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AttritionIt generally refers to the projected rate of inflation built into investor-owned utility rate cases.
Balancing AccountYour landlord requires you to pay a set amount every month, but that at the end of the month, your heating, shower curtains, the gardening, maintenance and whatever else your landlord believes is part of your tab, are deducted. Then, the actual rent is deducted. If there’s anything left over, you get a refund. If it goes the other way, you owe your landlord more money next month. That’s what a “balancing account” on the books at the California Public Utilities Commission is like—scaled to millions of customers.
Baseline Rates"Baseline" is a road that divides the hills from the flatlands. It divides both the "haves" from the have nots and workaholics who are rarely home from those who fire up the spa, flat screen and blender. Baseline rates aim to increase conservation by rewarding those with low energy use by giving them lower rates. On the flip side, high energy users pay higher rates, creating a subsidy for low energy users and conservation.
Bill EnrollmentLegislation is “enrolled” after its successful passage through both the state Senate and Assembly. After the final vote on a bill, it goes through the enrollment process to ensure the final version is typo free. A clean version of the legislation is sent to the governor with a cover sheet and signature page. However, when the bill gets to the governor's desk is a calculated political decision.
Carbon OffsetsA carbon offset is a game of Even-Steven. It’s a purchase of a promise to provide less carbon contribution elsewhere. In a swap for industry/individual to contribute to greenhouse gases, the industry may buy an offset to either reduce some other industry’s greenhouse gas production or create more greenhouse gas absorbing landscape. Most greenhouse gas offsets being offered are in the form of increased forestation. Trees absorb carbon, thus, forests are carbon sinks.
ClotureThe only procedure by which the U.S. Senate can vote to place a time limit on consideration of a bill or other matter, and thereby overcome a filibuster. Under the cloture rule (Rule XXII), the Senate may limit consideration of a pending matter to 30 additional hours, but only by vote of three-fifths of the full Senate, generally 60 votes. Filibusters have increased in the past several years.
Community Choice AggregationThe word “choice” stirs up passions—when referring to one’s body and one’s abode. Under state law, cities and other local entities can choose to pool regional electricity purchases and terminate investor-owned utility power services. AB 117, passed in 2002, allows for community choice aggregation under which resident’s power comes from local entities’ bulk purchases, largely expected to be alternative energy resources. The theory is that bulk wholesale electricity purchases by community aggregators are less expensive and greener than power provided by private utilities in their service territories. Utilities are still to provide transmission and distribution service, however, for that power.
Conservation Opportunity AreasIt’s hot. It’s lonely. Public agencies are studying these zones as they develop the Desert Renewable Energy Conservation Plan. They are likely targets for mitigation efforts as renewable energy projects are built, including acquisition to protect threatened or endangered species with few individuals left in the world and to provide habitat. The areas also are ripe for projects (think Roadrunner blowing up Wile E. Coyote’s buildings) to restore populations of sensitive species.
Cost CausationIt comes down to socialization or personal/corporate responsibility. Policy makers overseeing renewable energy entrants into the grid are trying to determine how to allocate the cost of specific generators. It could be simple socialization, but then it would assign costs to those who don’t create the increases—like paying taxes for public school, even though you don’t have kids. Or, it could be complicated to assign the exact amount of extra cost causation to generators who create the added expense.
Debt EquivalencyInvestor-owned utilities after the 2000-01 crisis worried about the financial risks of third-party power contracts. Compensation for that risk is known as "debt equivalency." It boils down to how private utility projects and contracts are treated by credit rating agencies. The California Public Utilities Commission compensates utilities for the perceived risk.
DecommissioningIf it was a ship, it would be rusting out in the bay. A nuclear power plant’s decommissioning takes more than “rust never sleeps.” The radioactive detritus from fission—plutonium and other toxic material—lasts for about 140,000 years. Thus, the nuclear plant keepers must go to great lengths to shield humans and land from the lethal effects of radioactivity. It’s envisioned that sealing up used power plant components in concrete will do the trick—at least for a few generations. It’s also expected that decommissioning will cost as much, if not more than the original cost of the facility.
DerivativesA carbon credit, or a utility’s move to hedge its natural gas price volatility, is usually an unregulated derivative financial device. It’s “derived” from underlying, tangible, assets, such as the value of carbon as a commodity, or a crop. In itself, a derivative has no value. It is a bet on the movement of other, real, assets.
Direct AccessConsidered consumer choice, "direct access," allows ratepayers to bypass their utility and buy power directly from other providers. The direct access door was opened to customers during the 1996 energy industry deregulation. It was largely frozen after the 2000-01 energy crisis.
Distributed GenerationIt’s a neighborhood v. metropolis thing. Distributed generation is in one’s backyard and not far away like a skyscraper in the big city. With photovoltaics on school roofs, or windmills on farms, the electricity produced doesn’t have to travel far to get to its users. Distributed generation avoids building high transmission lines because the electricity is produced and used locally.
Dry CoolingOn blistering hot days, we can cool ourselves by standing next a fan or soaking our clothes. Power plant cooling works much the same way. Electricity generating facilities get hot. Waste heat can be dispersed by air or water. Water cooling, however, is being phased out because of its harm to aquatic environments, placing dry cooling center stage. There are different dry cooling technologies but they all use air to disperse a plant’s heat. Some use large fans and others dry cooling towers. Dry-cooled plants have a larger footprint, are more capital-intensive and on very hot days plant efficiency drops.
Dynamic PricingThis is akin to Time-of-Use rates, entailing the ability to charge ratepayers hourly or other time-segmented rates for electricity to better reflect the actual price of power. Dynamic pricing aims to inform consumers about the real time cost of their energy use to motivate them to shift their power usage away from times of high demand.
En BancIn state agency vernacular, the term means that a regulatory body as a whole is called in to preside over a meeting or a hearing that is not part of its regularly held business meeting. Literally, it’s means all judges are supposed to be “on a bench.” All commissioners are supposed to be available for “en banc” meetings.
Energy Star ProgramThe U.S. EPA began the federal Energy Star program in 1992 in response to the spread of desktop computers and the habit of leaving them turned on all the time. To stop the waste—and cut associated greenhouse gas emissions—EPA set up a voluntary certification program that would award manufacturers with the now familiar Energy Star label if they could reduce the energy consumption of their computer models. Manufacturers did this by incorporating “power management” systems that would allow various components of their computers, like the hard drive, to go into “sleep mode” when the machines sat idle. Since then the program has expanded to some 60 product categories—from dishwashers to chargers for cameras and cell phones. The U.S. Department of Energy manages the program for major appliances, like refrigerators and washers. EPA primarily focuses on consumer electronics and buildings. Manufacturers voluntarily test their own products based on standard government methods and submit those results to the federal agencies.
Feed-in TariffThis oddly-named tariff is not a dairy trough but one involving set payments for renewable energy project output over several years. It provides solar, wind and other alternative project developers financial security. Feed-in tariffs often can include a subsidy. This tariff also includes public, standard contract terms, avoiding closed-door negotiations between utilities and solar, wind and other alternative energy developers.
Go to GroundIn the spy trade, “go to ground” means to disappear. Like 007, into the physical ether—new passport, new life. In the electricity trade, it’s similar. When electricity goes to ground it, too, disappears. Electricity, however, doesn’t get a new passport or a new life. It's simply wasted. If it is not used on demand it goes to ground, regardless of its cost. Until there’s storage developed, generators get paid to make electricity and consumers pay again for any excess to take if off the hands of grid operators when there’s too much electricity to consume.
Green JobsIf a carpenter builds a house and installs energy efficient windows, is that a green job? Is the electrician who installs the occasional solar panel on a rooftop or the plumber who installs a solar hot water heating system for a pool a “green collar” worker? The U.S. Bureau of Labor Statistics is trying to define “green jobs.” The feds say making green products, providing green services, producing conventional products and services with new green processes may be inclusive.
LeakageRegulators trying to limit greenhouse gas emissions are concerned about preventing “leakage.” It occurs when a company moves its operations out of a state, such as California, or to another nation, where greenhouse gases don’t face similar controls. Leakage also can occur when a factory in a regulated state or nation shuts down and a competitor in an unregulated state or nation picks up their market share, producing the same product and exporting it into the regulated geographic area. In both cases, regulators consider the associated greenhouse gas emissions to have “leaked” outside of their regulatory system.
Loading OrderLike stacking the heavy groceries at the bottom of your sack first, the “loading order” leaves the easiest and less-costly (environmentally and economically) alternatives at the top. It’s a state policy directing the power industry to meet new electrical load first through energy efficiency and demand-response, second with new renewable energy resources, and weighted at the bottom, fossil fuel generation.
Market Price ReferentA fluctuating benchmark set by the California Public Utilities Commission against which the reasonableness of the cost of a solar, wind or other alternative power project is measured.
Memorandum AccountYour kid gets an allowance; money for extra credit chores. The California Public Utilities Commission’s “kids” (utilities) gets an allowance (rates). Utilities also want money for chores (unforeseen events). The chore purse is known as a “memorandum account.” If a memorandum account is allowed, it’s to preserve utilities’ opportunity for cost recovery. Critics say it may be double dipping; paying IOUs for chores already covered by the allowance.
Needs AssessmentShould California assess its caloric need to decide whether it needs another candy bar or power plant? Adding figures up to see if the state’s power butt looks too big is the goal of a “needs” assessments. It weighs proposed power plants, power plants to be retired, energy efficiency diets and air quality, economic impacts. Just what will be on the plate is a lot of of guesswork, but gives policymakers something to rely on when committing the state environment and economy to a given power diet.
NegawattsIt is more than the Spanish idiom for "you're welcome,"-- de nada, or "of nothing." Negawatts (NW) are more than doing nothing for which regulators give thanks. Negawatts avoid generating power through consumer conservation and utility demand-response programs. Reductions in energy use result in fewer greenhouse gas emissions.
Nuclear InsuranceNot the Geico gecko insurance mascot, it’s more Wall St.’s Gordon Gekko. If there’s a nuclear accident in the U.S., nuclear plant owners have limited liability. As of this year, anything much above $12 billion in liability is to be covered by taxpayers, according to the 1957 Price-Anderson Act. Nuclear plant owners contribute to the insurance fund up to the cut off.
PACEPACE means peace in Italian but also translates into a municipal financing program offering upfront greenbacks to help green homes. That was until the federal housing mortgage agencies viewed it as threatening their shaky sovereignty. The Property Assessed Clean Energy (PACE) programs helped homeowners get around the initial steep retrofit costs by providing upfront financing in exchange for long-term property tax assessments. Since July 2010, PACE advocates have sought détente with the Federal Housing Finance Agency.
Price CollarsTo control carbon prices in a cap-and-trade market, regulators are considering two types of price collars. Hard collars, like extra starch, set a floor and ceiling on allowances, beyond which prices can’t budge. Soft price collars, like casual Fridays, allow greater latitude, but are tempered on the margins by government intervention. Government could use a reserve pool of allowances, releasing them to the market to dampen prices on the high side. The reserve could purchase credits to bolster prices on the low side. When the reserve runs low, regulators could refill it with emissions allowances from the future or by allowing increased use of offsets.
Public Goods ChargeHaving a purpose in life helps focus one’s energy. The purpose of the state’s public goods funded programs is to increase alternative energy resources, push the envelope on innovative research and development and assist struggling ratepayers. When the state’s power industry was deregulated, legislation was passed to direct a small portion of ratepayer funds to benefit the public. These public goods programs monies were directed to the California Energy Commission and California Public Utilities Commission, with $125 million to the CEC and $228 million to the CPUC annually.
Radioactive WasteUranium is mined and enriched as feedstock for nuclear power. Fissionable uranium creates steam to turn turbines. Once the uranium’s spent, the main waste byproduct is plutonium. That element is highly radioactive and fatal in the smallest amounts. Scientists predict that 24,000 years must pass before half of the element is rendered inert (“half life”). Complete denature is expected to take 240,000 years.
Rate of ReturnWhat’ in Your Wallet? Credit card companies are likely to extract 20% on your debt. In California, ratepayers pay 8.5%-11.5% on investor-owned utilities’ debts & investments. In regulatory parlance, it’s known as the “rate of return” or “cost of capital.” Utilities can finance new investments, like new transmission lines, with a portion of their equity and gather debt funding. Utilities are roughly limited to a 50-50 split between the two. On debt, there’s about 9% profit. On equity, regulators require ratepayers to service around 11%.
Reactive PowerWe can be active, proactive, and reactive, depending on the situation. So can energy. In the electricity industry, reactive power is a technical term defined various ways to describe a nebulous concept originally called “imaginary power.” Generally, it is a force that can be positive or negative, allowing the flow of real power from the generator to the consumer of energy. Imaginary, or reactive power, is akin to the energy absorbed by the spring between rail cars as they move back and forth along a rail line, with the spring recoiling and releasing propelling the cars forward.
RECLAIMMajor power plants operating within the South Coast Air Basin must maintain a sufficient supply of credits to cover their emissions of nitrogen and sulfur oxides under the South Coast Air Quality Management District’s REgional Clean Air Incentives Market program. It is known as RECLAIM. The program caps total emissions from power plants and other industries in the area. When the program started, each of the facilities received credits based on their historic emissions. Companies that emit less than their cap in any year can sell their unneeded credits to those who wish to emit more than their cap. The credits are traded on the open market at a price determined by the market.
Resource AdequacyResource adequacy is a cushion of power that utilities are required to have on hand. It helps ensure supply adequacy when power demand is stretched.
Ring-FencingIn Britain, fencing refers to a physical obstruction that keeps the sheep and the cattle from munching the greens. While a term of art, not law, in California regulation, it’s a financial separation to obstruct a utility’s parent or sibling’s bankruptcy from raiding the greenbacks on the utility’s plate.
Smart GridAP "smart grid", unlike AP English, generally refers to a two-way digital flow of communication between customers' advanced or "smart" meters, and utilities. A definitive defintion of "smart grid" is lacking.
Suspense FileNot the kind in a Hitchcock film, but the holding place for bills which carry appropriations over a specified dollar amount. The suspense file is a function of the fiscal committee in both houses. Bills are generally held on the suspense file before the adoption of the budget bill and just before the summer recess.
Time-of-UseTime-of-use rates, or dynamic pricing, refer to electricity prices based on certain blocks of time during the day. It's aimed at motivating large and small customers to reduce power consumption to lower utility bills via time-of-use meters that display block power prices. For example, 6a.m.- 8a.m, energy prices are low because power usage is moderately light across the state. In contrast, power prices on late afternoons on hot days increase due to high demand. Time-of-use rates replace flat rates that apply to most residential ratepayers. The latter rate melds both high and low power costs, which are not transparent to the end user. Currently, 200,000 large energy users in California have time-of-use meters, many of which were paid for by residential ratepayers during the 2000-01 energy crisis.
Tradable Renewable Energy CreditsTo avoid the fate of Tyrannosaurus Rex, T-RECs—or Tradable Renewable Energy Credits—are touted as a market strategy for avoiding extinctions of four- and two-legged creatures. Tradable RECs represent the “green”—or carbon lite attribute of non-fossil energy supplies. This branding, also known as “green tags,” is bought and sold separately from the renewable unit’s energy output. T-RECs are traded in several states but had been limited in California. A contentious issue is who owns the “green” attribute of renewable projects under contracts signed before renewable energy credits came into being—the renewable generator or the utility holding the contract.
Transmission & DistributionNature versus nurture: where does one begin and the other end? The state’s electrical highway is made up of the high voltage transmission system and lower voltage distribution systems. Distribution or power lines interconnect with the high voltage system, but what constitutes distribution differs by utility. Together they make up the grid. The majority of the transmission system is managed by the California Independent System Operator. Utilities step down power flows from long distance 230 kV or higher lines so they can fuel homes and businesses.
Water Ways & MeansPower plant water discharges are required by the federal Clean Water Act to be “permitted” by the state. Permits are issued annually for coastal power plants that use once-through water cooling. The permit cost is based on the amount of flow the generating facility is allowed to discharge into the ocean. The fee is capped at a set flow—one that is below power plants’ discharge. There was a recent fee hike, raising the ire of permitees.
Zero Net EnergyAlso referred to as "net-zero energy" homes and commercial facilities, these buildings generate as much power as they consume over a year. It generally refers to energy efficient buildings fitted with solar panels or other carbon-free renewable systems on their roofs or nearby, along with low water using devices.
Zero-Based BudgetingIncremental budgeting is a California tradition. With zero-based budgeting, instead program managers start building their budgets each year with a blank slate. Each activity and expenditure is justified rather than simply dusting off last year’s budget and justifying only the increases. Proponents argue zero-based wrings inefficiency out of operations, eliminates the opportunity for budget padding, and perpetuating activities that no longer remain useful. Critics contend it’s time consuming, causes instability, and downplays research and development that don’t produce immediate results.

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