stranded Asset - These are assets, or investments that were committed to by a utility while they were a monopoly in order to serve customers over the long term. When a province or state is deregulated, and customers decide to buy electricity from someone else, the money to pay for these assets can't be collected. As a result, they are stranded. In most areas considering deregulation, this is a major problem. Some provision must be made to pay off these assets, or they will become the responsibility of the taxpayer.

Wheeling - This is the transportation of electricity through one jurisdiction or area to get to another. For example, electriciy generated in Alberta and used in Manitoba would have to be wheeled through Saskatchewan.

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