When it comes to energy, there are a lot of terms and acronyms that make up the final price. The components can be separate line items on your bill, or be built into a ‘bundled’ fixed rate. The number or type of components that make up a final bill will vary from state to state and utility by utility. Historically, suppliers have provided a fully fixed, bundled, or all-in product. Recently, Diversegy is seeing more suppliers breakout some of the components they think are likely to vary over the course of a contract.
When comparing pricing from various suppliers it’s important to view an apples-to-apples comparison where the pricing presented has the same components attributed. Otherwise, customers can end up paying more than what initially is a deceivingly lower rate. Below are the most common components that make up a bill – knowing some of these terms and acronyms will allow you to better understand your energy contracts as well as the charges on the bill you receive for your business.
Here are some common energy terms:
Charges/terms that are applicable in any state:
- Amount of electric power needed or required by certain systems, generators, and other devices by the manufacturer.
- As officially defined by scientists, energy is the capacity for doing work. There are several types of energy that can be converted to power another item to work, including electricity and natural gas. Electricity is measured in kilowatt-hours (kWh) and natural gas is measured in therms.
- Ancillary Services
- Ancillary services are services outside of the standard procurement services in terms of energy. These products include solar, LED, and other energy efficiency products.
- Line Losses
- Line losses are considered energy waste that is as a result of transmission of electrical energy across power lines. This usually occurs in the distribution process.
- ISO Charges
- ISO, or Independent Service Operator, is the charge that helps pay for the maintenance of the grid system in your area/territory.
- Transmission Enhancement Charges and Credits
- These charges are caused by required enhancements to the power lines and grid systems. They either come from a federal or utility level but the customer will see a standard charge on their bill.
- These credits are caused by the total revenues allocated to the transmission enhancement project owners.
Charges/terms that vary by state
- ZECs, or Zero Emission Credits, is an emissions credit that is exclusively for nuclear power. Nuclear plants, or load serving entitles (LSE) must purchase these credits from NYSERDA (the New York State Energy Research and Development Authority) based the LSE’s proportionate amount of statewide load, or energy demanded, in a given compliance year. This is part of the clean energy goal set forth in New York State.
- RECs, or Renewable Energy Credits, is a credit put forth by the CES (Clean Energy Standard) that requires all LSEs in New York to purchase these credits as part of an offering of renewable energy resources for their retail customers. This is part of the clean energy goal set forth in New York State.
- TOTs, or Transmission Owner Transmission Solution, are an additional line item cost on the supply portion of your bill in New York that helps fund the construction of high voltage transmission facilities throughout New York State. This is a set charge that varies depending on your rate class and load factor.
- NITS (Network Integration Transmission Services Charges)
- NITS, or the Network Integration Service rate, is a utility driven charge on the supply portion of the electricity bill. This may be a separate line item or built into your supply rate. It is dictated based on usage and load-factor. Even with a fixed contract, a NITS increase will increase the supply portion of your bill.
- NITS rates can be seen in PJM utilities that include the following states: Ohio, New Jersey and Pennsylvania. For a full list of PJM Utilities, click here.
- SUT, or Sales and Use Tax, is a tax applied in New Jersey and Maryland that must be included in order to determine your total energy rate charge.
- GRT, or Gross Receipts Tax, is a Pennsylvania, New York (predominately ConEd), state tax imposed on the sales of electric energy and is included in the PTC (or Price to Compare). When we price out your deals, we include GRT in our pricing so additional charges are added after the fact.
- RMR, or Reliability Must Run, is a charge that helps pay for the backup generators for when an emergency occurs. These generators are used during extremely hot weather or if the plant stops generating electricity for whatever reason. These chargers fluctuate and are unknown ahead of time as well vary by location.
- RPS, or Renewable Portfolio Standard, is a regulation that requires the increased production of energy from various renewable energy resources such as solar.
- TDU Charges
- TDU, or Transmission and Distribution Utility, charges are from your local utility and cover the cost of maintaining power lines, poles, meters and more.
We will update this post as new terms are added.
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