Glossary

Glossary items are copyright by California Current.

Attrition It refers generally to the projected rate of inflation built into investor-owned utility rate cases.
Balancing Account These are accounts used by investor-owned utilities to keep transparent tabs on their expenses and revenue.  “Balancing accounts” on the books at the California Public Utilities Commission track utility over and under collections of revenue from ratepayers for specific purposes. The State Auditor in 2013 found these accounts were not adequately monitored and failed to protect ratepayers against unreasonable costs.
Baseline Rates “Baseline” is the lowest tier of rates applied to ratepayers with low energy use. The so called “baseline” was an energy consumption threshold below which discounted rates were offered to increase conservation. It was eliminated by the July 3, 2015 decision revising the investor-owned utility rate structures.
Bill Enrollment Legislation 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.
Carbon Offsets A carbon offset is a purchase of a promise to provide carbon reductions elsewhere to make up for emissions released by an industry/individual. Most greenhouse gas offsets offered are in the form of increased forestation. Trees absorb carbon.
Cloture The 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.
Community Choice Aggregation The word “choice” stirs up passions—when referring to one’s body and one’s abode. Under state law, AB 117 passed in 2002, cities and other local entities can choose to pool regional electricity purchases and terminate investor-owned utility power services. 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 continue to provide transmission and distribution service for that community power.
Conservation Opportunity Areas These are likely targets for mitigation efforts to offset impacts of massive renewable energy projects. They include areas that can be acquired to protect threatened or endangered species and to provide habitat.
Debt Equivalency Investor-owned utilities after the 2000-01 state electricity 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.
Decommissioning A nuclear power plant’s decommissioning is a long, windy and radioactive road. The radioactive waste 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 the environment 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.
Derivatives 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 Access Considered 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 following the 1996 energy industry deregulation law. It has been limited since the 2000-01 energy crisis.
Distributed Generation Distributed generation is a power supply, usually solar, in one’s backyard or nearby. With photovoltaics on school roofs, and windmills on farms, the electricity produced doesn’t have to travel far to get to its users, unlike many utility-owned power plants. New distributed generation avoids the need for new transmission lines because the electricity is produced and used locally.
Dry Cooling Hot spinning turbines are “dry cooled” by moving air as opposed to “wet cooled” using water. There are different dry cooling technologies but they all use air to disperse the heat from spinning turbines. 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 Pricing This is akin to Time-of-Use rates, entailing the ability to charge ratepayers hourly or based on other time increments, 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 Banc The term means that a regulatory or judicial body as a whole is called in to preside over a meeting or a hearing. Literally, it means all judges are supposed to be “on a bench.” All commissioners are supposed to be available for “en banc” meetings.
Energy Star Program The 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 awards manufacturers with Energy Star labels. Manufacturers incorporated “power management” systems to allow various components of their computers, like the hard drive, to go into “sleep mode” when the machines sat idle. 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 Tariff This oddly-named tariff is not a dairy trough but entails set payments for a renewable energy project’s output over several years. It provides financial security to solar, wind and other alternative project developers. Feed-in tariffs 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 Ground In the spy trade, “go to ground” means to disappear. Like 007, into the physical ether—new passport, new life. When electricity goes to ground, it too disappears. Electricity, however, doesn’t get a new passport or a new life but is simply wasted. If it is not used on demand it goes to ground, regardless of its cost. Absent storage, 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 Jobs If 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 included as green jobs.
Leakage Regulators trying to limit the shift of greenhouse gas emissions when polluting companies move out of California or to another region that lacks greenhouse gas caps or when a product once produced in California is shifted elsewhere. Although instate emissions may be lower there is no overall reduction. Leakage also occurs 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. Regulators consider the associated greenhouse gas emissions to have “leaked” outside of their regulatory system.
Loading Order  Like stacking the heavy groceries at the bottom of your sack first, the “loading order” leaves the easiest and least-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 Referent  A 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 Account Your 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 Assessment California assesses its caloric need to decide whether it needs another power plant. A needs assessment weighs proposed power plants, power plants to be retired, energy efficiency diets, and air quality and economic impacts. Just what will be on the plate is a lot of guesswork, but gives policymakers something to rely on when committing the state environment and economy to a given power diet.
Negawatts  Negawatts (NW) avoid generating power through consumer conservation and utility demand-response programs. Reductions in energy use result in fewer greenhouse gas emissions.
Nuclear Insurance  If there’s a nuclear accident in the U.S., nuclear plant owners have limited liability thanks to taxpayer-funded insurance. 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.

Once-Through Cooling

 

 

PACE

Power 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 water for cooling once and then discharge it to surface waterways. 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.

This is a municipal financing program offering upfront greenbacks to help green homes and businesses. The Property Assessed Clean Energy (PACE) programs helps building owners get around the initial steep retrofit costs by providing upfront financing in exchange for long-term property tax assessments.  The federal housing mortgage agencies viewed residential PACE assessments as threatening their shaky sovereignty and effectively halted them in 2010. Commercial PACE programs were not impacted. Residential PACE programs are making a comeback.

Price Collars To control carbon prices in a cap-and-trade market, regulators can use 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 Charge The purpose of the state’s public goods funded programs was to increase alternative energy resources, push the envelope on innovative research and development and assist struggling ratepayers. It was created as part of the state’s deregulation scheme to benefit the public. It was not reauthorized by the Legislature, but instead was reformulated by the California Public Utilities Commission in 2012. It became the Electric Program Investment Charge program.
Radioactive Waste Uranium is mined and enriched as feedstock for nuclear power. Fissionable uranium creates steam to turn turbines. Once the uranium’s spent, one of the waste byproducts 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”).
Rate of Return 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 Power Reactive power is a technical term defined various ways to describe a nebulous concept originally called “imaginary power.” 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. Reactive power maintains voltage levels and enables efficient load service. Reactive power and real power are inseparable in an alternating current grid.
RECLAIM   Major 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 Adequacy Resource adequacy is a cushion of power that utilities are required to have on hand. It helps ensure supply adequacy when power demand is stretched on hot days.
Ring-Fencing In 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 of the corporation, utility and other subsidiaries to protect a utility parent from being held liable for utility debts.
Smart Grid It generally refers to a two-way digital flow of communication between customers’ advanced or “smart” meters, and utilities. In addition to advanced meters, it includes monitoring, communication and control devises to optimize real time flows of energy across the grid.
Suspense File Not the kind in a Hitchcock film, but the holding place for bills 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.

Tiered Rates

 

 

Tiered rates are based on use, with higher users charged more per kWh. The first tier allows customers a certain amount of energy use at a low base rate. The next increment of usage is charged at a higher rate, and so forth.

Time-of-Use

 

 

Time-of-use rates, or dynamic pricing, refers 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. For example, 6 a.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 or tiered 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. Tiered rates are based on use, with higher users charged more per kWh.

Tradable Renewable Energy Credits

 

To 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 a “green tag,” is bought and sold separately from the renewable unit’s energy output. T-RECs are traded in several states but are 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 & Distribution 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 own and manage the distribution lines, stepping down power flows from long distance 230 kV lines or higher to power homes and businesses.
Zero Net Energy Also 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 Budgeting Incremental budgeting is a California tradition. With zero-based budgeting, program managers instead start building their budgets each year with a blank slate. Each activity and expenditure is justified rather than dusting off last year’s budget and justifying only the increases. Proponents argue zero-based budgeting 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 doesn’t produce immediate results.