Account classification: The way in which suppliers of electricity, natural gas or fuel oil classify and bill their customers. Commonly used account classifications are "residential," commercial, industrial and other. Suppliers' definitions of these terms vary from supplier to supplier. In addition, the same customer may be classified differently by each of its energy suppliers.

Active power: The component of electric power that performs work, typically measured in kilowatts (kW) or megawatts (MW). Also known as real power. The terms active or real are used to modify the base term power to differentiate it from reactive power.

Aggregator: Any marketer, broker, public agency, city, county or special district that combines the loads of multiple end-use customers in negotiating the purchase of electricity, the transmission of electricity, and other related services for these customers.  An Aggregator joins two or more customers into a single purchasing unit to negotiate the purchase of electricity from Retail Electric Providers.  An Aggregator conducts research on electricity prices, contract terms and conditions, and other services that their customers want, and recommends a Retail Electric Provider. Aggregators may also monitor electricity that customers use through an electric load profile, which shows what months, days of the week, and times of day their group tends to use electricity.

You could save even more money by becoming a part of the Credo Energy Monthly Electric Aggregation Program. By pooling up a group of individual businesses monthly bills together, that new group is usually able to command a lower electric price; hence benefitting every business in that electric aggregation group.

For every month or other designated time period, Credo Energy can combine all businesses that have opted in to the Credo Energy Electric Aggregation Program and shop one big bulk energy package to the retail electric providers. For example, let’s assume that your company spends $1,000 a month on electricity and opts in as part of the monthly electric aggregation program and during this monthly period 499 other companies opt in to the monthly electric aggregation program with monthly electric bills of $1,000. You now have a pool of 500 companies with a $500,000 monthly bulk electric energy order to the electric providers which can provide additional significant savings.

*When you fill out the Free Cost Analysis Request Form, please express your interest in electric aggregation.

Alternative Retail Electric Supplier (ARES) - Any person, corporation, generator, broker, marketer, aggregator or other entity certified by the Illinois Commerce Commission (ICC) that sells electricity to customers.

Ampere: The unit of measurement of electrical current produced in a circuit by 1 volt acting through a resistance of 1 Ohm.

Ancillary services: Services that ensure reliability and support the transmission of electricity from generation sites to customer loads. Such services may include: load regulation, spinning reserve, non-spinning reserve, replacement reserve and voltage support.

Anthracite: The highest rank of coal; used primarily for residential and commercial space heating. It is a hard, brittle and black lustrous coal, often referred to as hard coal, containing a high percentage of fixed carbon and a low percentage of volatile matter. The moisture content of fresh-mined anthracite generally is less than 15 percent. The heat content of anthracite ranges from 22 to 28 million Btu per ton on a moist, mineral-matter-free basis. The heat content of anthracite coal consumed in the United States averages 25 million Btu per ton, on the as-received basis (i.e., containing both inherent moisture and mineral matter). Note: Since the 1980s, anthracite refuse or mine waste has been used for steam electric power generation. This fuel typically has a heat content of 15 million Btu per ton or less.

Apparent power: The product of the voltage (in volts) and the current (in amperes). It comprises both active and reactive power. It is measured in volt-amperes and often expressed in kilovolt-amperes (kVA) or megavolt-amperes (MVA).

Appliance: A piece of equipment, commonly powered by electricity, used to perform a particular energy-driven function. Examples of common appliances are refrigerators, clothes washers and dishwashers, conventional ranges/ovens and microwave ovens, humidifiers and dehumidifiers, toasters, radios and televisions. Note: Appliances are ordinarily self-contained with respect to their function. Thus, equipment such as central heating and air conditioning systems and water heaters, which are connected to distribution systems inherent to their purposes, are not considered appliances.

Appliance energy efficiency ratings: The ratings under which specified appliances convert energy sources into useful energy, as determined by procedures established by the U.S. Department of Energy.

Appliance efficiency index: A relative comparison of trends in new-model efficiencies for major appliances and energy-using equipment. The base year for relative comparisons was 1972 (1972=100). Efficiencies for each year were efficiencies of different model types that were weighted by their market shares.

Appliance efficiency standards: The National Appliance Energy Conservation Act of 1987 established minimum efficiency standards for major home appliances, including furnaces, central and room air conditioners, refrigerators, freezers, water heaters, dishwashers and heat pumps. Most of the standards took effect in 1990. The standards for clothes washers, dishwashers and ranges took effect in 1988, because they required only minor changes in product design, such as eliminating pilot lights and requiring cold water rinse options. The standards for central air conditioners and furnaces took effect in 1992, because it took longer to redesign these products. Appliance efficiency standards for refrigerators took effect in 1993.

Auxiliary generator: A generator at the electric plant site that provides power for the operation of the electrical generating equipment itself, including related demands such as plant lighting, during periods when the electric plant is not operating and power is unavailable from the grid. A black start generator used to start main central station generators is considered to be an auxiliary generator.

Average Payment Plan:  An agreement worked out between an Electricity Provider and a customer that allows you to pay approximately the same amount for your electric service each month. 

Ballast: A device used to control the voltage in a fluorescent lamp.

Barrel: A unit of volume equal to 42 U.S. gallons.

Batt/blanket: A flexible roll or strip of insulating material in widths suited to standard spacing of building structural members (studs and joists). They are made from glass or rock wool fibers. Blankets are continuous rolls. Batts are pre-cut to four or eight foot lengths.

Biomass: Organic non-fossil material of biological origin constituting a renewable energy source.  Fuel derived from plant and organic matter that is used to generate electricity. Landfill gas is one of the most widely used forms of biomass generation. At those facilities, gases from decomposing organic matter are collected and burned to generate electricity. While biomass-based generation is not entirely pollution free, it does not contribute to global warming and produces much less pollution than more traditional sources of electricity such as coal.

Bituminous coal: A dense coal, usually black, sometimes dark brown, often with well-defined bands of bright and dull material, used primarily as fuel in steam-electric power generation, with substantial quantities also used for heat and power applications in manufacturing and to make coke. Bituminous coal is the most abundant coal in active U.S. mining regions. Its moisture content usually is less than 20 percent. The heat content of bituminous coal ranges from 21 to 30 million Btu per ton on a moist, mineral-matter-free basis. The heat content of bituminous coal consumed in the United States averages 24 million Btu per ton, on the as-received basis (i.e., containing both inherent moisture and mineral matter).

Blend And Extend products:  Using this option, customers may change their locked-in price in response to market rates. This modified contract price, which falls between the contract price and the market rate, is the “blend.” The contract then “extends” to a longer term to provide continuing budget stability. The product can be beneficial whether one is “blending” their price down or up.

Blower door: A device used by energy auditors to pressurize a building to locate places of air leakage and energy loss.

Blown-in insulation (loose fill): An insulation product composed of loose fibers or fiber pellets that are blown into building cavities or attics using special pneumatic equipment.

British thermal unit: The quantity of heat required to raise the temperature of 1 pound of liquid water by 1 degree Fahrenheit at the temperature at which water has its greatest density (approximately 39 degrees Fahrenheit).

Broker: an entity that arranges the sale and purchase of electric energy, transmission, and other services between buyers and sellers, but does not take title to any of the power sold.

Building Envelope: The structural elements (walls, roof, floor, foundation) of a building that encloses conditioned space; the building shell.

Built-in electric units: An individual-resistance electric-heating unit that is permanently installed in the floors, walls, ceilings, or baseboards and is part of the electrical installation of the building. Electric-heating devices that are plugged into an electric socket or outlet are not considered built in.

Butane (C4H10): A normally gaseous straight-chain or branch-chain hydrocarbon extracted from hydrocarbon extracted from natural gas or refinery gas streams. It includes isobutane and normal butane and is designated in ASTM Specification D1835 and Gas Processors Association Specifications for commercial butane.
Capacity: See Generator capacity and Generator name plate capacity (installed).

Carbon Dioxide (CO2):  CO2 is naturally present in the Earth’s atmosphere and is a greenhouse gas considered to be the main anthropogenic contributor to global warming and climate change. Burning fossil fuels to produce electricity and drive our cars releases significant amounts of CO2 into the atmosphere.

Carbon Footprint:  Your carbon footprint is a representation of the effect you, or your business, have on the climate in terms of the total amount of CO2 emissions you produce. Activities that constitute a household’s carbon footprint include, but are not limited to, electricity usage, vehicle travel, airline travel and natural gas usage.

Central cooling: Cooling of an entire building with a refrigeration unit to condition the air. Typically central chillers and ductwork are present in the centrally cooled building.

Central warm air furnace: A type of space heating equipment where a central combustor or resistance unit generally using gas, fuel oil, or electricity provides warm air through ducts leading to the various rooms. Heat pumps are not included in this category. A forced air furnace is one in which a fan is used to force the air through the ducts. In a gravity furnace, air is circulated by gravity, relying on the natural flow of warm air up and cold air down; the warm air rises through ducts and the cold air falls through ducts that return it to the furnace to be reheated and this completes the circulation cycle.

Climate Change:  Climate change describes the ongoing transformation of the Earth’s average climate over time (from decades to millions of years). The majority of the world’s climate scientists have concluded that greenhouse gas (GHG) emissions resulting from human activities, such as transportation and electricity production, have a significant impact on the atmosphere and are having a discernible influence on the global climate.

Coal: A readily combustible black or brownish-black rock whose composition, including inherent moisture, consists of more than 50 percent by weight and more than 70 percent by volume of carbonaceous material. It is formed from plant remains that have been compacted, hardened, chemically altered, and metamorphosed by heat and pressure over geologic time.

Combined hydroelectric plant: A hydroelectric plant that uses both pumped water and natural stream flow for the production of power.

Combined pumped-storage plant: A pumped-storage hydroelectric power plant that uses both pumped water and natural stream flow to produce electricity.

Commercial building: A building with more than 50 percent of its floor space used for commercial activities. Commercial buildings include, but are not limited to, stores, offices, schools, churches, gymnasiums, libraries, museums, hospitals, clinics, warehouses, and jails. Government buildings are included except for buildings on military bases or reservations.

Commercial facility: An economic unit that is owned or operated by one person or organization and that occupies two or more commercial buildings at a single location. A university and a large hospital complex are examples of a commercial multi-building facility.

Compact fluorescent bulbs: These are also known as "screw-in fluorescent replacements for incandescent" or "screw-ins." Compact fluorescent bulbs combine the efficiency of fluorescent lighting with the convenience of a standard incandescent bulb. There are many styles of compact fluorescent, including exit light fixtures and floodlights (lamps containing reflectors). Many screw into a standard light socket, and most produce a similar color of light as a standard incandescent bulb. Compact fluorescent bulbs come with ballasts that are electronic (lightweight, instant, no-flicker starting, and 10 to 15% more efficient) or magnetic (much heavier and slower starting). Other types of compact fluorescent bulbs include adaptive circulation and PL and SL lamps and ballasts. Compact fluorescent bulbs are designed for residential uses; they are also used in table lamps, wall sconces, and hall and ceiling fixtures of hotels, motels, hospitals, and other types of commercial buildings with residential-type applications.

Conventional hydroelectric plant: A plant in which all of the power is produced from natural stream flow as regulated by available storage.

Conventional thermal electricity generation: Electricity generated by an electric power plant using coal, petroleum, or gas as its source of energy.

Cooling: Conditioning of room air for human comfort by a refrigeration unit (such as an air conditioner or heat pump) or by circulating chilled water through a central cooling or district cooling system. Use of fans or blowers by themselves, without chilled air or water, is not included in this definition of cooling.

Cooling system: An equipment system that provides water to the condensers and includes water intakes and outlets; cooling towers; and ponds, pumps, and pipes.

Crude oil: A mixture of hydrocarbons that exists in liquid phase in natural underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities. Depending upon the characteristics of the crude stream, it may also include:

1. Small amounts of hydrocarbons that exist in gaseous phase in natural underground reservoirs but are liquid at atmospheric pressure after being recovered from oil well (casinghead) gas in lease separators and are subsequently commingled with the crude stream without being separately measured. Lease condensate recovered as a liquid from natural gas wells in lease or field separation facilities and later mixed into the crude stream is also included;
2. Small amounts of nonhydrocarbons produced with the oil, such as sulfur and various metals;
3. Drip gases, and liquid hydrocarbons produced from tar sands, oil sands, gilsonite, and oil shale.

Liquids produced at natural gas processing plants are excluded. Crude oil is refined to produce a wide array of petroleum products, including heating oils; gasoline, diesel and jet fuels; lubricants; asphalt; ethane, propane, and butane; and many other products used for their energy or chemical content.

Current (electric): A flow of electrons in an electrical conductor. The strength or rate of movement of the electricity is measured in amperes.

Customer choice: The right of customers to purchase energy from a supplier other than their traditional supplier or from more than one seller in the retail market.

Dam: A physical barrier constructed across a river or waterway to control the flow of or raise the level of water. The purpose of construction may be for flood control, irrigation needs, hydroelectric power production, and/or recreation usage.

Demand charge: That portion of the consumer's bill for electric service based on the consumer's maximum electric capacity usage and calculated based on the billing demand charges under the applicable rate schedule.

Demand-side management: Designed to encourage consumers to modify patterns of electricity usage, including the timing and level of electricity demand. It refers to only energy and load-shape modifying activities that are undertaken in response to utility-administered programs. It does not refer to energy and load-shaped changes arising from the normal operation of the marketplace or from government-mandated energy-efficiency standards. Demand-side management covers the complete range of load-shape objectives, including strategic conservation and load management and strategic load growth.

Deregulation: The elimination of some or all regulations from a previously regulated industry or sector of an industry.

Distribution: The delivery of energy to retail customers.

Distribution Charges:  Part of the basic service charges on every customer's bill for delivering electricity from the electric distribution company to your home or business. Distribution charges are regulated by the Public Utility Commission.

Distribution System:  The local poles, wires, transformers, substations and other equipment used to deliver electricity to end-use consumers from high-voltage transmission lines. 

Electric current: The flow of electric charge. The preferred unit of measurement is the ampere.

Electric energy: The ability of an electric current to produce work, heat, light or other forms of energy. It is measured in kilowatt hours.

Electricity Facts Label:  An information sheet required by the PUC that provides customers with standardized information on a retail electric provider's prices, contracts, sources of power generation and emissions. It allows customers to make an "apples-to-apples" comparison of electric provider offers.

Electric generator: A facility that produces only electricity, commonly expressed in kilowatthours (kWh) or megawatthours (MWh). Electric generators include electric utilities and independent power producers.

Electric power plant: A station containing prime movers, electric generators and auxiliary equipment for converting mechanical, chemical and/or fission energy into electric energy.

Electric utility: A corporation, person, agency, authority or other legal entity or instrumentality aligned with distribution facilities for delivery of electric energy for use primarily by the public. Included are investor-owned electric utilities, municipal and State utilities, Federal electric utilities and rural electric cooperatives. A few entities that are tariff based and corporately aligned with companies that own distribution facilities are also included.

Electricity generation: The process of producing electric energy or the amount of electric energy produced by transforming other forms of energy, commonly expressed in kilowatthours (kWh) or megawatthours (MWh).

ESI I.D. (Electric Service Identifier): An ESI ID is a unique number within the Texas electric market assigned to each delivery point-of-service by the TDSP. This number stays with the residence it is assigned to (it does not move with the customer). To find your ESI I.D., look at a current electric bill for that same service address.

Energy efficiency, electricity: Refers to programs that are aimed at reducing the energy used by specific end-use devices and systems, typically without affecting the services provided. These programs reduce overall electricity consumption (reported in megawatthours), often without explicit consideration for the timing of program-induced savings. Such savings are generally achieved by substituting technologically more advanced equipment to produce the same level of end-use services (e.g. lighting, heating, motor drive) with less electricity. Examples include high-efficiency appliances, efficient lighting programs, high-efficiency heating, ventilating and air conditioning (HVAC) systems or control modifications, efficient building design, advanced electric motor drives and heat recovery systems.

EnergyGuide Label: You can learn about the energy efficiency of an appliance that you're thinking about buying through the yellow-and-black EnergyGuide label it displays. The Federal Trade Commission's Appliance Labeling Rule requires appliance manufacturers to put these labels on:

• Refrigerators, freezers, dishwashers, clothes washers

• Water heaters, furnaces, boilers

• Central air conditioners, room air conditioners, heat pumps

• Pool heaters

The EnergyGuide label gives you two important pieces of information you can use to compare different brands and models when shopping for a new appliance:

1. Estimated energy consumption on a scale showing a range for similar models.
2. Estimated yearly operating cost based on the national average cost of electricity.

Energy service provider: An energy entity that provides service to a retail or end-use customer.

Energy source: Any substance or natural phenomenon that can be consumed or transformed to supply heat or power. Examples include petroleum, coal, natural gas, nuclear, biomass, electricity, wind, sunlight, geothermal, water movement and hydrogen in fuel cells.

Energy Star: ENERGY STAR is a government-backed program helping businesses and individuals protect the environment through superior energy efficiency. For more information, visit www.energystar.gov.

ERCOT (Electric Reliability Council Of Texas):  ERCOT manages the flow of electric power to approximately 21 million Texas customers -  representing 85 percent of the state’s electric load and 75 percent of the Texas land area.  The ERCOT Region includes Houston, Dallas, Fort Worth, San Antonio, Austin, Corpus Christi, Abilene and the Rio Grande Valley.  ERCOT does not include the El Paso area, the Texas Panhandle, Northeast Texas (Longview, Marshall and Texarkana), and Southeast Texas (Beaumont, Port Arthur, and the Woodlands).  Responsible for system reliability and competitive wholesale market in Texas. ERCOT is also responsible for centralized power scheduling, transactions and evaluation of balanced schedules to ensure reliability.

Facility: An existing or planned location or site at which prime movers, electric generators and/or equipment for converting mechanical, chemical and/or nuclear energy into electric energy are situated or will be situated. A facility may contain more than one generator of either the same or different prime mover type. For a cogenerator, the facility includes the industrial or commercial process.

Fluorescent light bulbs: These are usually long, narrow, white tubes made of glass, coated on the inside with fluorescent material, which is connected to a fixture at both ends of the light bulb; some are circular tubes. The light bulb produces light by passing electricity through mercury vapor, which causes the fluorescent coating to glow or fluoresce. In fluorescent lamps, energy is converted to light by using an electric charge to excite gaseous atoms within a fluorescent tube. Common types are cool white, warm white, etc. Special energy-efficient fluorescent lights have been developed that produce the same amount of light while consuming less energy.

Fossil fuel: An energy source formed in the earth’s crust from decayed organic material. The common fossil fuels are petroleum, coal and natural gas.  They’re called fossil fuels because they are formed from the decayed remains of prehistoric plants and animals. Fossil fuels are non-renewable energy sources which have a finite supply. All fossil fuels contain carbon, and when they are combusted to make electricity or power an airplane or automobile engine, they create carbon dioxide (CO2), a major greenhouse gas.

Fossil-fuel electric generation: Electric generation in which the prime mover is a turbine rotated by high-pressure steam produced in a boiler by heat from burning fossil fuels.

Fossil fuel plant: A plant using coal, petroleum or gas as its source of energy.

Fossil fuel steam-electric power plant: An electricity generation plant in which the prime mover is a turbine rotated by high-pressure steam produced in a boiler by heat from burning fossil fuels.

Fuel expenses: These costs include the fuel used in the production of steam or driving another prime mover for the generation of electricity. Other associated expenses include unloading the shipped fuel and all handling of the fuel up to the point where it enters the first bunker, hopper, bucket, tank or holder in the boiler-house structure.

Fuel Factor:  An affiliate electricity provider is allowed to recover its costs for the fuel used to generate electricity, such as coal, natural gas, wind, water, nuclear, etc., through the fuel factor. This cost is set by the Public Utility Commission of Texas and charged on each customer's bill, based on kilowatt-hour (kWh) usage. An affiliate electricity provider is prohibited from making a profit on fuel costs because they only sell electricity and does not generate it.

Furnaces that heat directly, without using steam or hot water (similar to a residential furnace): Furnaces burn natural gas, fuel oil, propane/ butane (bottled gas) or electricity to warm the air. The warmed air is then distributed throughout the building through ducts. Many people use the words boilers and furnaces interchangeably. They are not the same. We mean that warm air is produced directly by burning some fuel. Warm-air furnaces typically rely on air ducts to carry the warm air throughout the building. Warm-air furnaces are often built in combination with central air-conditioning systems, so that they can use the same air ducts for both heating or air-conditioning (depending on the season). Other terms for describing this type of equipment include: central system, split system and forced air/forces air furnace.

Generating facility: An existing or planned location or site at which electricity is or will be produced.

Generating station: A station that consists of electric generators and auxiliary equipment for converting mechanical, chemical, or nuclear energy into electric energy.

Generating unit: Any combination of physically connected generators, reactors, boilers, combustion turbines and other prime movers operated together to produce electric power.

Generation: The process of producing electric energy by transforming other forms of energy; also, the amount of electric energy produced, expressed in kilowatthours.

Generation charges:  The part of every customer's electricity bill that goes toward producing electricity. In deregulated electric markets, generation is competitively priced and is not regulated by the state. Generation charges are determined by suppliers, or may be negotiated by entities such as aggregators and utility partners.

Generation company: An entity that owns or operates generating plants. The generation company may own the generation plants or interact with the short-term market on behalf of plant owners.

Generator capacity: The maximum output, commonly expressed in megawatts (MW), that generating equipment can supply to system load, adjusted for ambient conditions.

Geothermal energy: Hot water or steam extracted from geothermal reservoirs in the earth's crust. Water or steam extracted from geothermal reservoirs can be used for geothermal heat pumps, water heating or electricity generation.

Geothermal plant: A plant in which the prime mover is a steam turbine. The turbine is driven either by steam produced from hot water or by natural steam that derives its energy from heat found in rock.

Green electricity:  Electricity that is made from renewable resources like wind, water, geothermal, solar and biomass.
Greenhouse effect:  The increasing mean global surface temperature of the Earth caused by gases in the atmosphere (including carbon dioxide, methane, nitrous oxide, ozone, and chlorofluorocarbon). The greenhouse effect allows solar radiation to penetrate but absorbs the infrared radiation returning to space.

Greenhouse gases:  A family of gases that trap radiant energy. Greenhouse gases include carbon dioxide, methane, nitrous oxide, water vapor, and halocarbons (i.e., chlorofluorocarbons). Human beings are increasing the amount of greenhouse gases in the air by burning fossil fuels. These increases affect our environment in the form of global warming and climate change.

Grid:  A network for the transmission of electricity throughout a region. The term is also used to refer to the layout of an electric distribution system.

Gross generation: The total amount of electric energy produced by generating units and measured at the generating terminal in kilowatthours (kWh) or megawatthours (MWh).

Gulf Coast Power Association: (GCPA) www.gulfcoastpower.org The Gulf Coast Power Association is a regional electric power trade organization serving Texas and the Gulf Coast.  The Gulf Coast Power Association is a non-profit organization of individuals and corporations who are interested in promoting and sustaining a healthy competitive power market.   The Gulf Coast Power Association's mission is to promote an improved understanding of issues and opportunities impacting contemporary power markets.  Credo Energy Corporation is a member of the Gulf Coast Power Association.

Halogen lamp: A type of incandescent lamp that lasts much longer and is more efficient than the common incandescent lamp. The lamp uses a halogen gas, usually iodine or bromine, which causes the evaporating tungsten to be redeposited on the filament, thus prolonging its life.

Heat pump: Heating and/or cooling equipment that, during the heating season, draws heat into a building from outside and, during the cooling season, ejects heat from the building to the outside. Heat pumps are vapor-compression refrigeration systems whose indoor/outdoor coils are used reversibly as condensers or evaporators, depending on the need for heating or cooling.

Heat rate:  A measurement used in the energy industry to calculate how efficiently a generator uses heat energy. It is expressed as the number of BTUs of heat required to produce a kilowatt-hour of energy. Operators of generating facilities can make reasonably accurate estimates of the amount of heat energy a given quantity of any type of fuel, so when this is compared to the actual energy produced by the generator, the resulting figure tells how efficiently the generator converts that fuel into electrical energy.  Heat rate refers to the efficiency of an electric generating plant. The lower the heat rate, the more efficient the plant and the higher the heat rate, the less efficient the plant.  

Using a heat rate product for a retail electric contract:
A heat rate product in a retail electric contract determines final price through a formula. The customer selects a heat rate, typically between 8 and 9. The retail electric provider then provides an “adder” which will, in conjunction with the heat rate and natural gas price, determine the final cost of the electricity supplied under the agreement. The adder covers the retailer’s ancillary services, congestion costs, unaccounted for energy (UFE) costs, back office support, and margin. The customer then chooses a day on which to lock in natural gas for a period of time, which can range from one month to the complete term of the contract. Multiplying the heat rate by the price of natural gas and adding the adder to this result determine the final price. For instance, if a heat rate of 8.5 is chosen with an adder of $20 and the natural gas price is $6.00/MmBtu, then the cost for electricity would be $71/ MWh.  The formula works as follows: (8.5 * 6) + 20= 51+ 20=$71/MWh.  Understanding what the heat rate of a plant signifies as well as the relationship between natural gas prices and heat rates in the Texas market is an important first step for determining whether the benefits of a heat rate product outweigh the negatives.

Heat rate products - pros and cons:
In the Texas market for example, as natural gas prices go, so go electric power prices. In fact, there is a 90%+ correlation between natural gas prices and electricity prices in the ERCOT region. This means, especially in a market with excess supply such that generation is readily available, that the cost of natural gas will be the predominant determinant of the cost of electricity at both the wholesale and retail levels.

Heating equipment: Any equipment designed and/or specifically used for heating ambient air in an enclosed space. Common types of heating equipment include: central warm air furnace, heat pump, plug-in or built-in room heater, boiler for steam or hot water heating system, heating stove and fireplace.

High-efficiency lighting: Lighting provided by high-intensity discharge (HID) lamps and/or fluorescent lamps.

Horizontal axis wind turbine: The most common type of wind turbine where the axis of rotation is oriented horizontally.

HVAC: An abbreviation for the heating, ventilation and air-conditioning system; the system or systems that condition air in a building.

Hydroelectric power: The use of flowing water to produce electrical energy.

Incandescent lamp: A glass enclosure in which light is produced when a tungsten filament is electrically heated so that it glows. Much of the energy is converted into heat; therefore, this class of lamp is a relatively inefficient source of light. Included in this category are the familiar screw-in light bulbs, as well as somewhat more efficient lamps, such as tungsten halogen lamps, reflector or r-lamps, parabolic aluminized reflector (PAR) lamps and ellipsoidal reflector (ER) lamps.

Incandescent light bulbs, including regular or energy-efficient light bulbs: An incandescent bulb is a type of electric light in which light is produced by a filament heated by electric current. The most common example is the type you find in most table and floor lamps. In commercial buildings, incandescent lights are used for display lights in retail stores, hotels and motels. This includes the very small, high-intensity track lights used to display merchandise or provide spot illumination in restaurants. Energy-efficient light bulbs, known as watt-savers, use less energy than a standard incandescent bulb. Long-life bulbs — bulbs that last longer than standard incandescents but produce considerably less light — are not considered energy-efficient bulbs. This category also includes halogen lamps. Halogen lamps are a special type of incandescent lamp containing halogen gas to produce a brighter, whiter light than standard incandescent. Halogen lamps come in three styles: bulbs, models with reflectors and infrared models with reflectors. Halogen lamps are suited to recessed or canned fixtures, track lights and outdoor lights.

Illumination: The distribution of light on a horizontal surface. The purpose of all lighting is to produce illumination.

Independent power producer: A corporation, person, agency, authority or other legal entity or instrumentality that owns or operates facilities for the generation of electricity for use primarily by the public and that is not an electric utility.

Insulation: Any material or substance that provides a high resistance to the flow of heat from one surface to another. The different types include blanket/batt, foam or loose fill, which are used to reduce heat transfer by conduction. Dead air space is an insulating medium in storm windows and storms as it reduces passage of heat through conduction and convection. Reflective materials are used to reduce heat transfer by radiation.

Insulation around heating and/or cooling ducts: Extra insulation around the heating and/or cooling ducts intended to reduce the loss of hot or cold air as it travels to different parts of the residence.

Insulation around hot-water pipes: Wrapping of insulating material around hot-water pipes to reduce the loss of heat through the pipes.

Insulation around water heater: Blanket insulation wrapped around the water heater to reduce loss of heat. To qualify under this definition, this wrapping must be in addition to any insulation provided by the manufacturer.

Insulator: A material that is a poor conductor of electricity. The insulating material is usually a ceramic or fiberglass when used in the transmission line and is designed to support a conductor physically and to separate it electrically from other conductors and supporting material.

Kerosene: A light petroleum distillate that is used in space heaters, cook stoves, and water heaters and is suitable for use as a light source when burned in wick-fed lamps.
Kilovolt-Amperes (kVA):  Also known as Total Power. The resultant effect of the active (kW) and reactive (kVAr) power is the total power measured in kVa. Kva = kW/power factor.

Kilowatt (kW): One kilowatt equals one thousand watts.  Ten 100-watt light bulbs, for example, have a total power rating of one kilowatt.

Kilowatt hour (kWh): A measure of electricity defined as a unit of work or energy, measured as 1 kilowatt (1,000 watts) of power expended for 1 hour. One kWh is equivalent to 3,412 Btu.  One kilowatt hour equals 1,000 watt hours, which is the same as running a 100-watt light bulb for 10 hours, or ten 100-watt light bulbs for one hour.

Lamp: A term generally used to describe artificial light. The term is often used when referring to a bulb or tube.

Letter Of Authorization (LOA):  Letter used as a formal request and authorization for a referenced Distribution Company to release energy usage data.  Data requested is typically for the prior twelve month period of service.  

Lighting equipment: Light bulbs used to light the building's interior, such as incandescent light bulbs, fluorescent light bulbs, compact fluorescent light bulbs and high-intensity discharge (HID) lights.

Load (electric): The amount of electric power delivered or required at any specific point or points on a system. The requirement originates at the energy-consuming equipment of the consumers.

Load Factor: The ratio, usually stated as a percentage, of actual KWH used during a designated time period to the maximum KW of Demand times the number of hours occurring in the designated time period. Formula is total kwh/peak kw/number of hours in month.

Local Wires Company:  The company that transmits and delivers electricity to a customer's home or business along the poles and wires (formerly a local electric utility). This company is still responsible for maintenance and repair of these poles and wires and will respond to emergency power outages.

Low E glass: Low-emission glass reflects up to 90% of long-wave radiation, which is heat, but lets in short-wave radiation, which is light. Windows are glazed with a coating that bonds a microscopic, transparent, metallic substance to the inside surface of the double-pane or triple-pane windows.

Low flow showerheads: Reduce the amount of water flow through the showerhead from 5 to 6 gallons a minute to 3 gallons a minute.

Lumen: A measurement of light emitted by a lamp. As reference, a 100-watt incandescent lamp emits about 1750 lumens.

Market Clearing Price For Energy (MCPE):  MCPE stands for Market Clearing Price For Energy and is the bare bones price that Texas companies generally use to fashion a custom tailored contract when they are buying their energy in large blocks.  Essentially MCPE allows a Texas company to use the block purchase of power and then go over that purchase without penalty.  The company simply pays whatever the variable market rate is at that time.  The MCPE price for energy is a variable rate that changes every 15 minutes and is historically much lower than a fixed price rate.  The smartest way to use MCPE pricing is in a block purchase contract when you know about how much energy you will use but don’t want to pay a large amount when you go over the usage you have forecasted.  This market price is continuously posted and available on ERCOT.

Megawatt (MW):  A term commonly used to rate the power output of electric power plants or to define large electric customer loads. A megawatt equals one thousand kilowatts, or a million watts. A large utility power plant typically has a power rating of 500 to 1,000 megawatts. One megawatt of power could supply 500 to 1,000 average homes, depending on the time of day.

Meter read:  Recording the amount of electrical energy used by homes and businesses as displayed by an electricity meter. Electricity meters are typically mounted on the exterior walls of homes and businesses. Most record total kilowatt hours of energy used per month and are usually read monthly by utility employees.
MMBtu: One million British thermal units.

Municipally Owned Utility ("Muni"):  A non-profit utility that is owned and operated by the municipality it serves. In Texas, municipally owned utilities may opt into the competitive retail electric marketplace.

New renewables:  Any renewable energy source built (or repowered) after January 1, 1997.

Nitrogen oxides (NOx):  Formed when fossil fuels (notably oil, coal, and natural gas) and biomass (plant matter, wood chips, and landfill gas) are burned at high temperatures. NOx contributes to acid rain and smog. Health effects associated with smog include damage to lung tissue, increased asthma attacks, and respiratory illness in children with frequent high-level exposure. When NOx causes acid rain, it contributes to pollution of lakes and coastal waters and the degradation of sensitive forests. This pollution is destructive to fish and other animal life. Making electricity is responsible for 25% of all the NOx pollution in the U.S., over 6 million tons each year.

Non-utility power producer: A corporation, person, agency, authority or other legal entity or instrumentality that owns or operates facilities for electric generation and is not an electric utility. Non-utility power producers include qualifying cogenerators, qualifying small power producers and other non-utility generators (including independent power producers). Non-utility power producers are without a designated franchised service area and do not file forms listed in the Code of Federal Regulations, Title 18, Part 141.

Nuclear electric power (nuclear power): Electricity generated by the use of the thermal energy released from the fission of nuclear fuel in a reactor.

Nuclear fuel: Fissionable materials that have been enriched to such a composition that, when placed in a nuclear reactor, will support a self-sustaining fission chain reaction, producing heat in a controlled manner for process use.

New York Mercantile Exchange (NYMEX):  Natural gas accounts for almost a quarter of United States energy consumption, and the NYMEX Division natural gas futures contract is widely used as a national benchmark price.  The futures contract trades in units of 10,000 million British thermal units (mmBtu).

Occupancy sensors: These are also known as ultrasonic switchers. When movement is detected, the lights are turned on and remain on as long as there is movement in the room.

Off peak: Period of relatively low system demand. These periods often occur in daily, weekly and seasonal patterns; off-peak periods differ for each individual electric utility.

On peak: Periods of relatively high system demand. These periods often occur in daily, weekly and seasonal patterns; on-peak periods differ for each individual electric utility.

Operating capacity: The component of operable capacity that is in operation at the beginning of the period.

Output: The amount of power or energy produced by a generating unit, station or system.

Power: The rate of producing, transferring or using energy, most commonly associated with electricity. Power is measured in watts and often expressed in kilowatts (kW) or megawatts (mW). Also known as real or active power.

Power (electrical): An electric measurement unit of power called a voltampere is equal to the product of 1 volt and 1 ampere. This is equivalent to 1 watt for a direct current system, and a unit of apparent power is separated into real and reactive power. Real power is the work-producing part of apparent power that measures the rate of supply of energy and is denoted as kilowatts (kW). Reactive power is the portion of apparent power that does no work and is referred to as kilovars; this type of power must be supplied to most types of magnetic equipment, such as motors, and is supplied by generator or by electrostatic equipment. Voltamperes are usually divided by 1,000 and called kilovoltamperes (kVA). Energy is denoted by the product of real power and the length of time utilized; this product is expressed as kilowatt hours.

Provider of Last Resort:  The Provider of Last Resort serves as the "back-up" provider when an electric company leaves the market for any reason. If this happens, customers may switch back to the affiliate electricity provider or choose another competitive electricity provider offering electric service in their area.

Public utility: Enterprise providing essential public services, such as electric, gas, telephone, water and sewer under legally established monopoly conditions.

Public Utility Commission (PUC):  The state regulatory agency that provides oversight, policy guidance and direction to electric public utilities. The "PUC" designation may also be represented by other acronyms depending on the state, for example: PUCT (in Texas).

R-value: A measure of a material’s resistance to heat flow in units of Fahrenheit degrees x hours x square feet per Btu. The higher the R-value of a material, the greater its insulating capability. The R-value of some insulating materials is 3.7 per inch for fiberglass and cellulose, 2.5 per inch for vermiculite, and more than 4 per inch for foam. All building materials have some R-value. For example, a 4-inch brick has an R-value of 0.8, and half-inch plywood has an R-value of 0.6. The below table converts the most common R values to inches. For other R values, divide the R value by 3 to get the number of inches.

Radiant barrier: A thin, reflective foil sheet that exhibits low radiant energy transmission and under certain conditions can block radiant heat transfer; installed in attics to reduce heat flow through a roof assembly into the living space.

Radiant energy: Energy that transmits away from its source in all directions.

Range top: The range burners/stove top and the oven are considered two separate appliances. Counted also with range tops are stand-alone cook tops.

Regulation: The governmental function of controlling or directing economic entities through the process of rulemaking and adjudication.

Renewables:  Energy sources that are either inexhaustible (solar, wind) or replenished over a short period of time (hydro, biomass, geothermal). Most renewable energy ultimately comes from the sun - indirectly in the case of wind, water, and biomass; directly in the case of solar (PV) generation. Natural gas and coal, for example, are not renewables because their use consumes gas and coal reserves at a much quicker rate than they can be replenished.

Renewable Energy Credits (RECs), Green Tags or Tradable Renewable Certificates (TRCs):  A commodity that represent the environmental benefits of generating electricity from renewable generation sources. One REC is created each time a megawatt hour of energy from a renewable facility is generated. RECs represent how and when a unit of electricity was made at a particular generation facility and the environmental benefits (or attributes) that result from making that electricity. For example, basic attributes would be: type of generation (e.g. wind), location, date of actual generation, emissions per MWh, if any. Environmental attributes include the emissions of NOx, SOx, CO2, mercury, and particulate matter that are avoided as a result of the wind (or other renewable) generation from that generating facility. RECs can be sold and traded for voluntary and regulatory purposes and the owner of the REC can legally claim to have purchased renewable energy.  Purchasing RECs helps ensure that more electricity is generated from renewable energy sources, which reduces the amount of electricity that has to be generated from polluting fossil fuel generation. As a result, RECs may be used to offset CO2 emissions associated with electricity usage and other sources. In addition to the carbon impact, purchasing RECs also supports renewable energy and encourages more renewable development.

Renewable energy resources: Energy resources that are naturally replenishing but flow limited. They are virtually inexhaustible in duration but limited in the amount of energy that is available per unit of time. Renewable energy resources include: biomass, hydro, geothermal, solar, wind, ocean thermal, wave action and tidal action.

Resale (wholesale) sales: Resale or wholesale sales are electricity sold (except under exchange agreements) to other electric utilities or to public authorities for resale distribution. (This includes sales to requirements and non-requirements consumers.)

Residential building: A structure used primarily as a dwelling for one or more households.

Residential/commercial (consumer category): Housing units, wholesale or retail businesses (except coal wholesale dealers); health institutions (hospitals, social and educational institutions (schools and universities); and Federal, state, and local governments (military installations, prisons, office buildings, etc.). Excludes shipments to Federal power projects, such as TVA, and rural electrification cooperatives, power districts, and state power projects.

Residential-type central air conditioner: There are four basic parts to a residential central air-conditioning system:

• a condensing unit
• a cooling coil
• ductwork
• a control mechanism, such as a thermostat.

There are two basic configurations of residential central systems: (1) a split system, where the condensing unit is located outside and the other components are inside, and (2) a packaged-terminal air-encased in one unit, usually found in a utility closet.

Retail Electric Provider (“REP”):  A Retail Electric Provider (REP) is a company registered with the state through the Public Utilities Commission (PUC) to sell energy directly to the public. 

Roof insulation: Insulating materials placed underneath the roof or on the roof (building).

Roof or ceiling insulation: A building shell conservation feature consisting of insulation placed in the roof (below the waterproofing layer) or in the ceiling of the top floor in the building.

Room air conditioner: Air-conditioning units that typically fit into the window or wall and are designed to cool only one room.

Seasonal energy efficiency ratio (SEER): Ratio of the cooling output divided by the power consumption. It is the Btu of cooling output during its normal annual usage divided by the total electric energy input in watt hours during the same period. This is a measure of the cooling performance for rating central air conditioners and central heat pumps.

Solar:  Energy from the sun. Sunlight can be converted to electricity directly, as in the case of photovoltaic (PV) applications or indirectly as in the case of solar thermal applications. According to the U.S. National Renewable Energy Laboratories (NREL), the amount of energy from the sun that falls to the earth in one day could supply the entire world's energy needs for 27 years.

Sulfur Dioxide (SO2):  Formed by combustion of fuels containing sulfur--primarily coal and oil. Major health effects associated with SO2 include asthma, respiratory illness, and aggravation of existing cardiovascular disease. SO2 combines with water and oxygen in the atmosphere to form acid rain, which raises the acid levels of lakes and streams, affecting the ability of fish and some amphibians to survive. It also damages sensitive forests and ecosystems, particularly in the eastern part of the U.S. It also accelerates the decay of buildings. Making electricity is responsible for two-thirds of all the SO2 pollution in the U.S., 13 million tons each year.

System Power Mix:  The average mix of electric power plants and other energy serving customers in a region. In the U.S., coal, other fossil fuels, and nuclear generation are the most-used sources for system power.

Transmission (electric): The movement or transfer of electric energy over an interconnected group of lines and associated equipment between points of supply and points at which it is transformed for delivery to consumers or is delivered to other electric systems. Transmission is considered to end when the energy is transformed for distribution to the consumer.

Transmission charges:  Part of the basic service charges on every customer's bill for transporting electricity from the source of supply to the electric distribution company. The Federal Energy Regulatory Commission regulates retail transmission prices and services.

Transmission circuit: A conductor used to transport electricity from generating stations to load.

Transmission And Distribution Utility (TDU):  The company that owns the power lines, poles, meters and other equipment necessary to deliver electricity to the customer.  The TDU also reads the meter and reports the customer’s usage to the retail electric provider.  Also sometimes referred to as a Transmission And Distribution Service Provider (TDSP), Utility Distribution Company (UDC), Electric Distribution Company (EDC), or Local Distribution Company (LDC).   

Transmission Distribution Service Provider (TDSP):  The Public Utility Commission protected the consumers, requiring that the TDSP provide the same level of service to homes and businesses in their service area, regardless of where you buy your electricity.

Transmission line: A set of conductors, insulators, supporting structures and associated equipment used to move large quantities of power at high voltage, usually over long distances between a generating or receiving point and major substations or delivery points.  Interconnected electric lines which move high voltage electricity from a generation facility ultimately to the distribution lines of an electric distribution company.

Transmission network: A system of transmission or distribution lines cross-connected and operated as to permit multiple power supply to any principal point.

Transmission system (electric): An interconnected group of electric transmission lines and associated equipment for moving or transferring electric energy in bulk between points of supply and points at which it is transformed for delivery over the distribution system lines to consumers or is delivered to other electric systems.

Utility distribution companies: The entities that will continue to provide regulated services for the distribution of electricity to customers and serve customers who do not choose direct access. Regardless of where a consumer chooses to purchase power, the customer’s current utility, also known as the utility distribution company, will deliver the power to the consumer.

Utility generation: Generation by electric systems engaged in selling electric energy to the public.

Utility distribution companies: The entities that will continue to provide regulated services for the distribution of electricity to customers and serve customers who do not choose direct access. Regardless of where a consumer chooses to purchase power, the customer’s current utility, also known as the utility distribution company, will deliver the power to the consumer.

Utility generation: Generation by electric systems engaged in selling electric energy to the public.

Weatherstripping or caulking: Any of several kinds of crack-filling material around any windows or doors to the outside used to reduce the passage of air and moisture around moveable parts of a door or window. Weatherstripping is available in strips or rolls of metal, vinyl or foam rubber and can be applied on the inside or outside of a building.

Wholesale competition: A system in which a distributor of power would have the option to buy its power from a variety of power producers, and the power producers would be able to compete to sell their power to a variety of distribution companies.

Wind farm: A power plant that uses windmills or wind turbines to generate electricity.

Wind power:  The conversion of wind energy into more useful forms, usually electricity, using wind turbines.

Wind power plant: A group of wind turbines interconnected to a common utility system through a system of transformers, distribution lines and typically one substation. Operation, control and maintenance functions are often centralized through a network of computerized monitoring systems, supplemented by visual inspection. This is a term commonly used in the United States. In Europe, it is called a generating station.