JUICE: A Dummies Guide to Energy

By Published On: October 9, 2009

It was difficult to tell what language was being spoken. It was gibberish to outsiders, which included the judge. After telling the attorneys to drop their techno-speak and acronym-laden arguments, the judge cracked. He threatened to write an opinion in acronyms of his choosing if they did not cease and desist. I often feel like that federal judge when covering filings, documents, and meetings riddled with specialized and newly-emerged lingo. Striving to understand what exactly is at stake, how much and to whom, in niches of the energy market that have their own terms of art makes me double check my mailing address to verify the country in which I currently reside. My colleagues and I at Circuit have decades of experience covering the energy industry. But in spite or our fluency in the arcane and obtuse dialect we’re often amazed, and at times amused, by the plethora of terms of art and acronyms that pop up. Take, for example, HEES, HERS and SPREE. None have to do with matching gender sets or profligate spending. They’re California Public Utilities Commission residential energy efficiency programs with a $3.1 billion price tag, which does make it a spending “spree.” We don’t hesitate to ask questions when energy techno-speak is used, but clarity can be illusive. At times, agreed-upon definitions are missing or mean different things to different people. That includes terms and descriptions used in regulatory rate cases, Wall Street ratings reports, “smart grid” proceedings, as well as strategies to cope with a changing climate. Use of obscure and/or undefined terms of art, technology, and economics ensures opaque policy. It keeps many stakeholders, including ratepayers and other members of the public, in the dark on issues that affect them. Lack of common definition also forecloses meaningful regulation, verification and/or enforcement. Here are some examples of squishy language and terminology lacking common definitions: “adaptation,” “carbon “offsets,” “incremental,” “market price referent,” and “zero net energy.” How many of you know exactly what they mean and whether your definition jibes with that of your colleagues? Rate cases are infamous for being laden with nearly incoherent terminology. It often takes me a few calls to find the select specialists who can shed light on obscure terminology in a filing. Even more disconcerting is that it’s not rare to find respected experts unable to explain a term’s parameters. Take, for example, “attrition,” which generally refers to the projected rate of inflation built into investor-owned utility rate cases. However, it means more than that but finding what all is included in the number is no easy task. When asking a Pacific Gas & Electric spokesperson in July of this year what elements “attrition” included in a rate hike proposal, he hadn’t a clue. I then contacted a non-utility economist. He couldn’t shed much light on the mystery either. Later, I was working my way through some utility “balancing accounts.” These are set up to cover investor-owned utility program costs outside a regulatory rate case or funding authorization. These accounts are supposed to track how much is actually spent implementing a program contrasted with estimated amounts. For instance, the California Public Utilities Commission sometimes limits what’s recorded in an account covering a new program to “incremental” costs beyond that approved in a general rate case. But who knows what it means and what gets added to that pot. “Real ‘green eyeshade’ kind of stuff,” said Mike Florio, The Utility Reform Network senior attorney. This week I asked some energy efficiency advocates to define “zero net energy” buildings, which are considered essential to the energy savings sought under private utilities’ newly approved $3.1 billion efficiency programs. The energy experts agreed the term refers to commercial or residential buildings that are able to produce the same amount of energy as they use over a year. However, one efficiency consultant--David Kaneda, with IDeAs Design Facilities--said the power generated atop or near the facilities deemed “zero net energy” was limited to solar or other renewable supplies. However, the other--Dan Kammen, University of California energy professor--said buildings powered by fossil fuel, such as fuel cells that use natural gas, would qualify as zero net energy structures, also sometimes called “net-zero energy” buildings. Last week, the writer of the guest editorial took issue with how I defined “market price referent,” in her column. It refers to a changing benchmark against which the reasonableness of the cost of renewable project power is measured--or so I thought. She insisted, however, the referent is a benchmark price against which the “above-market cost” of a project is measured. This list goes on. I acknowledge that the specialized fields--be it energy, finance, law or medicine--are riddled with geek speak. Acquiring the field’s lingo is a badge of honor, providing a sense of superiority by shutting out, and at times intimidating, non-insiders. But something is off if the insiders are having difficulties figuring out what is going on, and or disagree over how terms are defined and their parameters. Consider those complex over-the-counter financial derivatives, which few understand and were partly responsible for undermining financial markets last year. In the energy arena, things are not as convoluted or risky but the new dialects and terms of art undermine calls for transparency. Policy makers and regulators must require that filings, dockets, and workshop terminology be clearly defined and that those using it agree on its definition. It shouldn’t be a game of Pictionary. Circuit defines terms of art in articles when possible, or notes there is no common definition. Also, we recently began inserting in our weekly issues myriad definitions, ranging from “balancing account” to “time-of-use.” We believe that when ratepayer and/or taxpayer money is at stake, and the future of the industry, documents and presentations should not glaze eyes and numb minds, but instead open them. To help ensure the latter, we just launched an energy speak glossary on our website. We’ll define, or at least shed light, on the terminology in our budding online Circuit glossary of obscure, pompous, ridiculous and dull energy lingo. So, please send us the terms of art you are hankering to understand. Not only will we include it in our online glossary but also in our future best seller: “Dummies Guide to California Energy and Climate Change.”

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