Glossary of Terms

2022 Base Rate Review

The following terms and acronyms will be referenced throughout the 2022 Austin Energy base rate review process.

Avoided Costs (Value of Solar context) — Costs that Austin Energy avoids due to local solar energy production.

Capacity Factor — The ratio of the net electricity generated, for the time considered, to the energy that could have been generated at continuous full-power operation during the same period.

Commercial Customer/Business Customer — Any non-residential customer who receives electric service below 12,470 volts. Examples of commercial customers include: retail stores, restaurants, doctors’ offices, houses of worship, and office buildings.

Community Benefit Charges (CBC) — CBC funds additional programs and services that provide a benefit to the greater community, such as the Customer Assistance Program and energy efficiency offerings.

Congestion — The situation that exists when requests for power transfers across a Transmission Facility element or set of elements, when netted, exceed the transfer capability of such elements.

Cost of Service Study — A study conducted using a test year controlled for knowns and measurables that determines the total costs (revenue requirement) incurred by a utility in providing service to its customers and the allocation of those costs to customer classes.

Demand — The rate at which electric energy is delivered to or by a system at a given instant, or averaged over a designated period, usually expressed in kilowatt (kW) or megawatt (MW).

Electric Reliability Council of Texas (ERCOT) — The independent system operator responsible for managing the flow of electric power to approximately 90% of consumers in Texas, including those served by Austin Energy. In a geographic sense, ERCOT also refers to the area served by electric utilities, municipally owned utilities, and electric cooperatives that are not synchronously interconnected with electric utilities outside the state of Texas.

Embedded Costs (Value of Solar energy costing context) — Refers to the full amount required to provide a certain amount of energy.

Generation — Assets, activities, and processes necessary and related to the production of electricity by power plants.

Industrial Customer — Any non-residential customer who receives electric service above 12,470 volts. Examples of industrial customers includes factories or manufacturing plants and typically have the highest demand for electricity.

Investor Owned Utility (IOU) — Electric utility owned by shareholders who may or may not be customers. The IOU is a for-profit enterprise allowed to earn a pre-established rate of return for its shareholders and regulated by state public utility commissions of the state in which the IOU serves customers.

Kilowatt (kW) — A measure of electrical power equal to 1,000 watts.

Kilowatt-ac (kW-ac) — A Kilowatt of power at alternating current.

Kilowatt-Hour (kWh) — A quantitative measure of electric current flow equivalent to one thousand watts being used continuously for a period of one hour; the unit most commonly used to measure electrical energy, as opposed to kW, which is simply a measure of available power.

Line Losses — The difference between energy input into the Transmission Grid and the energy taken out of the Transmission Grid.

Load — (a) the amount of energy used per hour or kWh, or (b) a term describing a group of consumers of electricity.

Load Serving Entities (LSEs) — An Entity that buys energy from the ERCOT wholesale market and sells it to end-use customers or wholesale customers. In ERCOT, LSEs include Competitive Retailers, cooperatives, and municipally owned utilities that serve Load.

Load Size — The amount of energy used per hour or kWh.

Municipally Owned Utility — Any utility owned, operated, and controlled by a municipality or by a non-profit corporation whose directors are appointed by one or more municipalities. Austin Energy is a municipally owned utility and a department of the City of Austin.

Megawatt (MW) — The electrical unit of power that equals 1 million watts (1,000 kW).

Megawatt Hour (MWh) — A quantitative measure of electric current flow equivalent to one million watts being used continuously for a period of one hour.

Nodal Market — One aspect of the current market design for the ERCOT wholesale market is called the Nodal Market. In the nodal market, the electric grid consists of more than 4,000 nodes, at which the energy supplied and demanded is measured at least once every five minutes. These nodes serve as the primary inputs for determining the price for electricity in the ERCOT region. ERCOT shifted to the Nodal Market in December 2010 after discontinuing the Zonal Market.

Peak Load or Peak Demand — Highest need of the system experienced during a given 15-minute interval.

Plant-in-Service — Assets currently in use by the utility.

Power Supply Adjustment (PSA) — PSA recovers the costs of fuel for power plants and the electricity purchased from the grid.

Public Utility Commission of Texas (PUCT) — Formed in 1975 by the Texas Legislature as a rate regulatory body, the PUCT oversees the wholesale unbundled energy market. It has limited oversight of municipally owned utilities like Austin Energy for reliability, transmission costs and rates appealed by Austin Energy customers that live outside the Austin city limits.

Rate — A compensation, tariff, charge, fare, toll, rental, or classification that is directly or indirectly demanded, charged, or collected by an electric utility for a service, product, or commodity.

Revenue Requirement — The amount of annual revenues needed by a utility to pay all annual expenses, including debt obligations and rate of return needs.

Rate Design — After the cost of service process is complete, the review process turns to rate design in which rate structures and rates, or prices, are determined by customer rate class. Rates must be set to recover the utility's full revenue requirement.

Rate Class/Category — A defined customer grouping based on similar electric usage patterns billed under the same tariff. The terms Secondary, Primary and Transmission are used to described different levels of energy use in business/commercial customers.

Residential Customer — A customer who receives electric service for domestic purposes for such needs as heating, cooling, cooking, lighting, and small appliances. Examples of residential dwellings are single family homes, apartment units, and mobile homes.

Societal Benefits (Value of Solar context) — References the Federal social cost of carbon report based on integrated assessment models and Texas-specific carbon per kWh.

Tariff — The published document of a utility, municipally owned utility, or electric cooperative containing all rates and charges stated separately by type of service, the rules and regulations of the utility, and any contracts that affect rates, charges terms, or conditions of service.

Transmission and/or Distribution Service Provider (TDSP) — An Entity that is a Transmission Service Provider, a Distribution Service Provider, or both, or an Entity that has been selected to own and operate Transmission Facilities and has a code of conduct approved by the Public Utility Commission of Texas.

Transmission Service — Service that allows a transmission service customer to use the transmission and distribution facilities of electric utilities, electric cooperatives, and municipally owned utilities to efficiently and economically utilize production resources to reliably serve its load and to deliver power to another transmission service customer.

Value of Solar — The rate at which Austin Energy credits solar customers for the energy produced at their homes and businesses.

Wholesale — The sale of any commodity to a party who intends to resell that commodity to other parties is referred to as a wholesale transaction.

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Date last reviewed or modified: 4/21/22

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