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com
 Electricity
Retail Wheeling
Handbook
Second Edition

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 Electricity

Handbook

John M. Studebaker

Published by
THE INC.
700 Indian Trail
Lilburn, GA 30047

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Studebaker,
Eleclnclty retad wheeling handbook/ byJohn M. St~debaker.-2~.

HD9685.US
S794
2000 333.7793’24~21 00-031698

by M. Studefaker.. All ri ts reserve& No

publication be reproduqd m any E l r by
any means,electromc or mechamcal, mcluding photocoy, recording,
a y storage and retrieval system,withoufpemissionm
wntmg from the publisher.

700
GA 30047
of
l 0 9 8 7 6 5 4 3 2 1

to

NJ 07458
(UK)
of
Toronto
of New
of

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 Dedication

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Acknowledgments xi

Introduction x111

Section IUnderstanding ElectricUtilityBasics 1

Chapter 1 Electricity.AnOverview 3
Chapter 2 Regulation of Electricity 7
Chapter Developing Strategy for Reducing Electricity Costs 25

Section I1 Electricity Retail Wheeling-The Process Involved 43

Chapter 4 Electricity Retail Wheeling Process 45
Chapter 5 The Retail Wheeling Transaction 65
Chapter The Retail Wheeling Contract Process 83

Section 111 Electricity Retail Wheeling in Action 157

Chapter Where Do We Go From Here 159

Appendix A Listing of For-Profit Utility Regulatory Agencies 171

Appendix Listing of For-Profit Utilities 181

Appendix C Miscellaneous Utility Regulation Information 211

Appendix D Glossaries of Electricity Terms 219

Appendix Miscellaneous Electricity Conversion Factors 271

Index 281

vii

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 This publication is divided into four basic sections: Section 1, Un-
derstanding Electric Utility Basics (Chapters 1-3); Section 2, Electricity
Retail Wheeling-The Processes Involved (Chapters 4-6); Section 3,
Electricity Retail Wheeling in Action (Chapter 7); and Section Appen-
dices A-E, important background data to assist in reducing electric
utility costs.

RETAIL WHEELING OF ELECTRICITY-AN OVERVIEW

As with any undertaking, logical procedure must be established.

In this publication, the discussion of retail wheeling of electricity is the
predominate theme. However, before we discuss and analyze the retail
wheeling process, we must understand the basics of electricity it re-
lates to generation, transmission and delivery to the retail customer. To
accomplish this end, basic overview of regulation processes and elec-
tricity tariff schedule provisions is included in the following section.
Please read this section with great care it provides the founda-
tion upon which will be built the understanding of retail wheeling of
electricity. Remember that successful retail wheeling strategy will re-
quire an understanding how the electricity process functions.

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 I wish to express my thanks to the many individuals whose infor-
mation, insight and comments have assisted in making this publication
possible.
Every effort has been made to provide dependable and accurate
information. However, changes occur almost on daily basis due to the
very active environment that encompasses electricity retail wheeling.
This publication will address the issues they currently exist
well provide insight for the future so that the electricity purchaser can
be assured that their electricity costs remain competitive regardless of
what the future brings.

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 Introduction

The purpose of this publication, from an electricity purchaser’s

viewpoint, is to sort out all of the potential pitfalls and opportunities that
both currently well in the future may reduce or increase electricity
costs. accurately assess electricity costs, purchaser must have atleast
minimal understanding of how electricity flows from where it origi-
nates to where the purchaser is located, and how costs are accumulated
in the process.
There are many publications that currently address specific areas of
retail wheeling of electricity in one manner or another. There are also
many seminars that address various aspects of retail wheeling of electric-
ity. So why add one more publication to what appears to be an already
cluttered field?
Most publications well seminars address specific areas of the
retail wheeling process but may not tie all of the loose ends together.
Also it seems that assumption exists that everyone knows all of the
basics, and therefore this allows publications and seminars to concen-
trate on only one or two specific areas of information.
This publication is intended to be of value to an electricity pur-
chaser that needs to know the best and least costly method of obtaining
electricity at their facility based upon their usage characteristics for now
well in the future. It will also address how to determine the best
source of electricity pre- or post-deregulation that insures reliability
well cost competitiveness.

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 Understanding
Electric UtiLiv Basics

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 Many changes have occurred in the electric utility industry since
the last edition (1995) of this publication. Deregulation of the electricity
industry has progressed on rather ununified state-by-state basis in the
last 5 years. Since deregulation of electricity at this time is entirely
state-by-state procedure, there sometimes seems to be no rationale for
particular state‘s position on deregulation. If the current pace of deregu-
lation is maintained, it could conceivably be many years before some
states will ever allow their electricity users the opportunity of choice in
electricity commodity providers.
Electric utilities must become market responsive if they want to
remain viable in their industries. Failure to do so may subject them to
federally mandated regulatory imposition of retail wheeling of electric-
ity. The long-term outlook for electrical power alternatives is good and
for many companies the savings realized through these various alterna-
tives will be great. To be able to understand how changes occur in elec-
tric utilities, knowledge of what they are and how they regulated
must be available.
Probably one the most discussed, least understood area in elec-
tricity today is retail wheeling. This is the process whereby the customer
purchases the generation portion of their electricity usage from sup-
plier other than their own serving utility. This procedure, from the
customer’s viewpoint, is very similar to customer transportation natu-
ral where the customer purchases the actual natural commodity
themselves and through the services of marketer utilizes the serving
utility only to transport the natural to the point-of-use.
While this process works well in natural and causes no real
supply or cost problems, the same is not true for electric utilities where

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retail wheeling of electricity takes place. The reason for this is that most
natural utilities do not actually have the natural they sell, but
purchase their system supplies on the open market. In electricity, the
serving utility may generate all or at least portion of the electricity they
sell the customer. When customer elects not to use the serving utility’s
generated the utility’s generation utilization is reduced, theo-
retically at least, causing increased incremental costs to occur for the
utility.
In electricity utility service, the commodity being sold generally is
produced, at least partially, by the utility that serves the customer. In this
case, if the customer obtains their electricity from source other than the
local serving electric company (retail wheeling,) the electric utility suffers
real loss-potentially not having sale for the electricity being pro-
duced. Retail wheeling can have very real impact on the existence of
electric utility. How the origination points of the commodity (electricity/
natural vary are shown on Figure 1.1.
Figure 1.1shows that while electric utility usually generates its
commodity (electricity), natural utility usually purchases its com-
modity (natural While this difference may seem to be of no particu-
lar concern to the customer, it is of great importance to electric utility.
Since the electric utility generates its commodity, it relies, at least in part,
upon its retail customers to purchase the electricity it generates. If cus-
tomers have the choice to not purchase the generated electricity, the util-
ity has to find other customers or reduce its generation output, which
affects its overall system efficiency.
Another electric utility worry is customer self/cogeneration of elec-
tricity. In this scenario, the customer installs generation system that
provides both electrical well thermal (heat) outputs to supplement
and reduce dependence upon utility supplied electricity. Although co-
generation is not new process, its use has become more common
utility-supplied electricity has become more costly. Many electricity cus-
tomers currently, or in the near future, will have options to typical util-
ity-supplied electricity. The question an electricity user will have to an-
swer will be-which method of electricity purchasing is most reliable
and cost effective?
answer this question, it is important to know what is available
and how tomost effectively utilize the best options. This publication will
provide information needed by customer to utilize the least expensive
electricity available while assuring that supply integrity is maintained.

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 NATURALGAS

Utility Generation Utility Purchase

Of
Electricity Natural Gas

Interstate Interstate
Transmission Grid Transportation

Intrastate
Distribution Grid

1
Meter Meter

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 User

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REGULATION IN GENERAL

Utilities, generally speaking, are considered to be regulated mo-

nopolies. A regulated monopoly is an entity that has protected service
territory and has virtually no competition since no other provider of the
same commodity can compete for the protected service territory’s cus-
tomer. Since position of no competition can lead to abuse in both cost
and service, check and balance system is in place that requires utilities
to be held accountable for costs, services, etc. Utilities are regulated in at
least two areas, ’interstate’ (between states) and ’intrastate’ (within
state).

INTERSTATE REGULATION
(Between States)

Interstate regulation in electricity isthe responsibility of the Federal

Energy Regulatory Commission (FERC).This agency was created in 1977
and hasthe responsibility for oversight and regulation of interstate trans-
portation policies and rates concerning electricity. Since this agency has
these responsibilities, it would be well to understand its impact on rates
and transportation conditions.
Since electricity distribution from one state to and for use in an-
other state is always interstate (between states), FERC has jurisdiction
over the rules and regulations applying to it.
The Commission is composed of five members who are appointed
by the President, with the advice and consent of the Senate. More and
more the rulings of FERC meet with something less than enthusiasm on
the part of the electric utilities it regulates, due primarily to its increas-

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 For-Profit. Municipal, Rural Cooperative Electric Utilities

INTERSTATE

I
FERC

I
INTRASTATE

(Indmdual

Federal Power Electric APencies

INTRASTATE

ingly open access policies with relationship to electricity.

Know what is happening at the Federal Regulatory level so that
changes in electricity occur,you will have strategy in mind. The follow-
ing is the current address and numbers of FERC.

Federal Energy Regulatory Commission

Attn.: Chief, Public Reference Files Maintenance Branch
888 First Street, NE, Room 2-A

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 Washington DC 20426
Telephone 202-208-2356
202-208-2320
http://www.ferc.fed.us

SOME OF THE AREAS REGULATED BY FERC

Establishes and enforces rates and charges for electric energy trans-
mission and sales for resale. (Very important to retail wheeling of
electricity.)

2. Establishes and enforces operational characteristics, rates and

charges for electric energy interconnections.

3. Certifies small power production and cogeneration facilities.

4. Issues and enforces licenses for nonfederal hydroelectric power

facilities.

5. Issues and enforces certificates for construction and abandonment

of interstate electricity transmission facilities.

Establishes and enforces rates and charges for distribution and sale
of natural

Establishes and enforces oil pipeline rates, charges and valuation.

8. Establishes and enforces oil pipeline common carrier duties.

Hears appeals from Department of Energy remedial orders and

denials of adjustments.

FERC ORDER #888-(FINAL RULE 04-24-96)

FERC Order #888 was enacted forthepurpose of promoting

wholesale competition of electricity through open access servicesby
public utilities. Although its scope is for wholesale and not retail compe-
tition, it is a necessary precursor for retail competition in electricity. A
complete copy of this ruling (75 FERC 61,080, Order #888, Final Rule

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04-24-96) can be obtained fromFERC. Of particular interest in this ruling
are the following excerpted provisions.

1. Introduction/Summary
On April 24, 1996 the Commission issues three final, interrelated
rules designed to remove impediments to competition in the wholesale
bulk power marketplace and to bring more efficient, lower cost power to
electricity consumers. 1 n h e legal and policy cornerstone of
these rules is to remedy undue discriminationin access to the monopoly
owned transmission wires that control whether and to whom electricity
can be transported in interstate commerce. A second critical aspect of
the rules is to address recovery of the transition costs of moving from a
monopoly-regulated regime to one in which all sellers can compete on a
fair basis and in which electricity is more competitively priced.
In the years since the proposed rules were issued, 2/the pace of
competitive changes in the electric utility industry has accelerated. Cur-
rently the majority of electric public utilities have filed wholesale open
access transmission tariffs with the Commission. Prodded by such com-
petitive changes and encouraged by the proposed rules, the majority of
public utilities that own, control, or operate 3/transmission facilities used
in interstate commerce have filed some form of wholesale open access
tariff. In addition, since the time the proposed rules were issued, numer-
ous state regulatory commissions have adopted or are actively evaluat-
ing retail customer choice programs or other utility restructuring alterna-
tives. These events have been spurred by continuing pressures in the
marketplace for changes in the way electricity is bought, sold and trans-
ported. Increasingly, customers are demanding the benefits of competi-
tion (retail wheeling) in the growing electricity commodity market.
The Commission estimates the potential quantitative benefits from
the Final Rule will be approximately $3.8 to $5.4 billion per year of cost
savings, in addition to thenon-quantifiablebenefits that includebetter
use of existing assets and institutions, new market mechanisms, techni-
calinnovation,andlessratedistortion.Thecontinuingcompetitive
changes in the industry and the prospect of these benefits to customers
make it imperative that this Commission take the necessary steps within
its jurisdiction to ensure that all wholesale buyers and sellers of electric
energy can obtain non-discriminatory transmissionaccess, that the tran-
sition to competition is orderly and fair, and that the integrity and reliabil-

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ity of our electricity infrastructure is maintained.
In this Rule, the Commission seeks to remedy both existing and
future undue discrimination in the industry and realize thesignificant
customer benefits that will come with open access. Indeed, it is the
statutory obligation under sections 205 and 206 of the
Federal Power Act (FPA) to remedy undue discrimination. To do so, the
Commission must eliminate the remaining patchwork of closed and open
jurisdictional transmission systems and ensure that all these systems,
including those that already provide some form of open access, cannot
use monopoly power over transmission to unduly discriminate against
others. If the Commission does not take this step now, the result will be
benefits to some customers at the expense of others. The Commission
has learned from its experience in the natural gas area the importance
of addressing competitive transition issues early and with as much cer-
tainty to market participants as possible.
Accordingly, in this proceeding and in the accompanying proceed-
ing on OASIS, the Commission, pursuant to its authorities under sections
205 and 206 of the FPA:

requires all public utilities that own, control or operate facilities used
for transmitting electric energy in interstate commerce;

to file open access non-discriminatory transmission tariffs that contain

minimum terms and conditions of non-discriminatory service; to take
transmission service (including ancillary services) for their own new
wholesale sales and purchases of electric energy under the open
access tariffs; (very important to retail wheeling)

to develop and maintain a same-time information system that will give

existing and potential transmission users the same access to trans-
mission information that the public utility enjoys, and further requires
public utilities to separate transmission from generation marketing
functions and communications; (very important to retail wheeling)

clarifies Federalktate jurisdiction over transmission in interstate com-

merce and local distribution and provides for deference to certain
state recommendations, and

permits public utilities and transmitting utilities to seek recovery of

legitimate, prudent and verifiable stranded costs associated with pro-
viding open access and FPA section 211 transmission services.

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 Open
The Final Rule requires public utilities to file a single open access
tariff thatoffersnetwork,load-basedserviceandpoint-to-point,con-
tract-basedservice.TheRulecontainsaproforma tariff that reflects
modifications to the proposedtermsandconditions and also
permits variations for regional practices. All public utilities subject to the
Rule,includingthosethatalreadyhave tariffs on file, will berequired
to make section 206 compliance filings to meet the new pro forma tariff
non-priceminimumtermsandconditions of non-discriminatorytrans-
mission. Utilities may propose their own rates in a section 205 compli-
ance filing.
The rule provides that public utilities may seek a waiver of some
or all of therequirements of theFinalRule. In addition,non-public
utilities may seek a waiver of thetariff reciprocity provisions.
The Final Rule does not generically abrogate existing requirement
contracts, but will permitcustomersandpublic utilities to seekmodifi-
cation,ortermination, of certainexistingrequirementscontractsona
case-by-case basis. As to coordination arrangements and contracts, the
Rulefindsthatthesearrangementsandcontracts may need to be
modified to removeundulydiscriminatorytransmissionaccessand/or
pricingprovisions.Sucharrangementsandagreementsincludepower
poolagreements,public utility holdingcompanyagreements,andcer-
tain bilateral coordination agreements. The Rule provides guidance and
timelines for modifying unduly discriminatory coordination arrangements
and contracts, and specifies when the members of such arrangements
mustbegin to conducttrade with eachotherusingthesameopen
access tariff offered to others. The Rule also provides guidance regard-
ingtheformation of independentsystemoperators (ISOs).
The Rule does not require any form of corporate restructuring, but
will accommodatevoluntaryrestructuringthat is consistentwiththe
policies.
As discussed in the NOPR, not all owners or controllers of inter-
state transmission facilities are subject to jurisdiction
under sections 205 and 206 of the FPA and therefore are not subject
to
retains the proposed reciprocity provision in the pro forma tariff. Without
such a provision, non-open access utilities could take advantage of the
competitive opportunities of open access, while at the same time offer-
ing inferior access, or no access at all, over their own facilities. Thus,

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openaccess utilities would be unfairly burdened. We notethatsome
non-jurisdictional utilities have expressedan interest in amechanism
for obtaining a Commission determination that their transmission tariffs
satisfy the reciprocity provisions in the pro forma tariffs, and we provide
suchamechanism in theRule.
The Final Rule does not generically provide for market-based gen-
eration rates. prior deci-
sion that there is no generation dominance in new generating capacity,
intervenors in cases may raise generation dominance issues related to
new capacity. In addition, to obtain market-based rates for existing gen-
eration, public utilities will continue to be required to show, on a case-
by-case basis, that there is no generation dominance in existing capac-
ity.Further, in all market-based rate cases,theCommission will con-
tinue to look at whether an applicant and its affiliates could erect other
barriers to entryand whethertheremay beproblemsdue to affiliate
abuseorreciprocaldealing.
Finally, contemporaneously with this Rule the Commission issues
a NOPR on capacity reservation tariffs as an alternative, and perhaps
superior,means of remedying undue discrimination.

3. Transmission/Local Distribution
The Rule clarifies of the Federal/
state jurisdictional boundaries over transmissionand local distribution.
While the Commission continues to reaffirm their conclusion that they
have exclusive jurisdiction over the rates, terms, and conditions of un-
bundled retail transmission in interstatecommerce by public utilities,
they nevertheless recognize the very legitimate concerns of state regu-
latory authorities as they contemplate direct retail access or other state
restructuringprograms. Accordingly, theCommissionspecifiescircum-
stances under whichthey will givedeference to staterecommenda-
tions. Although jurisdictional boundaries may shift as a result of restruc-
turing programs in wholesale and retail markets, the Commission does
not believe this will change fundamental state regulatory authorities, in-
cluding authority to regulate the vast majority of generation asset costs,
the siting of generationandtransmission facilities, anddecisions re-
garding retail service territories. The commission intends to be respect-
ful of state objectives so long as they do not balkanize interstate trans-
mission of poweror conflict withtheinterstateopenaccess policies.

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4.
Withregardtostrandedcosts,theFinalRuleadoptsthe
Commission's supplemental proposal. will permit utilities to seek extra-
contractual recovery of stranded costs associated with a limited set of
existing (executed on or before July 11, 1994) wholesale requirements
contracts and provides that the Commission will be the primary forum for
utilities to seek recovery of stranded costs associated with retail-turned-
wholesale transmission customers. It also will allow utilities to seek re-
covery of stranded costs caused by retail wheeling only in circumstances
in which the state regulatory authority does not have authority to address
retail stranded costs at the time the retail wheeling is required. The Rule
retains the revenues lost approach for calculating stranded costs and
provides a formula for calculating such costs.

Obviously, there is much more detail and discussion in the com-

plete context of Rule #888 but even in this extracted small portion, the
basic requirements which are critical for deregulated electricity envi-
ronment are at least discussed-

Open access.
2. Transmission/local distribution.
3. Stranded Costs.

Before retail deregulation of electricity could become reality, the

wholesale structure/operation of the transmission/distribution electric-
ity system had to be addressed by the regulatory body responsible for its
operation/oversight (FERC). Anunderstanding of Rule #888 is beneficial
to anyone participating in the retail wheeling of electricity.

INTRASTATE REGULATION
(Within the State)

Intrastate regulation occurs within the borders of state and is the

responsibility of one of at least three types of regulatory bodies. The type
of electric utility that serves customer determines "who" regulates
"what."

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 For-profit electric utilities are regulated on statewide basis by
commission or group of individuals appointed or elected at the state
level. This commission or group of individuals regulates all for-profit
electric utilities, regardless of their geographic location within given
state.
Municipal electric utilities (utilities owned/operated by city or
county) generally are self-regulated. Also, they are generally autono-
mous and structure their rates they see necessary with minimal or no
state supervision or legislation.
Cooperative electric utilities are similar to municipal electric utili-
ties in that they are generally self-regulated with little state oversight.
Cooperative utilities often come into being when for-profit utility does
not provide service to given area, generally because of lack of suf-
ficient profit making opportunity. cooperative utility is usually created
when group of potential users form their own utility to provide com-
modity (electricity, natural water/sewer) for themselves that oth-
erwise would not be available.
Both municipal and cooperative utilities are generally self-govern-
ing with little state intervention except with relation to rate case proce-
dures and public notification guidelines. Ordinarily the state will require
that affected customers (intervenor groups) follow normal rate case pro-
tocol with relation to due process and input.
It is very important to know what is happening at the state regu-
latory level because of the impact of rate case decisions on customer
costs. At the federal (FERC) (interstate) level, electricity is more deregu-
lated than at the state (intrastate) level. Since regulation at the intrastate
level is generally more restrictive and in many instances results in tariff
provisions that cause customer rates to be more costly than they could
be, it is important to always be aware of pending rate cases in the state
where the user’s electricity serving utility is located so that strategy
based upon fact and not hope can be developed.

AREAS REGULATED BY INTRASTATE AGENCIES

Structures
In the case of electricity, the following areas are very important to
the customer.

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 Retail Wkeelinp

Types of Service that are/should be available when deregulation is

complete:

2.

3.
(Rates that compete with alternate sources of electricity)

4.
(Transportation of the retail customer’s electricity through the
serving utility’s distribution system on firm basis.)

5.
(Transportation of the retail customer’s electricity through the
serving utility’s distribution system on an interruptible basis.)

(Acts customer’s agent for wheeled electricity)

A ’full service’ electricutility would offer all of the options shown.

At the time of this publication, many electric utilities offer only options
(1)-Firm and (2)-Interruptible. It does no good to have deregulation at
the interstate lever (FERC) if at the intrastate level the advantages cannot
be utilized because of restrictive tariff schedule provisions. There re-
mains much to be done at the intrastate level before many customers will
recognize the true value of interstate deregulation.

THREE TYPES OF UTILITY REGULATION

ON AN INTRASTATE BASIS

I. For-Profit (Investor-Owned Companies)

Regulation-All for-profit investor-owned utilities
that operate within state boundaries.
since intrastate regulation of utilities
concerns the activities of utility within that particular state. State agen-
cies regulate the intrastate transportation and operation of electric utili-
ties. Since electricity may be distributed from location outside of the
boundaries of the state in which the customer is situated, there are both

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federal and state regulations that apply.
The state regulatory agencies usually take the form of Public Ser-
vice Commissions (PSC) or Public UtilityCommissions (PUC). The func-
tions of these entities are to regulate the intrastate distribution and op-
eration of utilities. These agencies also determine and approve indi-
vidual utility rates of return, grant franchises to utilities for specific areas
of operation, and in general, regulate the operation of utilities which are
within given state.
Although PSC or PUC structures are the most common forms of
state regulation, other methods are used. In some states, these commis-
sions regulate utilities only outside the incorporation limits of munici-
pality or city such in the states of Georgia, Texas, etc. Also, there are
some strange situations that occur in few states. For instance in the
State of Texas, the Public Utility Commission regulates electricity outside
of municipalities; however, outside of these same municipalities is an
entity called the 'Railroad Commission of Texas' regulates natural
Generally, retail customer will have more contact with the state
regulatory agency than with the federal agencies. Since state agencies
determine rate of return and approve or disallow rate increase requests
of utilities, the likelihood of involvement with these agencies will be
greater.
To remain informed on utility matters, knowledge of the opera-
tion and function of the state agencies is required. To follow state regu-
latory matters can be very time-consuming and costly if done on an
individual basis. One alternative to this is to become member of state
energy users group commonly called State Intervenor Groups. These
groups are comprised numerous individuals that have common con-
cerns, typically electricity and natural costs and regulations.
Collectively these groups can accomplish much at the state regula-
tory level. All user or intervenor groups are required to register with the
appropriate State Regulatory Agency. Therefore to determine whether
state has intervenor groups, contact the appropriate State Regulatory
Agency, and also check the Internet for intervenor groups with websites.

PUBLIC UTILITY COMMISSION PERIODIC REPORTS

Periodically, all public utility commissions that regulate for-profit

utilities are required to issue status reports. These reports are generally

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issued on weekly basis and provide data on all currently pending rate
cases within their jurisdictions. Copies of these reports are available to
anyone who request them in either mailed hard copies or via the Inter-
net. If public utility commission regulates the customer’s utility, it is
important to keep updated on what is going on at the commission level.
Typically the following information is detailed in these reports:

A docket or case number of the proceeding being discussed.

A brief report concerning the status of the proceeding.

3. Identification of the parties in the proceeding.

4. Timetable and place of next commission meeting Concerning the

proceeding.

For further information on how to receive commission reports,

contact the commission involved. (See Appendix A)

For-Profit Utilitv Regulation Svnotxis

(Investor-owned Utilities)

State regulatory agency.

Any utility that isin business for the

stated purpose of making profit and is owned by investors
through the purchase shares of stock.

3. Any rate changes may include at least the follow-

ing items:
A. A public notification of intent to change rate.
B. Adequate notification period prior to actual rate case presenta-
tion (this period defined by state law) to allow interested par-
ties to study the merits of the change request.
C. Presentation of rate requests at hearing open to the public
before the appropriate regulatory agency.
D. Allow input from interested customer groups (intervenors) re-
lating to rate change requests. The state regulatory body, based

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 upon testimony presented at rate case hearings, approves ac-
tual rates that will be put into effect.

There are approximately individual for-profit electric utilities

in the United States at this time. In terms of total energy supplied (elec-
tricity) in the United States, these utilities generate over of the
total electricity utilized.

When municipalities regulate utilities they are, rule, self-gov-

erning-that is, they are not subject to state regulatory rulings. Generally
when municipalities undertake the providing and regulation of utilities,
they are purchasing the commodities at wholesale rates from for-profit
or federally regulated utility, and then retailing these utilities to the
public.
This is especially true with electricity and natural In the case
of water and sewage, the municipality usually has control or jurisdiction
over the entire process.
Municipal utilities are generally presided over by utility commis-
sion or board of appointed or elected members. As in the case with all
utility regulatory agencies, ‘due process’ must occur before changes can
be made with respect to rates and conditions under which utilities are
provided. This means that public notice must be given and adequate
time allowed for public input prior to change being instituted. Typi-
cally, municipal utilities do not have many rate classes or options
do for-profit investor-owned utilities since they generally do not have
diverse class of customers.
There are approximately municipal utilities in the United
States, but in terms of total energy supplied (electricity), they constitute
minority when compared to for-profit investor-owned utilities.

Municiml Utilitv Regulation Svnotxis

Generally self-regulated bythebody or agency
selected by the municipality to oversee utility matters. Can be sepa-
rate for each utility regulated.

Any utility operatedand regulated by

municipality on not-for-profit basis.

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 Similar to for-profit investor-owned utilities.
A. Public notification.
B. Adequate notification period.
C. Presentation of rate request.
D. Allow input from interested customer groups.

Rural Electric Cooperative Utilities

Cooperative utilities are formed generally when for-profit inves-
tor-owned utility elects not to serve geographic area or customer base.
Cooperative utilities usually serve rural areas where there is not large
customer load base. Generally, power is purchased at wholesale from
for-profit utility and distributed by the cooperatives’ lines and/or pipes
to the individual customers’ locations.
Cooperative utilities are like municipal utilities in that they are self-
regulated but also are required to provide ‘dueprocess’ before instituting
changes in the utility rate base. They are also very different from any
other type of utility since they are classified ’cooperative’entity. The
term ’cooperative,’ far utilities are concerned, literally means that
each customer is part owner of the utility to the extent of their utility
usage percentage to the total and such, at least in theory, has their
proportionate say in how the utility is operated. They are similar to all
other types of utilities in rate change cases. They propose rate changes,
hear customer input and all other ‘due process’ practices before actually
instituting rate changes. Cooperative utilities are smaller in terms of total
energy supplied than are municipal utilities and in general are located in
rural types of service areas.

CooDerative Utilitv Reeulation Svnopsis

Generally self-regulated. All customers are
part owners of the utility and such have their proportionate say
or vote based upon their usage in relation to other customers. In
practice many times, board of overseers is appointed to represent
customer interests with respect to the utility operation.
Any utility defined cooperative and
that is owned and operated by the customer served.
Similar to other types of utilities and includes:
A.Public notification.
B. Adequate notification.
C. Presentation of rate request.
D. Allow input from customers.

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 of

There are approximately 1,100+ cooperative utilities in the United

States. But in terms of total energy supplied (electricity), they constitute
minority when compared to for-profit investor-owned utilities.

FEDERAL ENTITIES

These types of utilities are of Federal origin and regulation. Gener-

ally, intrastate regulation is not applicable since these types of utilities are
operated on an interstatebasis. The Federal Government has the overall
responsibility of regulation and operating procedures. As rule, these
utilities wholesale the majority of their power to for-profit investor-
owned companies, municipalities and cooperatives who in turnare regu-
lated by their respective regulatory bodies. When direct sales are made
to customers, regulation parameters are by Federal guidelines. The fol-
lowing areas are under the control of Federal regulations and supervi-
sion:

Power Administration
Juneau, AK 586-7405
(907)

2. Bonneville Power Administration

Portland, (503)
230-3000

3. International Boundary Water Commission

U S and Mexico
El TX (915)
534-6700

4. Southeastern Power Administration

Elberton,(706)
GA
283-9911

5. Southwestern Power Administration

595-6600
(918)

6. Tennessee Valley Authority

Knoxville, TN (423)
632-2101

7. US Army Corps. Of Engineers

Washington,
DC
(202)
272-0001

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8. U.S. Bureau of Indian Affairs
Mission Valley Power
Polson,
883-5361
(406)
MT

US.Bureau of Indian Affairs

San Carlos Irrigation Project
Coolidge, (602)
723-5439

10. US. Bureau of Reclamation

Washington,
DC
(202)
208-4662

11 Western Area Power Administration

Golden, CO (303)
275-1234

THE INFLUENCE INTRASTATE REGULATION

HAS ON UTILITY COSTS

State agencies regulate the intrastate distribution of electricity. An

electric utility uses combination of 'inter' (between states) and 'intra'
(within state) components and therefore both federal and state regula-
tion occurs.
Since state agencies provide the predominate day-to-day regulatory
functions concerning electricity, it is important to know that they func-
tion in manner that benefits the customer. One of the most discourag-
ing factors in intrastate regulation is the number of regulatory agencies
that allow the utilities they regulate to not offer truly 'cost-of-service'
tariff schedule rates. It does customer no good to have interstate access
to retail wheeling of electricity if the intrastate utility does not allow
retail wheeling of that electricity through their distribution system.To be
better able to visualize the flow of electricity through electric utilities,
Figure 2.2 is shown following:

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 THE FLOW OF ELECTRICITY

Generation of

Transmission of
Electricitv

Distribution of
Electricitv

l
Retail Customers

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This Page Intentionally Left Blank

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 The first step in this undertaking is the obtaining of accurate infor-
mation relating to the subject being investigated. In the case of electricity,
the first step in understanding begins with the obtaining of data that
relates to the pricing on unit basis of the commodity (electricity) being
purchased. Since all utilities are regulated in one way or another, written
records of usage and pricing data it relates to customers must be
available to any interested party that requires it.

ITEMS NEEDED FROM THE UTILITY AND

STATE REGULATORY AGENCY

Listed following are the mandatory basic informational items that

must be obtained before any understanding of electricity rates will be
realized. All of these items are matter of public record and must be
made available to any one who requests them. They are typically avail-
able from at least three sources-(l) the utility itself, (2) regulatory agen-
cies, and (3) university libraries. Generally, the most logical place to
obtain this information is from theutility or the utility regulatory agency
themselves. If request is received from customer of the utility, there
generally is no problem or cost involved. But if there should be charge,
then it should be reasonable and reflect the time and material required
furnishing the information. However, if request is received from a non-
customer, some problems may arise both with respect to availability
25

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well the potential for cost being assessed for the material.
Remember, all utility rate information that is approved by regu-
latory body for use in determining rates and conditions to which cus-
tomer is subject,must be matter of public record, and such, available
for public inspection. Typically, the utility service representative respon-
sible for the customer involved is contacted and request is made for the
information needed. It is always more beneficial for the customer to
obtain this information in person, but if not possible, then by telephone
or e-mail. The importance of obtaining the information following cannot
be overstated since these items are basic to understanding utility costs.
With relation to information that is required from the state, the best
way to proceed is to contact the state agency involved directly. As rule,
there should be no problem in obtaining either sales tax or economic
development/enterprise zone information from the state. It is always
best to contact the proper state agency directly by telephone since letters
seem to get lost or misplaced rather frequently.
In Figures 3.1 and following is shown the various items needed
prior to analyzing any electricity billing. Figure 3.1 lists the items that are
normally obtained from the service representative of the utility involved.
Figure 3.5 lists the items that are obtained from the state where the cus-
tomer is located. If all of the items described in these two figures are
obtained, thorough comprehensive analysis of the specific utility in-
volved can be done.

RECAP OF FIGURE 3.1-UTILITY DATA NEEDED

1. COMPLETE TARIFF OR RATESCHEDULE (UTILITY SERVICE REPRESENTATIVE)

A complete tariff or rate schedule covers all rates, terms and con-
ditions that are approved in rate case. All classes of customers are
addressed-residential,commercial and industrial. Thesetariffsor
schedules can range from several sheets to several hundred sheets in
length. Contained in this information will be all data relating to customer
rates, costs, terms for service, etc. The importance of this source docu-
ment cannot be overemphasized since it is absolutely mandatory for an
understanding of utility costs. Make certain that the request is made for
complete tariff or rate schedule since utilities tend to provide only the
particular schedule that currently applies to the customer making the
request. The availability of complete schedule cannot be over empha-

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 Obtain from the Complete Tariff
Utility Service Or
Rate Schedule
Representative
i

Obtain from the Experimental Rates

State RegulatoryBody

Off-Tariff Schedules

Unregulated Marketing
Affiliate Programs
Lrc

sized since only then can comparisons be made between different rates
and options. A typical complete tariff or rate schedule will contain the
following items:

1. Complete list and explanation of all customer rates available.

Complete list of all items or riders that modify or change rate costs.

Alternativeratesthat may be available on 'customer request'

basis for certain customer classes.

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4. Information on 'special' rates that may be available in certain cir-
cumstances.

5. Complete explanation to how all cost components of utility us-

age are measured and applied. Complete tariff or rate schedules
remain in effect until new rate case is filed and approved by the
appropriate regulatory agency. Only one complete schedule is re-
quired for given utility since all customer classes are addressed
therein.

2. EXPERIMENTAL RATES(REGULATORY BODY)

Experimental rates are not normally contained in complete tariff or
rate schedules since they are developed an experimental basis by
utilities and are not mandated for any particular customer. These types
of rates are not available from all utilities, but if they are, they can be
source of cost reduction potential. These rates are developed by the util-
ity and approved on an experimental basis by the applicable regulatory
agency.
The experimental category allows the utility to evaluate the poten-
tial for different type of rate structure. Since these rates are never
mandated, they are used only on customer voluntary basis. If the cus-
tomer chooses an experimental rate and it results in an increased cost,
then utility may not assess any charge higher than what would have
resulted from the regular schedule of rates. If an experimental rate
proves successful, the typical next step is to include it an optional rate
in the base tariff/rate schedule and not mandatory for any customer
class. Since the final step is to change the 'optional' classification to
'mandatory' category in the base tariff/rate schedule, it remains impor-
tant to keep up-to-date on experimental rates since long term they have
way of becoming mandatory for some customer classes. The most
common experimental rate structure currently being used in electricity
seems to be the 'real time pricing' structure. Determine whether experi-
mental rates are available; and if they are, obtain copy and determine
the immediate applicability well the long-term implications in case
they are later included in the base tariff/rate schedules mandatory for
your customer class.
An example of what an experimental real time pricing electric
could look like is shown in Figure 3.2.

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 Strategy Costs

ANALYSIS OF FIGURE 3.2

This experimental rate allows customer to purchase electricity on

an hour-by-hour basis based upon (kwh) usage only. The problem with
rate of this type is that usage (kwh) charges will probably be more
expensive at times when the customer usage will be the greatest.
For example, in the experimental rate shown in Figure 3.2, the
maximum charge in the example of daily usage cost printout occurs
from 1O:OO a.m. through p.m. on normal workdays (Monday-Fri-
day). In this example, very costly electricity will be consumed during
most customers’ largest usage periods. Generally, this type of rate will be
of benefit only to the customer that can shift electrical usage to the
utility’s normal off-peak periods, which would usually be during the
evening, night, early morning, weekends and holidays. Most electricity
users do not have the flexibility to shift usages to the extent needed to
benefit from this type of rate. However, if the customer can alter the
usage patterns on daily/hourly basis, rate of this type can be very
cost effective. An item-by-item analysis of this rate follows:

This schedule number (EX-RPT-3) designates the rate case tariff

schedule identification number assigned to this rate by the utility/
regulatory agency result of the utility’s case concerning this
rate. If customer wanted to examine all pertinent data presented
in this rate case filing, this could be accomplished by requesting the
data from either the utility or the regulatory agency by schedule
number (EX-RPT-3).

This section addresses the type of customer that can be served on

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 Experimental Tariff Schedule
Schedule: EX-RPT-3 (Experimental Real Time Pricing)
Applicability: Applicable to any general service customer with service
delivered at a voltage level of 4,160 or greater. To qualify for this rate, the
customer must have maintained a monthly billing demand level of at least
500 kW for the last 12-month period.
This rate is available on an experimental basis and the minimum term
is for a one-year period.
Base Monthly Rates:
A. Customer Charge $500.00
B. Demand Charge-per incremental kW (None)
C. Energy Charge:
Base Energy Charge-per k w h (Fuel Cost) $.0067
(2) Energy Charge-per kwh (Variable) ($.0175-$.4325)
Cost Data: Cost data shall be calculated on an hourly basis every day. No
later than a.m. every day the next hourly rates beginning at
12:Ol a.m. will be provided to the customer via a telecommunication link
with the customer mandatory dedicated telephone line. This data will pro-
vide the (24) hourly variable energy charge components for the next billing
period. This data will be provided every day of the year. The energy charge
components will reflect the actual costs as detailed in the Public
UtilityCommissionapprovedrate filing 21 1 dated 12-01,pages126
through 131.
5. Variable Energy Charges: Variable energy charges will range from a
minimum of $.0175/kWh to a maximum of $.4325/kWh per hourly measure-
ment period.
Minimum billing: The minimum monthly billing shall consist of the follow-
ing item:
A. Customer charge $500.00
Miscellaneous Provisions:
A. There shall beno demand (kW) charges applied to this rate.
B. The utility will provide and maintain the appropriate metering and re-
lated equipment to accurately measure the k w h consumption on an
hourly basis, at no cost to the customer.
C. The utility retains the right to limit the number of customers on this
rate.
D. The utility retains the right to withdraw this rate upon one
notice.

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this rate. In this particular rate, the customer must be served at
primary voltage level of 4,160 or greater. Also, the customer must
have maintained minimum billing demand level of 500 W
monthly for the last 12 months. Generally, applicability provisions
are instituted because the utility has determined that this minimum
voltage/demand threshold would be required by customer to
benefit from the rate. Also sometimes, especially on rate of this
type (experimental), the utility may want to test the rate's validity
or applicability only to certain type or class of customers.

A.CustomerCharge-($500.00)
This is the minimum monthly charge that an individual cus-
tomer would have to pay to be served on this rate. This charge
covers the utility's cost of maintaining and reading the meter
and miscellaneous other monthly billing cost items.

B. Demand Charge-(NonelkW)
This particular type of rate has no demand charge such.
Nevertheless, demand costs are calculated and included in the
energy charges associated with this rate. Although rate with
no demand (kW) charge may seem to be very 'cost effective'
type of rate, the truth of the matter is that demand costs are
calculated and included in the energy charge portion of this
rate. In fact, rate of this type actually would probably be more
expensive for most customers that could not shift usage pat-
terns on daily/hourly basis, which i s very difficult to do. Just
because demand is not included specific billing item does
not mean that its impact on the utility's costs has not been
considered. It has, and in this particular type of rate, is in-
cluded in the variable energy charge portion of the billing.

C. Charge:
Base Enerev Charge-per kwh (Fuel Cost)
This energy charge of $.0067/kWh represents the
utility's fuel cost to operate their generation equipment.
This charge is sometimes called fuel cost adjustment and
it is always applied to the energy (usage, kwh) portion
of the billing. All customers of utility are assessed the

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 same charge on each kwh used. All these charges are
approved by the appropriate regulatory agency.

Energy Charge-per kwh-(Variable)

This charge represents the variable usage (kwh) charges
by the utility on daily/hourly basis. The extremely
wide range variability, over per kwh
is due to the cost of electricity that is
experienced by the utility based upon its generation
load/utilization at various times of the day. Since this
rate is variable and is priced by the day and hour, it
actually can change on daily basis. see what daily
usage cost printout from the utility might look like, the
following example is given.

Example of a Daily Usage Cost Printout

Rate-EX-RPT-3 Data for: Wednesday

kWh

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 In this hourly kWh data is the cost of electricity during the (24)
hours of this particular day (Wednesday), the kwh cost ranges from
$0216 (2:Ol a.m./3:00 a.m.) to $.l910 (1:Ol p.m./2:00 p.m.) with the
higher costs being between 6:Ol and 1O:OO p.m. If customer uses
the majority of the electricity during these hours, then the cost for the
electricity will be very high. If however, customer has the majority of
the usage between the hours of11:Olp.m.-7:00 a.m., then the cost per
kwh would range from $.0312(12:Ol am/l:OOam) to $.0476 (6:Olaml
7:OOam).This amount could result in savings when compared to a typical
tariff schedule rate for this same type of usage pattern.
Basically real time pricing rate is generally only cost effective if
customer can vary their electrical loads on daily time related basis, or
if they ordinarily operate during periods of low utility load demand
intervals of time-typically evening, night, early morning and weekends.
If customer were served on this rate, they would receive daily print-
out of data similar to the one shown here for every day of the month,
including weekends and holidays.

4. Cost Data
This section explains how the hourly kwh charges will be calcu-
lated.

5. Variable Energy Charges

This section simply restates the information shown in Item 3.C. (2)
previously.

Minimum Billing
This section details what will constitute minimum monthly CUS-
tomer bill. Basically the minimum charge will consist of the cus-
tomer charge ($500).

7. Miscellaneous Provisions
This section enumerates miscellaneous provisions associated with
this tariff schedule rate. As can be seen from analyzing the provi-
sions of this example of real time pricing rate, it is not rate for
all customers. Generally, rate of this type will not be cost effective
for customers who operate on one-shift basis during normal first-
shift work. However, if customer operates hours other than these,
or can shift their usage on daily and hourly basis, or can work
many hours on weekends (Saturday and Sunday), then rate of

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 this type may prove to be very cost effective. Before changing to
rate of this type, always have the utility do an analysis of the past
year for the facility/operation in question to determine the cost
effectiveness of change.

Off-tariff schedules differ from both base tariff well experi-

mental rates in the way they are developed and applied. Off-tariff sched-
ules are rates that are negotiated generally between utility and spe-
cific customer. Initially, they are generally discriminatory in nature and
typically apply to larger customers. Rates of this type are negotiated and
must be approved by the appropriate regulatory agency.
As rule, off-tariff rates are developed for large user customers that
have either extremely large loads or unusual use characteristics that are
not addressed adequately in base tariff structures. Most off-tariff sched-
ules occur in larger utilities with diverse customer bases. establish an
off-tariff schedule is at best drawn out procedure. First, the utility
well the regulatory agency has to be convinced of the need for rate
of this type-no easy task in itself. Second, other utility customers may
argue that this is discriminatory rate since it could impact their utility
costs unfavorable, and that someone could have to pay for lost revenue
that generally results from an off-tariff schedule. Off-tariff schedules in
the past havenot been widely used or applicable to large user base, but
this is changing with the potential of electricity retail wheeling becoming
reality.
Evaluate the base tariff schedule in terms of usage characteristics
and if large differences appear between actual usage patterns and those
specified in the base schedule, the potential for an off-tariff schedule may
exist. To determine whether off-tariff schedules are available, contact the
appropriate utility regulatory agency and request copy of any off-tariff
schedules that are currently available. example of what off-tariff
schedule might look like is shown in Figure 3.3 following:

ANALYSIS OF FIGURE 3.3

This example of competitive service rider represents an electric

utility’s means to reduce specific customer’s electricity costs when re-

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 Availability: Available at discretion to Commercial and Indus-
trial customers that have electric service requirements which are subject to
effective competition. Effective competition exists if a customer is located
in service territoty and has the abilitv to obtain its enerav re-
auirements from an enerav supplier not rate reaulated bv the State Reau-
latorv Aaency.

Rate: Standard service rate provisions apply except the level of the de-
mand and/or energy charges may be decreased for a customer based on
a consideration of load characteristics and lowest cost competi-
tive energy supply.

Terms and Conditions of Service:

1. Customer must provide Company with information which documents
that customer is not likely to take service provided by any other electric
tariff available from Company.

2. Minimum load served under this Rider is 500

3. Customer must execute an electric service agreement with Company

that will include:
A. The minimum rate, which will recover at least the incremental
of Drovidina service, including the cost of incremental capacity
that is to be added while the rate is in effect.
B. The maximum possible rate reduction which will not exceed the
difference between the standard tariff and the cost to the cus-
tomer of the lowest cost competitive energy supply.
C. The term of service which must be no less than three (3) years.
D. The size of the load served which must be 500 at a minimum.
E.An annual minimum charae which will fullv recover distribution

quired to preserve or retain their load. This type of rate is becoming more
common with the introduction of retail wheeling of electricity. A serving
utility could utilize rate of this type to effectively retain customer that
could leave the serving utility’s generation base which could increase the
serving utility’s incremental base generation costs.
When rate of this type is utilized, any cost reduction related rev-

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36 Electricity Retail Wheeling

enue shortfall cannot be passed through to any other customer in any

subsequent rate case proceeding. In the case of for-profit utilities, any
revenue shortfall must be absorbed either through operational efficien-
cies or by the shareholders.

Availability
A rate of this type is inherently discriminatory since the utility can,
within this rider’s written boundaries, choose which, if any, indi-
vidual customers it will offer this ratemaking process to. Since any
utility shortfalls caused by revenue discounts offered through this
type of rate making process normally cannot be passed through to
any other customer, the discrimination factor is minimized. Also,
the offering of this type of discount can preserve generation base
load which can positively impact other customer classes by poten-
tially reducing utility base generation costs which ultimately effects
overall utility costs.

Rate
This provision defines the rate or cost considerations applicable to
this rate rider. Note that there are no definitive numbers in this
section since the actual costs are determined with relation to each
customer’s worth to the utility.

Terms and Conditions of Service

This section of the rider defines the terms and conditions under
which the customer will be served.
(1) to This rider
stipulates that the customer must verify, to the utility’s satisfac-
tion, that the customer will actively seek alternative suppliers if
discount is not provided.
In this case, the minimum load that the utility
will consider for discount is 500 kW. If customer did not
have single meter point demand of 500 kW, but instead had
several meter points with each lessthan 500 kW; and, that these
points in the aggregate totaled more than 500 kW, then rider
of this type might be utilized if the utility could be convinced
that it was in their best interest. Potential customers that might
fall in this type of situation could be fast food restaurants, small

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 rants, small commercial multiple location establishments, or
any multimeter customer with an aggregate total of over 500
kW for all meter points in the serving utility’s service territory.

(3) In order to take advantage of this

rate rider, the customer must execute (sign) an agreement with
the utility that sufficiently addresses the following (5) catego-
ries:
A. Minimum rate. In rate riders like this, the utility is going to
limit their ’lost’ revenue exposure by establishing limits on
the rate discount that could be available to any customer.
This particular provision states that after any discounting
to the customer, the utility will at least receive revenue,
sufficient to cover the basic cost of providing service in-
cluding the incremental capacity charge related to the rate.
What this provision and following address is the fact
that, generally no utility will sell electricity at cost lower
than their base cost of providing that electricity. The incre-
mental capacity addressed here and distribution costs
dressed in (E) following are those basic utility costs that
represent the minimum values that the utility must recover
on any rate discount they offer. If they were to discount
further, the revenue they would receive would be less than
their actual costs. The costs addressed in this and section
following are generally on record at either or both state
and federal regulatory agencies.

B. Maximumratereduction.Notwithstandingsection (A)
previously or section following, the utility is not going
to offer any customer a discount larger than they have to
order to retain that customer. This section states that the
customer will probably have to demonstrate or document
what competitive offers they have received in order for the
utility to make competing offer. This type of provision
can cause problems for the utility customer in confidential-
ity agreements they may have with potential non-utility
providers. Sometimes utility customer can simply execute
an RFP (request for proposal) to alternative electricity
providers [marketers other utility ESCOs (energy service

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38 Electricity Retail Wheeling

companies)] to convince the serving utility that the cus-

tomer is serious about reducing their electricity costs. As
electricity is deregulated, more opportunity for arrange-
ments like this will be available. Remember, trying strat-
egy like this has little downside but not trying can result in
more expensive electricity costs result of not taking
advantage of potential discounts in given market area.

C. Term of service. The minimum term for an arrangement

negotiated under the terms of this agreement will not be
less than (3) years. Terms for agreements of this type gen-
erally range between 3-10 years in length. A shorter, rather
than longer term is better since changes can and will occur
with both the customer well the utility that could
make any long-term agreement look not so good when
viewed in retrospect. Generally, any contract terms longer
than (5) years should be avoided, if possible.

D. Size of load (kW) served. The minimum load (kW) that the
utility will consider for discounts in this rider is 500 kW,
but there is no maximum kW limit. Items that should be
considered by the customer when considering this section
are follows:

(1) Is the 500 kW minimum through (1) meter or can

meters of less than 500 kW each be combined to accu-
mulate the 500 kW minimum?

(2) During the contract term, can the customer add to or

take away from the kW quantity that was present at
contract inception?

E. Annual minimum charge. This section and section (A) re-

late to the minimum revenue the utility must receive to at
least attain break-even status on the rate negotiation.
utility under the right conditions for the right customer
might consider negotiated rate that allows them to re-
cover the costs being preferable to losing revenue
ciated with the customer choosing another provider at least
for the electricity commodity portion of the rate.

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 AFFILIATE
Some electric utilities currently have peak power demand (kVA/
kW) deficits. This means that even though utility may not have base
load (kwh) problem, they may experience generation capacity shortfall
during some periods of 24-hour day. The utility can do several things
to compensate for this generation capacity shortfall. They can construct
new generation plants (supply side planning) that are very expensive or
they can offer their customers financial incentives to reduce demand
during the utility’s generation shortfall periods (demand side planning).
Many utilities, through their unregulated marketing affiliate
(ESCO), offer programs that encourage customers to reduce their de-
mand needs by paying for or providing incentives for the particular
items that favorably impact the utility’s demand shortfall problems.
These programs range from, ‘not worth much’ to ’extremely beneficial.’
These programs change frequently and sometimes specific amount of
money is allocated for program which means that when the money is
gone, the program is ended.
If the marketing affiliate has program, they will also generally
have in-house specialist that can be utilized for on-site evaluation
of facility to determine the applicability of the program to particular
situation. The utility service representative can provide program infor-
mation well arrange for an on-site evaluation by the appropriate
specialist. These programs typically include the following items/pro-
cesses although not all items are included in all programs.

1. Utility audits for rebate applicability

2. Fluorescent lighting.
3. High Intensity Discharge lamping.
4. Electronic ballasts.
Efficient magnetic hybrid ballasts.
6. Reflectors.
7. Occupancy sensors.
8. Miscellaneous lighting controls.
9. Rooftop air conditioning.
10. Window air conditioning.
11.Electric chillers.
12. Gas-fired air conditioning.
13. Heat pumps.
14. Boiler/water heaters.

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40

15. Cool storage-thermal storage.

16. Energy management systems (EMS).
17. Energy efficient motor drives.
18. Power factor correction capacitors.
19. Thermal insulation and window film.
20. Custom programs structured to individual customer require-
ments. (These programs are individually negotiated on cus-
tomer/utility basis.)

WHY IS REDUCING ELECTRICITY COSTS SO COMPLICATED?

As with anythingnew, unfamiliarity makes the process or procedure

seem more difficult than it really is. The basedata collection portion of re-
ducing yourelectricity costs is probablythe most important part of the m-
dertaking. Once you beginthe process of getting theinformation outlined
in this chapter, youwill realize that basically you only havetwo sources
that you have to contact-the utility and the stateregulatory agency.
To assist you in obtaining utility information, Figure 3.4 is shown.
With relation to getting state regulatory information, I would suggest
(from experience) that data be requested by telephone, noting the day,
hour, and person’s name with whom you spoke.

Dear (Service Representative of Utility Company):

part of an ongoing program in our company to reduce operating
costs, we are evaluating areas for investigation. One of these areas is
(insertcommodity name-electricity, natural gas, water orsewer).
Please provide the following information as soon as possible:
Complete tariff schedule including riders, attachments, etc.
2. Experimental rates, if applicable.
3. Off-tariff schedules, if applicable.
4. Unregulated marketing programs, if applicable.

We appreciate your attention in this matter and thank you in ad-

vance for your help.
Sincerely,

(Utility Customer)

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 Strategy

Figure 3.4 shows sample of utility data request form. This

sample, if utilized, may help in the obtaining of utility data that will be
needed to analyze utility costs. This form is presented only sample
but does contain the basic elements that should be present in any re-
quest. The request should be submitted by the customer of the utility
company to the customer’s own utility service representative.

WHO IS ULTIMATELY RESPONSIBLE FOR UTILITY COSTS?

The Federal Regulatory Commission, together with all state regula-

tory agencies, agree that-

The customer is ultimately responsible for being on the most cost-

effective rate.

2. There are no statestatutes that require utility to ensurethat

customer is served under the most economical or least costly rate
available. Neither are there are requirements that utility refund
any excess monies paid by customer if they are on correct rate
even if it is not the most cost effective. It is the customer’s respon-
sibility to select the least costly rate schedule.

Due to the vast number of customers most utilities serve, and the
changes and revisions their customers are constantly experiencing, it
would be impossible to assure that any customer is at all times on the
most economical rate available.
Unfortunately, many
utility customers are unaware of the rate that forms the basis of their
utility billing.
Through information provided in this publication, the correct ap-
proach to reducing electricity costs can be understood. With this knowl-
edge, the customer can determine the steps needed to be assured their
electricity costs are what they should be.

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 Electricity
Retail Wheeling-
The Process IitvOlved

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 Electricity
Retail Wheeling Basics i

RETAIL WHEELING OF ELECTRICITY

Retail wheeling of electricity is simply the purchase of the electric-

ity commodity by retail customer from source other than their own
serving utility. The process is verysimilar to retail customer purchase of
natural however, the effect on the electric utility is very different
from that on the natural provider.
In the purchase of electricity from utility, the commodity (electric-
ity) being purchased is typically considered to be originated or generated
by the electric utility. Even though electricity is generally considered to
be generated by the utility that sends the monthly bill to the customer,
no one really knows what actual electrons flow to the customer's meter
point. All electric utilities that generate electricity actually flow that elec-
tricity into power pool for ultimate distribution to the customer.
Currently there are power pools that cover all of the contiguous
United States and parts of Canada. No one can identify or track the
actual flow of electrons from the point-of-generation to the point-of-use
by customer. Unless there is specific physical single line that connects
electricity generation with the user of that electricity, (there are thou-
sands of electricity generation units flowing electrons into the power
pools in the United States) it is impossible to identify the location where
any particular electron was generated.
Electricity flows based upon the path of least resistance, not just
where any particular utility wants it to go. There are no "good" or "bad"
electrons; however, there are various levels of delivery classifications.
Whether electricity commodity is purchased from the utility or through
the wheeling process, the actual electrons being delivered to the
45

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tomer will be the same quality and be distributed through the same
transmission/distribution wires p d meters that are used by the utility
that serves the customer.
In the purchase of natural in the majority of instances, the
commodity (natural does not originate within the provider’s service
territory but is simply purchased by the provider and resold to the retail
customer.
Although these differences between electricity and natural may
seem to be of little importance to retail electricity customer, they actu-
ally are critical to the utilities/providers and their differing attitudes
towards the customer’s direct purchase of the commodities that they sell.
Since most natural providers purchase the commodity they sell from
someone else, it does not disrupt their operation or profitability to any
great extent whether their customers purchase ’provider’ natural or
arrange for their own natural and simply utilize provider pipes,
meters, and services. If the provider charges are based upon true cost of
service principles, most natural providers would probably rather
retail customers obtain their own natural since it would result in less
headaches for the provider.
electric utility, however, takes very different view of direct
purchase of electricity by its retail customers since generally the serving
electric utility, in theory at least, generates quantity of electricity equal
to what it sells to retail customers. When retail electricity customer
purchases the electricity commodity from some source other than the
serving utility, the potential lost electricity generation sales for the serv-
ing utility result in lost revenue. The lost generation revenue may not be
capable of being replaced by the serving utility.
If this is true, retail customers choose to purchase their electricity
commodity from sources other than the serving utility, the utility will be
required to increase electricity incremental rates to offset the reduced
electricity commodity sales. As this happens, more and more retail cus-
tomers might opt to obtain their electricity commodity from other than
the servingutility. Thisscenario has name called the ’death spiral.’ This
means that less and less electricity generation is sold to retail custom-
ers by their serving utilities, the incremental electricity cost will continue
to rise. Ultimately, the serving electric utility’s incremental rates will
become prohibitively expensive, resulting in financial losses for the util-
ity involved.
Will wide-spread electric utility bankruptcies result retail wheel-

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ing becomes more common? Possibly, but has happened in many
industries when competition has presented itself, the affected entities
will find ways to compete.
The question at this point might be-what happens if my electric
utility company declares bankruptcy? If utility bankruptcy occurs, an
interim administrator would be appointed by the courts until pur-
chaser for the utility assets could be located. Utility bankruptcies, while
not common occurrence, have happened with the results being that the
utilities declaring bankruptcy have been purchased and continue to op-
erate.
Retail wheeling of electricity isinherently neither good nor bad, but
depending upon your view, valid case can be made both for and
against the process. From customer’s viewpoint, due to the large varia-
tion in electric utility rates caused by lack, in part, of true competition,
retail wheeling of electricity would seem to be welcomed option. From
an electric utility viewpoint, someone has to pay for its investment in
materials and generation capacity; and, if customers can purchase their
electricity anywhere on the power pool, the utility may have no way to
recoup its costs. Both of these views have some validity, but what will
ultimately determine the reality of the process will be retail customers
causing it to happen.
If retail electricity customers take ‘wait and see’ attitude, then
retail wheeling will probably never be widely available since electric
utilities, especially high generation cost utilities, are not going to push
for process that could ultimately force them to lose customer base.
Retail wheeling of electricity is not something that is technologi-
cally impossible to do since almost all electric utilities currently ’whole-
sale’ wheel electricity between themselves on daily basis. The real
problem electric utilities have with retail or customer wheeling of elec-
tricity is that it will require them to obtain and keep their retail customer
base through competition, not through regulatory commission mandated
service territory boundaries.
It is best to keep the lines of communication open between the retail
customer and the electric utility-seeking the utility’s opinion regarding
retail wheeling of electricity and asking your electricity utility’s service
representative questions, such

Does the utility think that retail wheeling willeffect how it oper-
ates; and if so, how?

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 When and how does the utility think retail wheeling of electricity
will effect them and the way they market electricity?

Will retail wheeling increase or reduce the utility customer base?

What customer retention strategies has the utility developed to

cope with or to utilize retail wheeling of electricity?

Does the utility currently have any experimental or off-tariff sched-

ules that have been developed to address retail wheeling? If any of
these types of rates are currently available, ask the service represen-
tative for copies of them.

Retail wheeling will effect each electriccustomer whether they ever

wheel electricity themselves or not. Know what is going on in this area
of electricity retail sales.

HOW WILL RETAIL WHEELING EVOLVE?

One of the real questions concerning retail wheeling of electricity is

how will the wheeled electricity get from the point of generation to the
point of use over various transmission grids? The stated problem is one
of logistics-how to get the electricity from the point of generation to an
individual specific retail customer that is perhaps located on distribu-
tion grid different from the one on which the electricity is generated. A
good overview of some of the potential problems relating to retail
wheeled electricity is found in the publication ”Overview of Issues Re-
lating to the Retail Wheeling of Electricity,” published by The National
Regulatory Research Institute-http://www.nrri.

OVERVIEW OF ISSUES RELATING TO

THE RETAIL WHEELING OF ELECTRICITY

Parallel Path and Flow Problems

The actual path taken by electric power wheeled across transmis-
sion systems is difficult to predict and impossible to measure. Electric
current moves according to Kirchoff’s Laws and essentially flows on the

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 Wheeling

path of least electrical resistance. As a result of these physical laws,

power moves across many parallel lines in often circuitous routes.
For example, assume that four utilities (A,B, and D)are inter-
connected to eachother through tie-line between each of them. If utility
A plans to wheel power to utility D,one might assume that the power
will flow over transmission line A D which connects utility A to utility D.
Realistically, the current may flow from utility A over line AB to utility
and then line BD to utility Alternatively, the current may flow
from utility A over line AB to utility B, then down to line BC to utility
C and then over CD to utility D. In actuality, the current has numerous
possible paths it can take depending on the loads on the individual
transmission lines at the time. Most likely though, portion of the
wheeled current traveling over each transmission line would hinge upon
transmission loads on those lines at the time. In sum, the actual flow of
power may, and typically does, diverge widely from the contract path.
As a result the supposed economics of the contract path frequently have
little to do with the actual costs of the power transfer. Furthermore, these
loop flows can affect third parties distant from the intended power flows,
and these third parties may, and often do, incur costs without compen-
sation. Most utilities, however, consider the parallel path problem
cost of interconnection and generally prevent other utilities from wheel-
ing only if the additional transmission system loads cause capacity over-
load problems on portions of their transmission grid.

Network Congestion and Line Capacity

If the transmission network is heavily loaded, bottlenecks may lead
to congestion that will prevent full use of the cheapest plants. Often
referred to ’out-of-merit’ dispatch, the constrained use of the plants
frequently can create significant opportunity cost that can be assigned
to consumers causing the congestion.
The congestion limitations arise in two principal forms. The first is
the on the flow of power on an individual line. The thermal capacity of
transmission line sets an upper limit on the flow of power on that line.
Through the interactions of Kirchoff’s laws, line limitation affects every
other flow in the network. A change in generation or load at any buss
will have some effect on the flow on the constrained line; hence, the
constraint can affect the loading profile at each buss. A second major
source of congestion in power network arises from voltage magnitude
constraints atbusses. In normal operations or an approximation of the

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more complicated worst-contingency analysis, voltage constraints define
transmission lines. Even when power flows do not approach the thermal
limits of the system and the transmission lines appear to have excess
capacity, voltage limits can constrain the transfer capacity.
Voltage constraints inevitably require attention to both thereal and
reactive power loads and transfers in the alternative current (AC) trans-
mission system. Recall that real power (the power that lights out lamps)
is measured in watts or megawatts (MWs) and reactive power (power
factor) is measured in voltage-reactive or VARS and megaVARS
(MVARS). Power generation, load, and flow in an AC system are divided
into both real and reactive power components. Without voltage con-
straints, the only matter of concern is the real power flow; it is common
practice to ignore the associated reactive power analysis. But voltage can
be affected by both real and reactive power loads, and the interaction
between the two is critical in determining the induced limits on real
power flows.
In reality, voltage limitations and the associated reactive-power
compensation are prevalent. For example, recent power shortages in
New England and New York were largely attributed to voltage and re-
active power problems. Consequently, accounting for the congestion lim-
its created by thermal limitations on transmission lines may not by itself
prevent losses of real power flows. Any new regime for transmission
access must address the congestion problem created by reactive power
and voltage constraints. The most direct method is to account for both
real and reactive power when designing wheeling prices.
Existing transmission and distribution lines are capable of provid-
ing electrical service to all electric customers currently with utility’s
service territory. Today’s transmission and distribution system was pri-
marily designed and constructed to transmit electricity from utility’s
on-system generators at specific locations to its customers within its ter-
ritory, and secondarily to transmit electricity from interconnection points
for reliability and economy power transactions. This same transmission
system may therefore be incapable of transmitting large quantities of
power from outside sources to its retail customers or to other utilities.
Additionally, every transmission line is designed to carry certain maxi-
mum amount of electric current. If this maximum current is exceeded,
then the transmission line will be damaged. Consequently, wheeling
transaction may overload and damage the line.

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Line Losses
Even if wheeling transaction does not cause transmission line
damage, it can increase transmission line power losses. Transmission line
power loss can be defined the loss of power, in the form of wasted
heat, associated with transmitting electrical current over transmission
line. Line loss is generally unavoidable and is directly proportional to the
mathematical square of the current. Therefore, doubling the current on
transmission line would cause quadrupled line losses. Line losses also
are directly proportional to transmission distance-the greater the dis-
tance of electrical transmission over the same size transmission line, the
greater the line losses associated with the flow of power. Wheeling trans-
actions can increase transmission line losses substantially.

Metering Problems
The electricity requirements of system constantly fluctuate. The
actual power supplied to the system is dependent upon its load require-
ments at any given time. Thus, the party selling power must be sensitive
to these load fluctuations. Two different methods are commonly used to
handle this problem.
The first and most efficient method focuses on the use of meters at
the purchaser’s delivery point(s). The amount of power delivered to the
delivery points is instantaneously summed and telemetered to the gen-
eration dispatch center of the utility selling the power. In this way, the
seller is constantly aware of the purchaser’s instantaneous power re-
quirements.
In the second method, the seller of power provides schedules allo-
cations of power to the purchaser on day-to-day basis. The party
wheeling the power is responsible for providing the actual power re-
quirements to the purchaser and for load fluctuations on the purchaser’s
system. Since metered delivery points are requirement of any party
purchasing off-system power, the exact amount of power supplied to the
purchaser is known. The meters are read on periodic basis (usually
monthly) and the actual power supplied to the party purchasing off-
system power is determined. The amount of actual power supplied is
compared to the amount of scheduled power provided and the differ-
ence is calculated. If more power was actually supplied during the pe-
riod than was schedules, the seller would reimburse the party wheeling
the off-system power for the previous month” deficiency in its following
month” schedule power.

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 The metering problems associated with retail wheeling could be
complex and cumbersome. In order to accurately track customer’s load,
network of meters and telemetering would have to be installed from
retail customers to the parties generating and supplying their power.
Since the system load is adjusted automatically, the computer would
instantaneously sum the demands of the retail customers and automati-
cally adjust for the increase or decrease in load.

Distribution System Concerns

Certain technical problems associated with wheeling of electricity
are intertwined with legal issues. If consumer decided to purchase off-
system power, he would have to purchase the distribution grid. If he
purchases the service, the wheeled power would in most cases be distrib-
uted to him easily long it is within the distribution system limits.
If he opts to construct his own grid, whole host of legal issues would
likely arise.

Generation and Transmission Planning

If a customer in utility’s service area contracts for off-system
power and wheeling, does that utility still have the responsibility to plan
for generation and transmission capacity to serve that customer? Must
the utility stand ready to service former customer during system emer-
gencies experienced by this customer’s current supplier? Must the utility
resume service to former customer who wishes to become that
utility’s customer at some future time? These are questions that will re-
quire answers before capacity planning can be done efficiently.
Retail wheeling could certainly harm utility’s ability to forecast
future generating capacity requirements. A utility’s load would now
depend, among other things, upon the difference between the utility’s
own retail rates and the market price of electricity. Retail wheeling
would also create transmission planning problems for utilities. Utilities
wishing to provide service to off-system retail customers could require
costly transmission line and system improvements. As utility added
and lost different off-system retail customers, changes in that utility’s
transmission system could be required.

Construction of New Lines

Although utility’s transmission and distribution systems are ca-

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 Retail

pable of serving customers within its service area, existing transmission

systems were not built with wheeling in mind. In particular, the points
of interconnection between utilities were not designed for retail wheel-
ing. Thus, in order to make retail wheeling possible, in some instances
improvements to the current transmission systems may be necessary.
Construction of new transmission lines presents large obstacle for retail
wheeling. Utilities face many barriers in constructing new transmission
lines. Construction of transmission line is lengthy and expensive
project. Before construction of the transmission line begins, the required
land must be purchased. Transmission lines are restricted to certain ar-
eas. Consequently, the proposed transmission-line construction must
meet the requirements and obtain the approval of different federal and
state agencies. The next section briefly illustrates how to improve the
capabilities of the transmission and distribution network.

Technical Measures to Correct for Wheeling Impediments

To make wheeling and competition possible, the previously dis-
cussed technical impediments have to be carefully handled. Legal, ad-
ministrative, and pricing policies could correct for loop flow, metering,
planning, and distribution problems. Line limitations and losses repre-
sent physical problems that could be solved only by either expanding or
improving the networks physical capabilities. Because of environmental
concerns and regulatory delays, electric utilities are now seeking practi-
cal alternatives to constructing high-voltage and ultra-high-voltage
transmission lines. A recent utility trend is to more effectively use exist-
ing transmission lines and rights-of-way. For example, the power trans-
fer capability of lines not operating at their thermal limits can be in-
creased by the addition of series, shunt compensation, or the use of
phase shifting transformers. Rights-of-way also can be made to carry
more power by (1)raising the voltage on existing lower voltage lines, (2)
converting AC lines to DC (direct current), (3) using hybrid lines where
AC and DC lines occupy the same tower or the same right-of-way, or (4)
by compacting the lines where more circuits are permitted in given
space. High-phase order transmission is one promising form of compac-
tion that has been investigated.
High-voltage DC (HVDC) transmission is area of particular
importance. Thyristor converters rated 500 kV, 2,000 have been devel-
oped using both air and liquid cooling. Several areas of development
have made HVDC systems more cost effective over time and have

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greatly improved their performance. They include direct light firing of
thyristors, the development of higher voltage cells that lead to lower
losses, greater control flexibility through the use of micro-processors and
sophisticated new control functions (for example, multiterminal opera-
tion, real and reactive power control, and damping of subsynchronous
oscillations), the reduction of converter transformer losses, and better
protection of equipment against over-voltages with the development of
zinc oxide arresters. HVDC should play an increasingly important role in
enhancing the capability of the transmission network to accommodate
increased wheeling and competitive activities.
An economical way to increase the power transfer capability of an
AC line is to install capacitors in series with the line to reduce its elec-
trical impedance. Using zinc oxide discs with high-energy handling ca-
pability, series capacitors can be reliably protected against over-voltage
by connecting series-parallel arrays of discs directly across the capaci-
tors. The protection of turbine generators against subsynchronous oscil-
lations, which may arise when series capacitors are used, has been ac-
complished using either passive filters or active thyristor dampers.
Another means of increasing the power transfer capability of exist-
ing transmission lines is the addition of shunt compensation of the form
of switched capacitor banks or static VAR controls. Static VAR controls
were initially applied to control the voltage flicker produced by electric
arc furnaces. More recently, static VAR controls were applied to control
rapid voltage fluctuations power transmission systems and to im-
prove the stability of large networks. Static VAR controls consist of thy-
ristor switches, sometimes in conjunction with mechanical switches, to
regulate the amount of inductance or capacitance connected to the trans-
mission line for purposes of voltage regulation and increased power
transfer.
These measures should significantly enhance the overall reliability
and capability of electric power systems to comply with the new com-
petitive regime. They have limitations and costs, however. In recent
study, the enhancement potential and installation costs of five options of
different technical measures were compared. These options, proposed to
enhance the network transfer capabilities, are (1)fixed series capacitors,
static VAR compensators (SVCs); (3) adjustable series and SVCs, plus
(4) parallel paths controlled; and (5) the rapid response generation. The
study concludes that power transfer could be increased by 35 percent, 50
percent, 60 percent, 70 percent, and 90 percent with the adoption of

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options 1 through 5, respectively. Assuming option 1 is the bench mark,
the study found that the installation of option 2, 3, 4, and 5 are approxi-
mately percent, 150 percent, 500 percent, and 800 percent more ex-
pensive that the installation cost of option 1. The savings that would
result from the transfer of cheap power by the enhanced network should
be accounted for when conducting cost/benefit analysis. The question
remains whether utilities would be willing to invest in such measures if
the economic benefits and rewards accrue mainly to consumers.

FINAL COMMENTS

Society has limited tolerance for actions which may disrupt electric
service over wide area. If numerous players are encouraged to engage
in any sort of competition in the electric network, some workable en-
forcement procedure should be established to ensure that variances from
the rigorous and unforgiving nature of operations on the grid are not
compromised because of competitive pressure. Unlike natural trans-
mission, electric wheeling can affect the reliability and stability of service
over wide area. Because electricutilities are interconnected and operate
in parallel, the actions of one utility affect other utilities.

ECONOMIC/POLICY CONSIDERATION

Retail wheeling would undoubtedly advance the competition that

is evolving in the electric power industry. Along with EPAct and emerg-
ing market pressures, retail wheeling would move the future path of the
industry toward more balanced mix of market factors and regulation in
determining performance and structure.
Allowing retail customers the right to purchase power from com-
peting generators would affect the electric power industry in five major
ways. First, by weakening utility’s monopoly power, it would directly
enhance competition in retail markets. Second, it would eventually cause
change in the ratemaking practices of state regulators. Third, it would
stimulate vertical disintegration of the industry where some utilities may
decide to exit the generation business. Fourth, it would reshape the
’regulatory compact’ by changing the service obligations of utilities and

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their status the sole supplier of power within their franchise areas.
Fifth, it would cause the industry to become more cost conscious and
accommodating to the needs of individual customers.

Another good evaluation of retail wheeling of electricity is found in

the publication "Retail Competition in the United States Electricity In-
dustry,'' published by the Electricity Consumers Resource Council-
http:/ /www.elcon. This publication outlines eight principles for achiev-
ing competitive, efficient and equitable retail electricity markets-they
are follows:

No.
Market forces can do better than any government or regula-
tory agency in determining prices for commodity such electricity.

Laws and regulations that restrict the development of competitive

electricity markets should be rescinded or amended. The need for bur-
densome regulation will be reduced where competitive electricity mar-
kets are allowed to flourish.

The benefits from competition will never fully materialize unless

and until there is competition in both wholesale and retail electricity
markets. But not all retail electric services are natural monopolies and
therefore they should not be regulated such.

The owners andoperators of transmission and distributionfacili-

ties, and the providers of coordination and system control services,
should be required to provide access to those facilities and services to
any buyer or seller on nondiscriminatory, common-carrier basis.

Rates for the use of transmission and distribution facilities should

reflect the actual cost of providing the service. If the facility is natural
monopoly, those rates should be based on actual costs and the services
provided on nondiscriminatory and comparable basis to all users.

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Principle 6
Resource planning is not natural monopoly. The types and
market shares of generation and end-user technologies that will be sup-
plied in wholesale and retail markets should be decided in the market-
place.

Principle 7
Legitimate and verifiable transition costs that develop result of
competition should be recovered by equitable split amount
ratepayers, shareholders and taxpayers. The costs of assets that were
uneconomical in the existing regulatory regime are not transition costs.

Principle 8
The potential for transition costs should not be used excuse
to prevent or delay the onset of competitive electricity market.

As can be seen, there are both obstacles to and advantages in retail

wheeling of electricity. How quickly retail wheeling occurs to any great
extent will depend upon howinvolved potential retail wheeling custom-
ers become involved in the process. Although there are many questions
for practicality reasons, the process is evolving follows:

1. Retail wheeling of electricity will, at least initially, occur internally

on each of the current 10 North American Electric ReliabilityCoun-
cil Regions (NERC) (power pools) in the contiguous United States.
Following, in Figure 4.1, are the geographic areas served by each of
these regions together with each region’s name.

It is this writer’s experience that in actuality intra-NERC region

retail wheeling competition is evolving the first step in retail
wheeling of electricity. Thismakes sense both with respect to trans-
mission distribution (intra-region only) and variations in specific
utility production costs and retail rates. This type of competition is
already taking place in various parts of the United States where
retail wheeling is in effect.

2. A large portion of retail customers that could retail wheel electricity

will never do so because their serving utility will negotiate dis-

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REGION NAME (POWER
POOLS) GEOGRAPHIC AREA
SERVED

1. wscc Arizona Nevada

Western Systems California Oregon
Coordinating Council
Utah Colorado
Idaho Washington
Montana
(partial)
Wyoming
New Mexico (partial)

2. MAPP Iowa Nebraska

Mid Continent Area Minnesota North Dakota
Power Pool Montana (partial) South Dakota

3. SPP Arkansas Louisiana

Southwest Power Pool Mississippi (partial) Oklahoma
Missouri
(partial)
Kansas
New Mexico (partial)
Texas (partial)

4. ERCOT
Electric Reliability Texas (partial)
Council of Texas

5. MAIN Illinois
Mid American Interpool Missouri (partial)
Network Wisconsin

6. ECAR Kentucky (partial) Indiana

East Central Area Reliability Maryland (partial) Ohio
Coordination Agreement Michigan (partial) West Virginia
Pennsylvania (partial)
Virginia (partial)

7. SERC Alabama Delaware

Southeastern Electric District of Columbia Georgia
Reliability Council Kentucky (partial) North Carolina
Missouri (partial) South Carolina
Virginia (partial) Tennessee

8. FRCC Florida
Florida Reliability
Coordinating Council

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 Basics

9. NPCC Connecticut New York

Northeast Power Maine Rhode Island
Coordinating Council Massachusetts Vermont
New Hampshire

10. MAAC Maryland (partial)

Mid Atlantic Area Council Michigan (partial)
New Jersey
Pennsylvania (partial)

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 the Pools)

*Electric Production Retail

NERC Generation costs Rates
Regions (typical) (typical) (typical)
(GWh) (c/kWh)
(@/kwh)

wscc
MAPP
SPP
ERCOT
MAIN
ECAR
SERC
FRCC
NPCC
MAAC

Total Generation GWh

Average Costs 1.9c/kWh 7.1@/kWh

Note: Electric generation/production costs/and retail rates for each of the NERC
regions varies each hour, day, week and month. The figures shown are typical
and are not intended to represent any actual month. This data is presented
only to provide insight to differencesbetween the regions in actual generation
amounts, production costs and retail rates.
Production Costs include fuel prices and non-fuel costs.

count rate withthe customer to retain their base load. It must bere-
membered thatin utility that generates electricity, their good retail
base load customers are critical to the profitability of that utility.
Based upon actual negotiations with electric utilities in
client’s behalf, there have been instances where utility was willing
to negotiate rates, project cost concessions and various other cost
reductions with client even where there was no opportunity for
the client to leave the serving utility. Why do these types of nego-

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 tiations occur? Because the serving utility really does want to keep
their good electricity load profile retail customers satisfied, if pos-
sible.

3. There are many misconceptions about what the advent of wheeling

will mean to retail customers. Based upon actual experience, fol-
lowing are some of the most frequently asked questions by poten-
tial retail wheeling customers concerning their fears or discomfort
with their entering into the retail wheeling arena.

A. Question: What about power quality?

Answer:Power quality will be what
The first thing that has to be determined is what is power
quality. Power quality means many things to many different
people. Power quality can mean that if the power is available
it is good quality. others, it can refer to variation in hertz
(cycles), variation in voltage, harmonic levels, and electric line
transmitted spikes, etc. The thing that has to be understood is
that power quality, whatever this means, will remain consistent
both before, well after retail wheeling.
The quality of power is a function of the power pool in
which the retail customer is located. It must be remembered
that generally, retail customers are not directly connected to
any single serving utility’s generation sources. Retail customers
are directly connected to their serving utility’s distribution sys-
tem, but the actual electrons that enter their serving utility’s
distribution system can be generated anywhere on the power
pool of which they are part. In fact, the origination point of
the electrons may even be from different power pool than the
one which directly serves the retail customer.
The truth is-the wheeled electricity is the same what
retail customer is currently receiving from their current electric-
ity supplier. one can track the actual path electrons take
from the point-of-generation to given electricity customer
unless there is direct individual physical connection between
the point-of-generation and the point-of-use, which is not the
case between generators and users today.
Should particular quality level be required by an indi-
vidual user? The best and most effective way of obtaining that

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 quality level is to ’condition’ the electricity on the user’s side of
the electricity delivery meter point. Quality of power should
not be reason for not investigating retail wheeling electricity
savings potentials.

B. Question: How do I know that I will have the electricity I

need?
Answer: The electricity you need will beavailable if
have opted for firm commodity, transmission, and
distribution.
The real question is will you be able to afford the electricity
you receive if your provider defaults (does not deliver) your
electricity needs? Generally there is no accurate way to track
specific customer’s wheeled electrons from point-of-generation,
transmission, and distribution to the customer’s individual
meter point on real time basis.
The ’truing up’ of specific customer’s actual meter point
usage on monthly basis, with what the electricity provider
actually delivered for that specific customer, is accomplished
by comparing the serving utility receipt point quantities from
the provider in the customer’s behalf for the same period is
the meter point reading period. At this point in time it is diffi-
cult, if not impossible, to compare actual specific customer
serving utility receipts with usages on real time basis. In prac-
tice, the total deliveries by the retail customer’s electricity pro-
vider and the usage quantity registered on the retail customer’s
use point meter are reconciled on monthly basis. If there are
discrepancies, especially deficits, the retail customer has to pay
penalty to the serving utility for system-supply electricity that
was required to make up for the electricity provider’s shortfall.
The question is not will electricity be available, but rather
who will pay for any electricity-provider caused problems. In
actuality, the retail customer is responsible to the serving utility
for any electricity provider problems including, potential pen-
alties for shortfalls, overages, balancing problems, etc. The way
to minimize these potential cost problems is to structure the
provider contract in such way as to shield or protect the retail
customer from the serving utility cost penalties.

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Electricity Retail Wheeling Basics 63

C. Question: How will I know if I am getting the best deal?

Answer: It depends upon whatyou define as the ’best deal.‘
If the best deal is absolutely the ’cheapest’ electricity com-
modity cost available, probably you will never be satisfied that
what you are paying is the ’cheapest’ that could be had, since
the ’cheapest’ cost changes every day or even more frequently.
However, if your definition of ‘the best deal’ is reasonable
cost with assured delivery from provider that can supply all
of the assurances that you require, then you can quantify the
‘best deal’ for your requirements.
Many times the ’cheapest’ initial cost does not translate to
the best long-term value. Comfort with the providerselected
well comprehensive contract that covers all of the variables
that can occur, is the only way to assure reasonably cost and
satisfactory assurance that the electricity commodity will be
available when needed. Reasonable cost and satisfactory con-
tract terms are result of knowledge and negotiation with the
potential provider. Luck not the venue to accomplish either
of these

D. Question: Who maintains the user’s meters, and other elec-

tricity generation, transmission, and distribution
intrastructure when the user wheels electricity?
Answer: The same entities that currently do.
All areas of generation, transmission, and distribution of
electricity continue to operate with thesame federal/state over-
sight with retail wheeling is currently required. Retail wheel-
ing of electricity only allows retail electricity customer the
option of selecting electricity commodity suppliers, other than
their serving utility. Federal/state regulatory oversight of main-
tenance, quality, and other electricity generation and delivery
characteristics will remain much the same they are today.

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THE CURRENT STATUS OF RETAIL WHEELING OF ELECTRICITY

Any list of states that currently allow retail wheeling of electricity

would be seriously out of date by the time this publication is available
to the general public. With the advent of the Internet, there are much
more efficient ways to remain informed on the status of electricity retail
wheeling on state-by-state basis. There are at least (50) web sites that
address various aspects of electricity retail wheeling but the following (4)
Internet web sites are the ones I use most frequently:

www.ferc.fed.us/electric/order888.htm
This site contains FERC Order titled-”Promoting Wholesale
Competition Through Open Access Nondiscriminatory Transmis-
sion Services by Public Utilities; Recovery of Stranded Costs by
Public Utilities and Transmitting Utilities.”
Although the title of this order seems somewhat cumbersome,
it is well worth investigating especially if you want to be aware if
the legislation that was enacted prior to but was instrumental in
retail wheeling occurring. (See general discussion of this ruling in
Chapter of this publication.)

www.serve.com/commonpurpose/dereg.html
www.EIA,DOE.gov/cneaf/electricity/chgstr/tab5rev.html
These two sites provide state-by-state retail wheeling information
on very timely basis. It is the best to utilize both web sites since
they each provide retail wheeling information in slightly different
manner that seems to compliment rather than repeat each other.

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4. www.me3.org/projects/dereg/stranded.html
This site presents an in-depth analysis of stranded investment/cost
recovery strategies used by electric utilities and the related poten-
tial problems of the issues that surround the recovery methodolo-
gies utilized.

ELECTRICITY COSTS ON A TRUE ENERGY COST BASIS

Probably one of the most misunderstood facts about electricity is its

true cost in comparison to other energy sources. Whether electricity,
natural gas, propane, fuel oil, coal, or any other fuel source is utilized to
provide operational energy to process, cost of the fuel on comparable
basis should be known. Electricity on kwh basis must be compared to
other types of energy on common dominator basis. How do you com-
pare kWh to dekatherm (Dth)(1,000,000 Btu) of natural or gallon
of propane, gallon fuel oil, or ton of coal?
compare these seemingly dissimilar entities, there must be some
common measurement criteria common to each of the fuels. The com-
mon thread in each of these fuels is that they all are measured and quan-
tified on an energy basis. This common basis is British Thermal Units or
Btu.
Because the measurement unit in electricity is kilowatt-hours
(kwh), the unit cost seems relatively small when compared to other
potential fuel sources. For example, which of the following fuel sources
is least expensive energy (Btu) basis?

1. Electricity .060/kWh
2. Propane .50/gal
3. Fuel Oil #6 .50/gal
4. Natural 3.00/dth
5. Coal 25.00/ton (2,000 lb.)

The true energy costs for thesefuel sources comparable energy

(Btu) basis are follows:

Electricity $.O6/kWh 17.58/dth

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 67

Propane $.50/gal 5.46/dth

3.Fuel Oil #6 $.50/gal 3.34/dth
4. NaturalGas $3.00/dth 3.00/dth
5. $25.00/ton 1.05/dth

Energy Btu Comparisons

Electricity (1)Kilowatt-hour ( k m ) 3,412

Propane Gallon (Gal.) 91,500
Fuel Oil (1) Gallon (Gal.) 150,000
Natural Gas Dekatherm (Dth) 1,000,000
Coal (1)Ton (2,000 lb.) 24,000,000

By using the information shown in Figure 5.1, the true cost of electricity
per the Btu standard of measure of(1,000,000 Btu) is as follows:

(1) k w h 3,412 Btu

Number k w h in 1,000,000 Btu (1,000,000 Btu 3,412 Btu)
293.08 k w h
There are 293.08 k w h per 1,000,000 Btu

Calculation of Fuel Costs Shown Previously

1. $.06/kWh 1,000,000 Btu 3412Btu 293.08 k W /
1,000,000 Btu
293.08 kWh $.O6/kWh $17.58/1,000,000 Btu

$.50/gal. 1,000,000 Btu 91,500 Btu/@. 10.93 gal-

lon/ 1,000,000 Btu
10.93 gal. $.50/gal. $5.47/1,000,000 Btu

3. $.50/gal. 1,000,000 Btu 150,000 Btu/@. 6.7 gal./

1,000,000 Btu
6.7 gal. $.50/gal. $3.35/1,000,000 Btu

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68

Btu

Electricity Cost per

(Cost per kwh) 1,000,000

$.01 (293 k w h $.01) $2.93

.02 5.86
.03 8.79
.04 11.72
.05 14.6
.06 17.5
.07 20.51
.08 23.44
.09 26.37
.l0 29.30
.l1 32.23
.l2 35.16
.l3 (293 38.09 $.13)

4. $S.OO/Dth $3.00/1,000,000Btu

5. $25.00/ton 1,000,000 Btu 24,000,000 .042ton/1,000,000

Btu
.042 $25/ton $1.05/1,000,000 Btu

On true Btu cost, even though electricity at $.O6/kWh seems

much less expensive than coal at $24/ton, coal is in reality far less expen-
sive ($1.05/1,000,000 Btu) versus electricity at $.06/kWh ($17.58/
1,000,000 Btu) on energy basis. It must be recognized that raw fuel
costs are not the only cost that determines true fuel efficiency. Since
equipment that utilizes electricity, propane, fuel oil, natural coal
is generally not efficient, raw fuel costs must be factored the
equipment efficiency in which they are utilized.

Examples of how these efficiencies could affect true energy costs follow:

200% efficiency withan electricity cost of

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 Wheeling

$.O6/kWh would result in true electricity cost of $8.79/1,000,000

Btu.
(293.08/kWh/l,000,000/Bt~ $.06/kWh 200% $8.79/1,000,000
Btu)

2. 70% efficiency with propane cost of

$.50/gallon would result in true propane cost of $7.81/1,000,000
Btu.
(10.93 gallon/1,000,000 Btu $.50/gallon 70% $7.81/1,000,000
Btu)

3. 50% efficiency with fuel oil #6 cost

$.50/gallon would result in true fuel oil #6 cost $6.70/
1,000,000 Btu.
(6.7 gallon/1,000,000 Btu $.50/gallon 50% $6.70/1,000,000
Btu)

4. 65% efficiency with natural cost

of $3.00 Dth would result in true natural cost $4.62/
1,000,000 Btu.
(1Dth/1,000,000 Btu $3.00/1,000,000 Btu 65% $4.62/1,000,000
Btu)

5. 35% efficiency with coal cost of $25/ton

would result in true coal cost of $2.98/1,000,000 Btu.
(.042 ton/1,000,000 Btu $25/ton 35% $2.98/1,000,000 Btu)

The primary thing to remember when trying to structure an ar-

rangement with an electricity commodity provider is that relatively
small savings on electricity costs result in relatively large savings in
energy costs. For example:

$.001 (1/10@)electricity savings per k w h $.293 savings per

1,000,000 Btu.
(1,000,000 Btu 3,412 Btu/kWh .001 $.293)

Also, if the electricity savings requiresno up-front or investment

cost, the entire savings will go directly to the bottom line. If retail wheel-
ing of electricity arrangement could save$10,000 year and require no

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70 Electricity Retail Wheeling

cost to implement the savings, the actual effect on what would haveto be
generated in new sales at various profit margins would be as follows:

1. To generate $10,000 bottom line savings with 10% profit margin-

$100,000 would have to be generated in new sales. ($10,000 10%
$100,000)

TO generate $10,000 bottom line savings with 7% profit margin-

$142,857 would have to be generated in new sales. ($10,000 7%
$142,857)

It is important to understand these facts because many times the

savings in the wheeled electricity process may seem small but in reality
are quite large in their bottom line impact on profitability.

CATEGORIES OF RETAIL WHEELED ELECTRICITY

This section addresses the two classes of retail wheeled electricity

that are currently the most frequently utilized. An understanding of
these classes of wheeled electricity is necessary to be able to cost effec-
tively retail wheel electricity from other than the serving utility sources.

Firm Service
Electricity that is purchased under this category is the type that is
typically purchased from the serving utility and has the highest priority
of delivery. If any electricity is available, it will flow to firm service cus-
tomers. Generally firm service customers have no back-up generation
capability and result, pay the highest tariff rate applicable. Depend-
ing upon the serving utility’s tariff schedules, firm category customers
may or may not be eligible for other than firm service electricity. Prob-
ably retail wheeling customer, if they require an uninterrupted flow of
electricity, will purchase firm distribution capacity from the serving util-
ity or back up their operations with on-site generation capacity uti-
lize interruptible service.

Interruptible Service
This category of service is the type that is the most cost effective to
retail wheeling customers. Those retail wheeling customers who can
accommodate interruption of electric service on short notice, generally in
peak load seasons or situations, will benefit from this class of service.

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 Process 71

This category of service is less expensive than firm service. A customer

who chooses this type of service will probably either have type of
business than can withstand interruption or will have back-up genera-
tion source to supplement disruption of electricity service.
Many times the cost differential between firm and interruptible
service is such that back-up generation supply can be obtained with the
savings realized. If this can be done, the end result is increased customer
flexibility with respect to electricity supply sources. Interruptible service
is becoming more widely available from serving electric utilities even
prior to the advent of retail wheeling in their service territories. Investi-
gate your serving utility’s tariff schedules to determine the availability
and applicability of interruptible electric service to particular situation.

Which Customers are Utilizing the Retail Wheeling Process?

Are There Other Options Available?
Most ’first’ customers for retail wheeling are large electricity users
where electricity costs have considerable impact on their product/pro-
cesses. Since true retail wheeling of electricity can negatively effect the
serving utility’s profitability, there is much pressure on the customer to
not wheel or at least to consider other options that will cause them to
remain with the serving electric utility.
As has happened in natural electric utilities are inclined to be
responsive to the customers’ needs to keep them satisfied users of the
serving utility electricity. These utility efforts are taking many forms to
help their customers reduce their electricity cost-e.g. negotiated incre-
mental rates and/or financial assistance to customers. Serving electric
utilities are beginning to operate more on competitive rather protected
monopolistic basis. This change does not come easily since competition
is not something any company likes to have to contend with.
Many negative things are said about retail wheeling with relation to
overall electricity system reliability and utility ’stranded’ investment
costs if currently captive customers leave their serving utility. But the fact
is that competition in the electricity industry is here to stay and grow.
Electric utilities will either ’adapt and grow’ or ’resist and fail’-there
will be no middle ground. Change is not easy but resistance is fatal.
Not all potential retail customers are choosing to or financially find-
ing it prudent to wheel their own electricity. However, these customers
are finding in many cases, that they are able to negotiate less costly elec-
tricity rates with their serving utility. As with any situation that involves

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competition, even those not directly affected in many cases find that they
too can benefit from the process. One thing that electric utilities say will
happen if retail wheeling becomes widely available, is that some
customer’s rates will increase result of lost utility revenue. This
would only be true if the utilities were to continue to operate in the same
method that they currently do.
What is happening is the electric utilities are taking either one of
two possible positions-to view retail wheeling new opportunity for
growth, or resist and fight the process see their market share con-
tinue to erode. Those that see it as an opportunity will grow and all of
their customers will benefit from the process. Those that resist will ulti-
mately fail, go bankrupt, or be purchased by company that through
vision sees opportunities rather than disaster. Retail wheeling is here
regardless of what electric utilities want, there are problems and failures
but once the transitional period is over, electricity will become com-
modity rather than protected monopolistic service regardless of indi-
vidual feelings about the process.
In flow chart form, Figure 5.3 shows the various steps that are
present in the retail wheeled electricity process. Remember that the pro-
cess shown here is typical and may not be completely accurate with what
may occur in given circumstance. Utilize this data only guide to the
incremental steps that are present in retail wheeling transaction.

EXPLANATION OF FIGURE
WHEELED ELECTRICITY FLOW CHART

1. Wheeled Electricity Generation Point-Price Point 1

This is the generation facility that is supplying the retail customer
wheeled electricity. This generation facility to be physically con-
nected to the electricity transmission grid that the customer’s serving
utility utilizes. The wheeling generator may be adjacent to the
customer’s serving utility or it may be in different state so long both
the wheeling and wheeled-to parties have access to common transmis-
sion grid. The costs accumulated at this point include the actual wheel-
ing generator charges for the electricity. These costs generally are struc-
tured in MWh (1,000,000 watt-hours). Also, the wheeled to customer
normally has choice of either firm or interruptible electricity generation
service.

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 < T I
f
Wheeled Electricity
Supply Transmission
Serving Utility
(Interstate)

Serving Utility
Distribution System

Grid
This is the transmission grid that links the wheeling generator to
the wheeled customer’s utility. This grid is governed by the Federal
Energy Regulatory Commission. Generally, the wheeled to customer has
choice of firm or interruptible transmission service.

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 This point is where the wheeled to customer’s utility receives,
meters, and takes title to the wheeled electricity. The costs at this point
include the wheeled electricity costs accumulated in Price Point No. 1,
the agent fees and the transmission grid costs to deliver the wheeled
electricity to the wheeled to customer’s utility. Included in the transmis-
sion costs is line loss factors due to the resistance of flow of electrons
through the transmission grid.

This portion of the system is intrastate and is part of the customer’s

serving utility grid. It isregulated on intrastate basis by the appropriate
regulatory agency. Inthe retail wheeling of electricity transaction, the intr-
astate portion of the wheeling transaction is subjectto the most regulatory
change or (deregulation). Both the utilities well the regulatory agen-
cies have to perceive real customer desire for retail wheeling before
major deregulation occurs. Line lossfactors effect this portion of the trans-
action much the same occurred in the transmission grid between the
wheeled electricity supply andthe serving utility receipt point.

This is the point at which the wheeled electricity passes through the
retail customer’s on-site electricity meter. Remember, the electricity the
retail customer actually receives may never include any of the actual
wheeled electrons that were generated for the retail customer. The reason
for this is that the retail customer’s wheeled electricity is co-mingled
with all other electricity that is present in the transmission grid, both
between the wheeled electricity supply and the serving utility receipt
point, well between the serving utility receipt point and the retail
customer’s meter point.
There is no problem with this since actual electrons of electricity are
the same.The actual electrons of electricity that the customer receives
in the retail wheeling transaction are the same prior to the wheeling
arrangement, much like the natural transportation process. The
wheeled electricity received and metered at the serving utility receipt
point is recorded and credited to the retail wheeling customer much like
deposit in bank savings account.
During the billing month, the retail wheeling customer has these
deposits available to utilize determined by the retail wheeling agree-

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ment. The exact electrons deposited in the wheeling customer’s account
may not be the same electrons that are utilized by the wheeling customer,
but so long there are not more withdrawals than deposits, the overall
system will remain in equilibrium. This may sound inordinately compli-
cated, but basically this same process goes on daily where utilities wheel
among themselves on wholesale basis. It would be very difficult to
trace given electron from generation point to use point, but the system
works and remains in balance long the same quantity of deposits
of electricity are available there are withdrawals made.
Since electricity cannot be practically stored, this electricity genera-
tion/use system must be essentially balanced all of the time-no small
feat given the complexities of electricity generation/distribution in the
United States. Physically, retail wheeling works. The problem is all of the
metering and related billing calculations concerning, for example-line
losses (under or over), usage of electricity by the customer, and many
other cost items that need to be addressed by all of the entities involved.
The total retail wheeled electricity cost to the using customer will be the
sum of the costs accumulated in Price Points Nos. 1 and 2 and totaled in
Price Point No. 3.
In some scenarios, the retail wheeling customer utilizes inter-
ruptible electricity generation and transmission up to the serving utility
receipt point because of the differentials between firm and interruptible
electricity costs to these points. If retail wheeling customer requires
firm or non-interruptible electricity, it may be possible to negotiate
back-up arrangement with the serving utility for supplemental electricity
in the event of interruption of the customer’s wheeled electricity. Al-
though retail wheeling of electricity is nothing like customer transporta-
tion of natural in technical and operation characteristics, it is similar
in the process to the natural transportation transaction. In Figure 5.4
following, is typical retail wheeling cost flow chart that will help to
explain the various costs.

EXPLANATION OF FIGURE 5.4-

RETAIL WHEELED ELECTRICITY COST FLOW CHART

Wheeled Electricity Supply-Price Point

Costs included in this area include the actual commodity (electric-
ity) cost. This cost is calculated in MWh (megawatt-hours-1,000,000

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 1. Price No. 1Point
Wheeled Electricity Supply

2.
Agent Charge

3.
Interstate Transmission
Grid

4.
Serving Utility Receipt
Meter Point

5.
Serving Utility Intrastate
Distribution Grid

Loss

Fees

6. for
Wheeling Customer #l,
Meter Point Charge

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The Retail Wheeling 77

watt-hours). This unit of measure (MM) is the standard utilized in all

(10) power pools for all transactions between utility generators on
wholesale basis. One of the most readily accessible electricity price indi-
ces is the ”D. J. Electricity Price Index” which is found daily in The Wall
Street Journal in the ”Money and Investment” Section. This electricity
price data is generally located adjacent to the Futures Price sheets.
The electricity prices in this index represent actual weighted aver-
age prices for electricitytraded at various delivery points in the 10 power
pool regions. Prices are quoted in dollars per megawatt-hour (MWh) and
are-firm delivery, on- and off-peak; and non-firm (interruptible) deliv-
ery, on- and off-peak. Although not all delivery points on all 10 power
pools are currently listed in this index, retail wheeling becomes more
widely available more delivery points will be developed.
Remember, if any index is utilized, it will only include the com-
modity (electricity) delivered to common transmission power pool
point. the costs shown in an index will have to be added transmission
costs to the wheeling customer’s serving utility receipt point, plus serv-
ing utility distribution costs. The various types of electricity that can be
purchased at power pool delivery point are follows:

This class of electricity generation service is most expensive, but it

is the only type of generation that is available 24 hours day, 7
days week with no interruption other than condi-
tions. A customer that cannot be interrupted would opt for this
class of service.

This class of electricity generation service is subject to curtailment

based upon the stipulations contained in the contract between the
generator and the customer. This class of service is generally less
expensive since it can becurtailed, but it can be very viable option
for customers that can interrupt their electricity needs. Generally,
interruptions will occur during periods of high electricity usage in
the applicable power pool. In most areas of the country, high elec-
tricity usage periods occur in the summer months due, at least
partially, to air conditioner usage.

This class of electricity generation generally can be either firm or

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 interruptible. Generation in this class would occur during the high-
est usage of generation on the power pool. Normally, generation
on-peak will continue for period of-from 12 to 16 hours daily,
Monday through Friday. Typically, Saturdays and Sundays and
holidays are considered to be off-peak periods, 24 hours day.

This class electricity generation can be either ”firm” or ”inter-

ruptible.” Off-peak generation occupies hours not considered to
be ”on-peak.” Electricity generation purchased during off-peak
periods is expensive than electricity generation purchased “on-
peak.” The least expensive electricity generation that can generally
be purchased would be off-peak and interruptible.

This charge represents the retail customers cost for the agent (mar-
keter) utilized to acquire the electricity generation needed. Most wheel-
ing customers utilize the services of third party (agent) to initiate and
follow-up on the wheeling process much is generally done in cus-
tomer transportation of natural These third parties, whether brokers,
marketers or producers, are technically know agents since they act in
the customer’s behalf and can legally bind them to contractual agree-
ment. These entities will perform at least the following functions for the
retail wheeling customer:

Select an appropriate wheeled electricity supply source.

Select an appropriate interstate transmission grid to move the

customer’s wheeled electricity from its origination point to the
customer’s serving utility meter/receipt point.

Negotiate the least expensive wheeled electricity and transmission

rates for the customer.

Assist the wheeling customer in the contractual agreements that

will be required. There are at least three distinctly different con-
tracts required-(l) between the wheeled electricity supplier and
the wheeling customer; (2) between the transmission grid utilized
between the wheeled electricity supply and the serving utility

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The Wheeling Process

meter/receipt point, and the wheeling customer; and (3) between

the customer’s serving electric utility for the transmission other
services that they provide to the wheeling customer. These con-
tracts in flow chart form will look follows:

Wheeled Electricity
Contract Commodity Supply

Transmission Grid
Contract
of

Serving Electric Utility

Contract
of

In addition to these (3) contracts, there will be fourth contract

between the wheeling customer and the agent utilized by the
wheeling customer to facilitate the wheeling process.
Generally, the agent charge is percentage of the actual electric-
ity generation cost. At the time of the writing of this publication,
agent charges range in the area of to 2% of the actual agent
acquisition cost of the electricity generation required by the retail
customer. The functions that agent should provide will be ad-
dressed in the RFP and “Contract” sections of this publication.

These charges represent the power pool’s transmission fees to move

the electricity generated, through the applicable power pool’s transmis-
sion grid, to the retail customer’s serving electric utility receipt or meter-
ing point. These costs represent rental or fees collected by the various
power pool transmission line owners. These fees are subject to FERC
approval and generally include “line loss” fees to account for electricity
generation losses due to the resistance of flow of electrons through the

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80 Electricity
HandbookRetail Wheeling

transmission system. The loss factors are subject to FERC approval.

To minimize loss, electricity generation voltage levels in this por-
tion of the transaction are generally between +100,000 volts to
volts. These high voltage levels are generally reduced to more usable
levels on the serving utility’s distribution system. Also, included in this
portion of the transaction would be any miscellaneous FERC fees and/
or applicable taxes.

4. Serving Utility Charges-Price Point No.

This is the point at which the agent exits the wheeled electricity
transaction. This is also the point at which the agent costs are accumu-
lated and billed to the retail customer. The billing from the agent will
include the following items:

Electricity generation cost per M W . (Item onflow chart.)

B. Agent charge. (Item on flow chart.)

C. Interstate transmission of electricity. (Item #3 on flow chart.)

Total cost for items 2, and 3 expressed generally in dollars per

MWh.

5. Serving Utility Intrastate Distribution Charge-Price Point #3

This charge represents the serving utility cost to move the electric-
ity received at price point #2 (item on flow chart) through their dis-
tribution system to the retail customer meter point. This portion of the
wheeling transaction is under the jurisdiction of the appropriate state
utility regulatory authority. Included in this portion of the transaction
will be included miscellaneous costs follows:

(See interstate transmission

charges, item #3 for an explanation of line loss.)

These costs are the result of the

serving utility’s need to reduce the electricity voltage level supplied
from the transmission’s power pool at serving utility receipt point.
(Item on the flow chart.) These costs may be included in the
distribution charge or it may be listed separately.

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 81

if These costs compensate

the serving utility for the meter, its usage and maintenance. This
cost may be included in with other items or it may be listed sepa-
rately.

costs. These costs represent the utility’s

investment in generation infrastructure that may not be utilized by
the retail customer when they retail wheel electricity through an
agent. These costs are considered to be ”stranded” since the serving
utility, in theory at least, may have no other customer to utilize this
infrastructure. These costs are approved on utility-by-utility basis
by the appropriate state utility regulatory agency. These types of
costs will generally be different for each utility and may even be
different for different customer classes served by the same utility
based upon usage characteristic variations. Also, included in this
portion of the transaction would be and state regulatory agency
fees and/or any applicable taxes.

This price point includes all of the serving utility costs fol-
lows:

A. Intrastate distribution cost. (Item on flow chart.)

B. Distribution line losses, if applicable. (Item on flow chart.)

C. Transformation costs, if applicable. (Item on flow chart.)

D. Customer meter costs, if applicable. (Item on flow chart.)

Stranded investment recovery. (Item on flow chart.)

Any miscellaneous fees and/or costs, if applicable. (Item on

flow chart.)

All of these costs will be billed to the wheeling retail customer by

the serving utility. This billing,together with the agent billing (item
on flow chart), will be the total electricity cost to the customer
for the entire wheeling transaction (item on flow chart).

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 Total Wheeling Costs.
This total includes all wheeling costs from wheeled electricity sup-
ply point (item #l on the flow chart) through the serving utility distri-
bution costs (item #5 on the flow chart) are follows:

A. Wheeled electricity supply cost. (Item on the flow chart.)

B. Agent charge. (Item on theflow chart.)
C. Interstate transmission grid costs. (Item #3 on the flow chart.)
D. Serving utility distribution grid costs. (Item #5 on the flow chart.)

The total cost at this point would be compared to the total cost the
retail customer had been paying to their serving utility prior to retail
wheeling.

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 6
The Retail Wheeling
Contract Process

THE AGENTS THAT ARE USED FOR

OTHER THAN SERVING UTILITY SUPPLIED ELECTRICITY

The section details the various agents for retail wheeled electricity.
This information provides the background necessary to be able to intel-
ligefftly determine the type of agent that should be used to provide the
electricity needed at the reliability required. The information given
herein provides the foundation for doing retail wheeling transactions.

RETAIL WHEELING INFORMATION

Generally, retail wheeling (direct purchase) is provided by at least

three different entities-(l) brokers, (2) marketers, and (3) producers. The
three entities are explained following:

Most retail wheeled electricity that is available to customers is not

obtained from the serving utility. Other parties (agents) actively market
electricity to retail customers. The main and most important distinction
between brokers and producers is the fact that brokers do not take or
assume title to the electricity they market. Brokers act only third party
facilitators. In effect, they sell for someone else. Brokers act agents, but
do not actually take title to the electricity they sell. Brokersare paid fee
for their services by either or both the buyer and/or seller. This is not to
say broker retail wheeled electricity is unreliable or in anyway different
from purchasing from titled source.
83

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 The thing to remember is that since title does not pass to the bro-
kers, their warranty to availability is no better than their source pro-
vides. In general, the fewer steps required to arrive at the actual electric-
ity generation source, the more reliable the supply. Do not necessarily
disregard broker-supplied electricity but remember brokers are able to
provide no better title to the electricity they market than what they
have-which is none.
If broker is used, make sure"(1) their source is identified, (2) the
supply is assured for the duration of the contract, and (3) their source
does have title to the electricity that they provide to you. In general, it is
probably better, both on long-term cost and reliability, if you contract
with either marketer or an electricity producer.

Marketers
Marketers differ from brokers in that they take title to the electricity
they sell the wheeling customer. A marketer takes title to the electricity
but does not have or own the generation facilities. Marketers, or market-
ing affiliates, are also known in the electric industry "traders." While
all of this may seem confusing, remember the difference between this
category and the broker category is that title to the electricity does pass
with the marketer where it does not pass with the broker. The difference
between marketers and producers is that producers own electricity gen-
eration facilities and marketers do not.
The marketer category is the largest supplier of retail wheeled elec-
tricity. As with any group of individual entities, there are good and bad
available. So be certain that any contracts to be negotiated conform in
general to the one that is described in this section.

Producers
Producers have title to and own electricity generation facilities.
They are the original owners of the electricity and are responsible for its
generation and distribution to an interstate transmission grid receipt
point. Some producers market their own electricity directly to retail
wheeling customers. Sometimes, several generators join together to form
quasi-cooperative that in turn markets the electricity to retail wheeling
customers. Producers, such, probably are not the major force in the
retail wheeling market. In general, they sell their electricity production to
either transmission grid, serving utility, or marketer, who in turn
supplies the retail wheeling customer.

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Basic Differences Between Brokers, Marketers and Producers
Brokers-Do not taketitletoor do not own generation facilities.
2. Marketers-Take title to but probably do not own generation facili-
ties.
3. Producers-Havetitleto and own generation facilities.

Synopsis
Generally, there will be no reason to limit the choice of your sup-
plier strictly on the basis of the category (broker, marketer, or producer).
The criteria for selecting supplier will be based upon data such
1. Reliability of supply.
2. Price.
3. Transmission distribution routing.
4. Contract language.
5. Retail wheeling customer service.
6. Congeniality between buyer and seller.

Making these evaluations is no simple matter. It is possible some-

times to rely upon the broker, marketer, or producer for help. However,
the motivation of these three entities might be primarily from desire to
sell their services, not necessarily to satisfy the needs of the customer.
The surest method to follow is to have set of guidelines like the ones
previously described, and evaluate any potential supplier in terms of
these guidelines.

TYPES OF CONTRACT REQUEST FOR

PROPOSAL (RFP) TO UTILIZE FOR
VARIOUS TYPES OF WHEELED ELECTRICITY CONTRACTS

At this point, we have discussed and illustrated how the retail

wheeling of electricity works. Now it is necessary to point out how the
retail wheeling market is evolving.
Most retail wheeling contracts include more than the purchase of
the electricity commodity. The reason for this is that there is very little
margin on the electricity commodity to provider to This
means that if provider sells the electricity commodity to retail cus-
tomer for $.0300/kWh and has margin of their total revenue per
kwh is ($.0300 .02 per kwh)

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86 Wheeling

For retail customer that uses 1,000,000 month, the gross

margin to the provider would be $600. 1,000,000 $600)
On top of this, large users would normally negotiate quantity dis-
counts. For this gross margin per kwh) the provider must secure
the electricity commodity, arrange for the transmission of the electricity
to the retail customer’s serving utility receipt point, guarantee delivery,
nominate and balance electricity deliveries, and send out monthly bill-
ings to the retail customer.
Since the gross margins on electricity commodity deliveries are so
slim, the trend is toward the providing of more than one service by the
provider to the retail customer. Generally the services offered together
will be electricity, natural and engineering services for one orall
of the retail customer’s facilities. These types of transactions are referred
to ”Energy Partnerships.” By the grouping together of various ser-
vices, both the provider well the retail customer can benefit.
help understand how different types of arrangements between
users and suppliers are structured, following are three different types of
sample RFPs (Request for Proposal) which precede contractual agree-
ment between the user and supplier.

Figure 6.1 RFP for Electricity Commodity Only.

Figure 6.2 RFP for Electricity Commodity Only, With (3) Pricing
Options.
A. Fixed Discount.
B. Minimum Guaranteed Savings.
C. Shared Savings.

Figure 6.3 RFP for Electricity, Natural Gas, and Energy Services.

These RFP samples, while for informational purposes only, are typi-
cal of actual materials being utilized in transactions between providers
and retail customers.

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 RFP Electricity Commodity Only

TABLE OF CONTENTS

I. OVERVIEW 2
1. Explanation 2
2. Scope of Services 2
3. Process 2

BIDDING PROCEDURE 2
Phase l-Bidding Requirements 3
Phase 2-Proposal Return 3
Phase 3-Evaluation of Proposal 3
Phase &Final Negotiations

PROPRIETARYINFORMATION 3

IV. GENERAL CONDITIONS

1. Independent Contractors
2. Equal Employment Opportunity Requirements
3. Insurance Indemnity

V. QUALITYSPECIFICATIONS
1. Performance
2. Response

VI. PROPOSAL SPECIFICATIONS

1. Proposal Requirements
2. Evaluation Criteria

VII. REQUIRED SERVICES 6

1. Agreement Term
2. Structure of Electricity Commodity Discount
3. Billing 7

VIII. SPECIAL PROVISIONS 7

Changes: Non-Assignment: Successors 7
2. Force Majeure 7

ELECTRICITY COMMODITY COST

REDUCTION CONTRACTUAL AGREEMENT 7

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88 Wheeling Retail Electricity

REQUEST FOR PROPOSAL

OVERVIEW

1. Explanation.
This Request for Proposal (RFP) will be used to evaluate proposals
for the reduction of electricity commodity costs at the prop-
erties.

Under this Request for Proposal, energy cost reduction will include
the price of the electricity commodity only. Information submitted by
bidders will provide the basis for consideration of a contract with the
customer. In addition to being cost competitive, the successful bidder
must have the ability to work effectively with the personnel
and management.

Scope of Services.
The Customer is soliciting proposals for electricity commodity cost
reduction for all facilities included in this RFP.

Process.
This RFP contains four phases, as follows:
Phase Bidding Requirements
Phase Proposal Return and Initial Review
Phase 3- Evaluation of Proposals and Interviews with
Selected Bidders
Phase Final Negotiation and Award of Contract

II.
BIDDING PROCEDURE

All bidders will receive relevant materials about the current con-
sumption of electricity and costs at facilities and will also be
provided a copy of the RFP describing the services being sought by the
Customer. Each bidder will receive the terms and conditions under
which their bid should be made, and upon which a contract may be
awarded.

PHASE l-Bidding Requirements:

A Pre-Bid Conference is scheduled for (time) (date)

(location) Attendance is

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 Wheeling

PHASE 2-Proposal Return and Initial Review:

All bids must be received on

or before (date) Failure
to meet the deadline for submission will be grounds for disqualification
of the bidder. The Customer will review all bids for compliance with RFP
requests.

PHASE 3-Evaluation Proposal andInterviewswithSelected

Bidders:

The Customer will conduct a detailed review of the proposals sub-

mitted. Interviews, in person or via telephone, will be set up for those
bidders whose proposals most closely meet the objectives of the Cus-
tomer. Interviews will focus on the proposal, the schedule for
delivery of benefits and the pricing of electricity commodity
supply.

PHASE 4-Final Negotiation and Award of Contract:

The Customer retains sole discretion to determine whether con-

tracts will be awarded. Upon that decision, the Customer will notify the
successful bidder and will enter into final negotiations for contracts for
electricity commodity cost reduction services.

PROPRIETARY INFORMATION

All information related to the RFP will be considered “confidential

information.” “Confidential Information” means the contents of this RFP
and any and all other information provided at any time by the Customer,
its agents, or any Serving Utility. The terms and conditions of the Non-
disclosure Agreement executed and delivered to the customer by all
bidders, is required.

By its acceptance of and retention of the RFP, the recipient agrees

to hold all confidential information in strictest confidence. The recipient
may disclose confidential information to its responsible employees, but
only to the extent necessary to facilitate its response to this RFP.

If the recipient of this RFP is unwilling to abide by the terms of this

Section, then the recipient should immediately return this document to
the Customer at the address shown on the cover of the RFP.

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 Commodity

v.
GENERAL CONDITIONS

This RFP is not intended to constitute an offer or binding agree-

ment, nor does it impose any obligation or liability on the Customer or
on any bidder.
The Customer reserves the right to refuse any or all offers made
hereunder, in its sole discretion.
All proposals become the property of the Customer upon receipt
and will not be returned.
All proposed services and materials to be delivered hereunder are
subject to the applicable laws and regulations of federal, state, county
and local governments, and any applicable city or municipal laws or
ordinances. The successful bidder, at its own expense shall procure all
necessary licenses, certificates, permits or other authorizations which
may be required to perform the proposed services in accordance with
all applicable laws.

1. Independent Contractors.
The Customer and successful bidder shall not be subject to direc-
tion by the other in the performing of their respective work under any
agreement reached pursuant to this RFP process. Each shall do such
work as an independent contractor.

2. Equal Employment Opportunity Requirements.

The Customer complies with Equal Employment Opportunity laws,
orders and regulations in the conduct of its activities. In so doing, the
Customer is required to be assured that those with whom it has busi-
ness dealings involving the furnishing of any services or products are
also in compliance with these requirements. All bidders responding to
this must agree to be in compliance with the same standards.

Insurance Indemnity.
The successful bidder,when entering into an agreement for ser-
vices with the Customer, agrees and promises:

a) To perform the work diligently, so as to complete the same as

scheduled and agreed upon.

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 b) indemnify and hold harmless the Customer from and against
any claims, suits and judgments for property damage, bodily injuries
and deaths caused by any act or omission of the successful bidder, its
agents and employees.

c) To carry and maintain such insurance as will protect the success-

ful bidder and the Customer from claims by employees of the successful
bidder under any Compensation or similar acts, and also from
any other claims for personal injury or property damages.

V.
QUALITY SPECIFICATIONS

It is theintent of thecontract for services to ensurethat the

facilities shall continue to receive electric utility services at
the same or at an improved level of quality, delivery and reliability as
was available prior to the issuance of such contract.

1. Performance.
Services will continue to be provided through wires, transformers,
meters and other facilities as provided prior to the initiation of any ser-
vice contract. No risk of interruption of delivery of a commodity, except
under conditions specifically noted and offered as an option to the
base proposal, and no change in the quality of the commodity
delivered will be allowed.

2. Response.
The successful bidder, upon execution of an agreement for ser-
vices, shall immediately respond to any and all service problems pre-
sented by the Customer including problems associated with delivery to
the serving utility receipt point.

VI.
PROPOSAL SPECIFICATIONS

1. Proposal
Requirements.
All bids received must meet the following minimum requirements for
consideration by the Customer:
A. facilities included in this must be included in
proposed arrangements.
A one-year minimum term agreement.

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 EvaluationCriteria.
All submitted proposals will be evaluated based upon the level of
the proposed electricity commodity savings.

The following information details the required services to be fur-

nished in response to the Customer's Request for Proposal.

VII.
REQUIRED SERVICES

1. Agreement Term. (Minimum Period-l2months)

The successful bidder will provide the Customer a discounted elec-
tricity commodity rate for a period of months beginning (date)

2. Structure of Electricity Commodity Discount.

The discountforCustomer'sfacilities will be based upon the
Customer'smeterpointelectricitycommoditycostsas of (date)
and will include, but not be limited to the following:

A. Electricity generation costs.

B. Fuel costs, as applicable.
C. Interstate transmission costs.
D. FERC fees, as applicable.
E. Interstate transmission line losses, as applicable.
Provider's gross margin.
G. Miscellaneous interstate charges and fees.
H. Intrastate distribution costs.
I. Intrastate distribution line losses, as applicable.
J. Miscellaneous state fees and charges, as applicable.
Customer's equipment fees and costs, as applicable.
L. Stranded investment recovery costs.
M. Total Customer use-point meter cost (items A-L).

The discount will be applied and calculated monthly by the suc-

cessful bidder for the affected Customer facilities beginning at contract
signing and continuing for months.

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 93

3. Billing.
The discount amount will be clearly identified each individual
monthly invoice. The successful bidder will provide a billing
summary for all facilities included in this RFP a monthly
basis. The successful bidder will provide each individual facility with a
monthly accounting of the cost savings generated by the discount and
will institute an open book accounting policy for the Customer to audit
actual costs.

VIII.
SPECIAL PROVISIONS
1. Changes:Non-Assignment:Successors.
Any contract entered into between the successful bidder and the
Customer pursuant to this RFP process shall represent the entire agree-
ment between the parties with respect to the subject matter hereof. Any
such agreement shall not be assignable by either party without the prior
written consent of the other. Any inconsistencies between the represen-
tations contained in this RFP and any other agreement between these
two parties shall be resolved in favor of the RFP contract.
2. ForceMajeure.
Failure or delays in the performance of the work contemplated
hereunder, as more specifically described in a contract between the par-
ties, by either party, shall excuse both parties from performance of their
respective obligations hereunder if, and so long as, caused by acts of
God or the elements, law or governmental restrictions, labor distur-
bances, war or the results thereof, or any other causes like those enu-
merated, which are beyond the reasonable control of the party whose
performance is affected. If either party anticipates that circumstances
beyond its control may occur, that party shall promptly furnish written
notice of such circumstances to the other party, and shall take all re-
sponsible steps to carry out the terms of this RFP and the contract as
soon as reasonably practicable, subject to delays as may be caused by
such an event. In the event delaying circumstances occur andshall
continue for a period of thirty (30) continuous days, the party entitled to
such performance shall have the right to terminate the unperformed
portion of the contract.

ELECTRICITY COMMODITY COST REDUCTION

CONTRACTUAL AGREEMENT
The acceptance of any bid will not constitute a contractual agree-
ment between the Customer and the successful bidder. Such an agree-
ment will not exist until such time as all terms and conditions are re-
duced to writing and executed by all parties.
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 Notice that this RFP is for electricity commodity only. (See VII-
”Required Services” in RFP) In this type ofRFP, for electricity commod-
ity only, customer savings in the range of to 4% of their total electric-
ity expenditures are reasonable. An electricity-commodity-only arrange-
ment is not what most potential providers prefer. Since the typical mar-
gin for providers on electricity commodity is very small, there generally
is not much interest for this type of arrangement there would be for
an electricity commodity and engineering services structure. Most of
potential provider’s margin will be in the providing of engineering ser-
vices, not in the providing of the electricity commodity.

EXPLANATION OF
FIGURE 6.1-RFP FOR ELECTRICITY COMMODITY ONLY

Overview

Provides the purpose and expectations of the RFP.

Describes the item (electricity commodity) that is to be the focus of

this RFP.

Describes the RFP steps involved.

Bidding Procedure

This is very key part of the bidding procedure. All interested

bidders must attend pre-bid meeting so that they can ask questions
about any partof the RFP. Attendance at this meeting allows all potential
bidders to voice, not only any questions they may have, but to also hear
questions other potential bidders may have.
From personal experience, this meeting will do more to impact
favorable outcome to the RFP process than any other single item in the
process. Misunderstanding of what is really wanted in an RFP of this
type is one of the most troublesome aspects of the process. To not man-
date attendance at pre-bid conference by all interested potential bid-
ders is to ask for problems. All bid results will be directly proportional

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to the bidders understanding of what is wanted by the customer. Infor-
mation and data are the keys to successful experience in this process.

This section outlines the required bid receipt date mandated by the
RFP. Generally the time period from receipt of the RFP by potential
bidder to its completion and return to the Customer should be 4 to 6
weeks at minimum. Do not shorten this period to unrealistic time
because to do so can very negatively impact the quality the bids re-
ceived. The types of described here, are for the most part, rather
new to the industry andwill require time by bidders for them to under-
stand and respond to.

Here is described the evaluation process in detail. Always respond

to all bids, and to the extent possible, let all non-selected bidders know
why their bid was not further evaluated. You may want to utilize them
in subsequent proposals so be honest and forthright with them. Remem-
ber, even non-qualified bidders have invested considerable amount of
time and money in responding to the RFP.

This explains the process for award of contract by the Customer.

111. Proprietary Information

This section explains the confidential nature of the information
between the Customer and RFP recipients.

IV. General

Here respondents to the RFP are told that they are not employees
of the Customer but independent contractors.

Outlined here are the EEOs with which any bidder must comply.

Here is explained the various insurance coverages that are required

by the selected bidder when contracting with the Customer.

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 Outlined here is the fact that delivery of services (electricity) will
continue to be performed in the same or at an improved quality level
the Customer is currently receiving. This section is put in to assure that
electricity commodity cost reductions are not the result of reduced reli-
ability, delivery quality or any other physically altered characteristic of
electricity to the Customer. This RFP is for the cost reduction of the elec-
tricity commodity only with its physical characteristics remaining consis-
tent with whatwas being delivered prior to the contract between the suc-
cessful bidder and the Customer.

This addresses the response requirement of the successful bidder in

the event of problems experienced by the Customer result of their
contracting with the successful bidder.

Bid minimum requirements are enumerated in this section.

How bids will be evaluated is explained here.

Here the minimum agreement term limits are set forth. Generally,
the minimum term for contract for electricity commodity pricing
would be for at least year. Terms shorter than (1)year are more dif-
ficult to structure with potential providers because of their limited profit
potential.

This section is the most important part of the RFP.In it are listed the
components to be considered in the discount. As can be seen there are at
least 12 different items to be considered (Items A-L). The main thing to
remember here is that any discount for electricity commodity (Item A)
must be represented at (Item M) which is the total Customer use-point
meter cost.

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TheContract
Retail Wheeling Process

These costs are result of the generation of the electricity

commodity at either the point-of-generation or at common power
pool delivery point. This is the only item in this type of RFP where
discount will be available. Typically the electricity generation
component of Customer’s bill will be of the total bill
cost.
Be careful of potential provider discount percent numbers. For
example, if potential provider were to offer 10%discount-what
would it mean to the total use-point electricity cost?
For the purpose of illustration, let us assume total Customer
use-point meter cost (Item M) of $.06/kWh. Let us further assume
that the electricity commodity cost (Item A) is $.02/kWh. What
does 10% discount on $.02/kWh amount to on total cost of $.06/
kwh?
10%)-$.002 cost reduction ($.06 $.002) $.058/kWh;
or total cost reduction of 3.5% ($.058/kWh $.06/kWh).
The perceived 10% discount, applicable to electricity com-
modity cost only (Item A), will really amount to 3.5% on the total
Customer use-point meter cost (Item M). ($.O6/kWh vs.
kwh)
When discount numbers are discussed, make certain that all
discussions are referring to use-point costs (Item M) not just com-
modity costs (Item A).

These charges represent the costs of fuels to turn the turbines

that generate the electricity. Theymay be included in the electricity
generation costs (Item A) or may be separately listed. These types
of costs, if separately listed, are not generally discounted.

These costs represent the cost of the moving of the electricity

commodity across the applicable power pool transmission lines to
the Customer’s serving utility receipt point (between Items G and
H). The potential provider may be able to receive some discounts
this item in some instances, so always ask the potential provider
about discounts on this item; and, if they are available, they should

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 Electricity Retail Wheeling

to the Customer. FERC approves the various costs relating to

transmission.

These fees, if separately identifiable, are not discountable and

represent the FERC regulatory agency‘s fees tousers for regulatory
oversight of the interstate transmission grid system.

As
These costs, if present, represent the actual reduction in electricity
it travels across the transmission grid system. This loss is result
of resistance to flow of electrons in an electrical system. These
losses are stated averages and are under the jurisdiction of FERC.
Typically they can be of total flow of electricity. There is no
discounting of these loss factors.

This figure will represent the provider’s gross charge to the

Customer for serving marketer or facilitator in this transaction.
This fee will not be all profit for the provider since they incur ex-
penses in serving the Customer’s agent. Typically, this fee will be
in the area of of the electricity commodity cost. Remember,
that any provider to realize profit on the service they offer to
the Customer so be careful in trying to negotiate this figure down
to an unreasonable level. You tend to get what you pay for!

These costs vary by power pool and may include many items,
taxes, system maintenance, expense recovery items, etc. They are
not negotiable. FERC approves these types costs.

H.
These costs are basically the same those described in Item
C previously, except that they occur within the Customer’s state of
electricity usage. Discounts on this intrastate distribution system
are typically not available. The state regulatory agency approves
the various costs relating to distribution.

These costs are basically the same those discussed Item

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previously, except that they occur within the Customer’s state of
electricity usage. Typically these losses can be of total flow
of electricity. There is no discounting of these costs. The state regu-
latory agency approves loss factors.

1.
These costs are basically the same those discussed in Item
G previously, except that they occur within the Customer’s state of
electricity usage. They are not negotiable. The state regulatory
agency approves these types of fees and charges.

K.
Sometimes this item is referred to competitive transition
cost. Either description means the same to the Customer-extra
electricity costs. These costs are supposed to compensate the
Customer’s serving electric utility for the potential losses sustained
when the Customer elects not to purchase the electricity commod-
ity from the serving utility’s generation.
Since, in practice, no one knows where any specific electricity
commodity generation output is going, it is difficult to understand
how any serving utility knows whose electrons were used by any
given Customer at any given time. However, in this case, percep-
tion is good reality, and serving utilities are being granted
relief from these perceived problems every day. These costs are
under the jurisdiction of the state regulatory agency and are not
negotiable by an individual electric utility Customer.

These costs would be billed by the serving utility and could

include such items equipment rental and special service fees,
specifically agreed-to by the serving utility and Customer. These
costs may or may not be under the jurisdiction of the state regula-
tory agency. These costs can be negotiable item between the serv-
ing utility and the Customer if they are not regulated by the state
agency.

This is the total of all cost Items A-L and represents the actual
use-point cost to the Customer. Any and all discounts Items A-

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 L have their ultimate impact on this use-point cost. Always calcu-
late total discounts against the current cost at this point to deter-
mine the actual overall value of any contract agreements with
potential provider.

This item defines how billing is to be handled.

VIII. Provisions

This section addresses the legal structure between the successful

bidder, and the Customer with relation to assignment by either party.

Events over which neither party has control are covered in this
section.

Electric Commodity Cost Reduction Agreement

This section defines when an actual contractual agreement exists
between the parties.
A contract for electricity commodity pricing can be structured in
many ways depending upon the customer’s requirements but the items
covered in this sample RFP must be addressed in some manner. A par-
ticular customer’s legal council can be real asset in formulating an
actual RFP that provides realistic cost reduction well as including
the safeguards needed to be assured that the Customer is contracting
with reputable provider.

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 RFP for Electricity Commodity Only With (3) Pricing Options

TABLE OF CONTENTS
I. PREFACE 2
A. Definitions 2
Customer 2
2. Services 2
3. Bidder Candidate 2
4. RFP 2
5. Bidder 2
6. Facilities 2
7. Supplier(s) 2
B. Overview 3
C. Explanation 3
1. Evaluation and Qualification Process 3
2. Proprietary Information 4

GENERAL REQUIREMENTS 4
1. Introduction
Equal Employment Opportunity Requirements
3. Legal Documents, Laws and Regulations 4
4. Insurance Requirements
5. Substitutions
QUALITYSPECIFICATIONS 7
A. Performance Specification 7
Electricity
2. Response Specification
IV. PROPOSAL SPECIFICATIONS
A. Proposal Options
1. Option #l-Fixed Discount Standard from Serving
Utility Retail Tariff Rate
2. Option #2--Shared Savings with a
Minimum Guarantee Discount
3. Option #3-Shared Savings Only-
No Guaranteed Savings
4. Bidder Conditions-Applicable to All Pricing Options 9

V. SPECIAL PROVISIONS
Type of Contract(s)
2. Proposed Contract(s) Term 10

VI.AWARD OF CONTRACT
1.Award of Contract 10

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 1.
PREFACE

DEFINITIONS

Customer Legal Name

Legal name of customer.

Services

SERVICES refer to all work associated with electricity energy

cost reduction, as defined in this document.

Bidder Candidate

BIDDER(S) refers to the company(s) that participate in the

RFP process.

4. RFP

RFP refers to “Request for Proposal.”

5. Bidder

BIDDER(S) are companies in the business of providing MATE-

RIALS and/or SERVICES of the type requested in this RFP for
a profit to other companies.

Facilities

The term FACILITIES incorporates any Customer facilities in-

cluded in this document.

Supplier(s)

SUPPLIER(S) are those BIDDER(S) under contract with Cus-

tomer to provide“goods”and/orSERVICES mutually
agreed-upon terms for a specified time period in accordance
with the Terms and Conditions specified in a Contract between
the parties.

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 (3)

B. OVERVIEW

This RFP will be used to evaluate BIDDER(S) who wish to establish

a long-term contractual arrangement with Customer. In addition to being
cost competitive, the selected BIDDER@) must have the ability to work
within the corporate environment.

Only BIDDER(S) who meet these criteria will be considered

C. EXPLANATION

Customer is soliciting proposals for electric cost reduction SER-

VICES for its FACILITIES as detailed in the RFP attachment. It is the
intention to identify the best match between
needs and capabilities.

1. Evaluation and Qualification Process

The participation and information requested by the attached
documents are intended to facilitate the evaluation and quali-
fication process. This process serves as the means for select-
ingthe BIDDER@) who appear best suited to meetingthe
needs of Customer.

Phase l. Responses will be evaluated by Customer to identify

those BIDDERS whose proposals appear “most likely to sat-
isfy” the needs. BIDDERS who satisfactorily com-
plete this phase of the selection process will be eligible for the
next phase of the process.

Phase Customer willconductfinalinterviewswiththe

staff who will be handling this account, examin-
ing pricing information and asking any questions necessary to
make the decision for the final award of a contract.

Phase Customer will finalize pricing and contract terms, and

will determine if the contract will be awarded.

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 Wheeling

2. Proprietary Information
Any specifications (technical or business data) which in any
way represents “information” furnished to BIDDER(S) under
this RFPor in contemplation hereof, will remain
property; and all copies thereof, will be returned to Customer
if BIDDER(S) decline to participate, is eliminated in the evalu-
ation at the end of Phase IV, orat any time upon request.
BIDDER@) agrees to keep information confidential associated
with this RFP and not use same for any other purpose except
upon such terms as may be agreed upon by BIDDER@) and
Customer in writing.

This is the RFP document originated by the Customer.

This RFP is not intended to constitute an offer or binding agreement

between the parties, nor does it consummate a contract between
Customer and any BIDDER. The only legal obligations between the
parties shall be those set forth in an executed contract.
Customer reserves the right to refuse any offer made to it at its sole
discretion. In the event a contract is not consummated, Customer
shall not be obligated for any expenses of any BIDDER or for any
charges whatsoever relating to this RFP.
Customer does not seek to obtain any of the propri-
etary or confidential information. Please do not include any such
information as pari of the proposal.
Customer does not intend, and will use all reasonable efforts not to
disclose, any information from the proposal to those
submitting competing proposals. All proposals become the property
of Customer upon receipt and will not be returned. Customer re-
serves the right to reject any or all proposals received if such action
is considered to be in the best interest of Customer.

This RFP is contingent upon compliance with all provisions con-

tained herein. Consideration will be given only to those companies
that respond to all requirements.

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 All potential SERVICES to be executed and MATERIALS delivered
under this RFP are subject to applicable laws and regulations of
federal, state, county, and local governments and any/all city or
municipal laws or ordinances.
No BIDDER(S) shall disclose to others that Customer has tendered
this RFP to them, except as may be required to complete the re-
quirements of this RFP and Proposal Information Package. If such
a disclosure is required by the BIDDER(S), in order to prepare a
proposal response, the BIDDER(S) will require any party to whom
it does disclose such information to sign a Non-Disclosure Agree-
ment.

B. EQUAL EMPLOYMENT OPPORTUNITY

REQUIREMENTS
Customer complies with Equal Employment Opportunity Laws, or-
ders and regulations in the conduct of its activities. In so doing,
Customer is required tobe assured that those with whom it has
business dealings involving the furnishing of any SERVICES or
products arealso in compliance withtheserequirements.All
BIDDER(S) responding to this RFP must agree to be in compliance
with the same standards.

C. LEGAL DOCUMENTS, LAWS AND REGULATIONS

The successful BIDDER(S) shall observe and comply with the pro-
visions of any present and future federal, state and municipal laws,
rules, regulations, requirements, ordinances, orders and directives
which apply to its operations, except where stricter requirements
are contained in this
The successful BIDDER(S) shall procure all necessary licenses,
certificates, permits orother authorizations from all governmental
and other authorities having jurisdiction over its operations. The
successful BIDDER(S) shall give all notices, pay all fees and take
all other actions that may be necessary to ensure that its SER-
VICES are delivered in accordance with applicable law.

INSURANCE REQUIREMENTS
The successful BIDDER shall be required, at a minimum, to carry
the types of insurance coverage in the amounts required by the
Customer including Workman's Compensation, employee liability,
bodily injury and property damage.

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E. SUBSTITUTIONS
Whenever any subcontractor is specified by name, all BIDDER(S)
shall base their quotations only on that specific subcontractors
costs.
In order not to limit competition, and so that Customer may con-
sider alternatives which may be of benefit, the bidders may propose
substitutions which they consider equivalent to, or better than, the
specified items contained in the RFP
All proposed substitutions must be submitted in writing as part of
the bid submission. After the bids are received, no alternative prod-
ucts or subcontractors will be considered by Customer.
All subcontractors' names, specified and alternatives (if used) must
be submitted as part of the bid along with their proposed prices.

QUALITY SPECIFICATIONS
It is the intent of the proposed contract to ensure that the included fa-
cilities of Customer shall, after the issuance of the contract, continue to
receive utility (electricity) services at the same or improved level of
quality, deliverability and reliability as was available prior to the issuance
of the contract.

A. PERFORMANCE SPECIFICATIONS

1. Electricity.
Electricity services will continue to be provided through wires,
transformers, meters, etc., as is currently provided prior to is-
suance of the contract. No change in quality of the electricity
commodity will be allowed.

2. Response Specification
The BIDDER@) shall respond to problems presented by
designated Customer representatives upon notification. This
would include, but not be limited to, delivery reliability to serv-
ing utility receipt point.

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 Iv.
PROPOSAL SPECIFICATIONS
A. PROPOSALOPTIONS
Option #l-Fixed Discount from Serving Utility Retail Tariff
Rate.
BIDDER(S)willofferCustomeradiscountfromthetotal
monthly bill that Customer would have otherwise paid if it had
taken service from the Serving Utility. In any month, the stan-
dard retail tariff schedule rate applicable to Customer plus any
taxes that would be applicable and included in the total Serving
bill to Customer shall serve asthe baseline against
which this fixed discount is calculated.

CHART 1

FIXED DISCOUNT (Cost/kWh)

Customer Current Rate Class Fixed Discount

2.Option #P-Shared SavingswithaMinimumGuaranteed

Discount.
BIDDER(S) will offer Customera minimum guaranteed discount
from the total monthly bill that Customer would have otherwise
paid to the Serving Utility against which this minimum guaran-
teed discount is calculated is the same as described in Option
#l.
CHART 2-A

MINIMUM GUARANTEED DISCOUNT

(Shared Savings) (CosVkWh)

Customer Current Rate Class Minimum Guaranteed Discount

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108 Electricity Retail Wheeling

Actual total discount will consist of theminimum guaranteed discount

plus a shared savings discount on any savings greater than the mini-
mum guaranteed discount. Savings greater than the minimum guaran-
teed discount will be shared between the BIDDER(S) and Customer.

(in [Yo] of total savings)

(Minimum Guaranteed Discount)

Customer’s share of savings

in excess of minimum
guaranteed savings by
l- BIDDER’S(S’) share of
savings in excess of
minimum guaranteed
current rate class.
l savings by current
rate class.

3. Option#3“Shared Savings GuaranteedSavings.

This option is entirely a shared savings arrangement whereby Cus-
tomer and the BIDDER(S) split any savings on a predetermined per-
centage basis. These savings would be the difference in any month
between the total amount Customer would have paid during such
month, including all applicable taxes as a retail tariff rate customer of
Serving Utility, and the total cost Customer actually pays to the
BIDDER@) including all applicable taxes for such month.

(in of total savings)

(No Guaranteed Savings)

Customer’s share of savings BIDDER’S(S’) share of saving

by current rate class. by current rate class

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 2

4. BIDDER Conditions Applicable to All Pricing Options

a. Agreement terms and start date?

b.Warranty that sets forth terms and conditions that guarantee

cost of electricity at meter point will
never exceed what Customer would have paid to Serving Util-
ity in a standard retail tariff schedule rate.

c. Warranty that sets forth terms and conditions that protect Cus-
tomer for all electricity purchased from bidder during the term
of the Agreement as follows:

1) responsibility for all electricity on a firm

delivery basis for both base and peaking quantities.

2) responsibility for all nominations andre-

quired balancing.

3) responsibility for any/all Serving Utility pen-

alties that could result from incorrect nomi-
nation and/or balancing procedures.

d. Define responsibility (if applicable) for coordina-

tion, meter reading and billing procedures.

e. Define responsibility (if applicable) for any re-

quired new/different meters including installation and mainte-
nance charges.

NOTE: BIDDER(S) can provide pricing information on any or all of

the pricing structures, fixed discount, shared savings with a mini-
mum guaranteed discount and shared savings only with no guaran-
teed savings. Evaluation of proposals will include both electricity
cost savings, as well as evaluation of BIDDER(S) safeguards
against non-delivery/penalty situations for Customer.

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110 Electricity Retail Wheeling

OF

Customer contemplates that this qualification process will result in

the award of either a fixed or variable cost Contract(s). Customer
reserves the right toacceptor reject any andallproposalsre-
ceived, at its sole discretion.

B.

The resulting Contract(s) will be for a one-year minimum term or

other term(s) that will be mutually agreeable to the other parties.

An award of a Contract will not be made until the necessary inves-

tigations have been made of proposals provided pur-
suant to this RFP and other requirements of evalu-
ation process. Award of any Contract will be made in a period as
may be decided by Customer. Customer reserves the sole right to
decline to award any Contract resulting from this evaluation pro-
cess.

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 Notice that this RFP is for electricity commodity only. (See IV-A,
Proposal Options in RFP.) However, it allows the flexibility forthe poten-
tial vendors to select from one of three pricing options for the electricity
commodity-Fixed Discount, Shared Savings with Minimum Guaran-
teed Discount, and Shared Savings Only. (See IV-A, 2, and 3, Proposal
Options in RFP.)

EXPLANATION OF FIGURE 6.2-RFP FOR

ELECTRICITY COMMODITY ONLY WITH (3) PRICING OPTIONS.

NOTE: Portions of this figure are very similar to Figure 6.1 (RFP for
Electricity Only). Items I,11,111,IV, V, VI,VI11 and IX in Figure 6.1 are
similar to Items I, 11,111, V, VI in Figure 6.2. Item VI1 in Figure 6.1 and
Item IV in Figure 6.2 are where the real differences between these two
figures occur. These two figures are structured slightly differently from
each other in the areas described for purpose.
The purpose is to make the reader of this publication aware of
different structures that can be utilized in documents of this type without
impacting the viability of the RFP. Generally individual customers and/
or their legal representatives will have standard contract provisions with
which they are familiar and feel comfortable. In these instances the ques-
tions may arise to what “standard” contract provisions can be utilized
in “utility services” RFP. The answer is that many of the generic stipu-
lations and requirements that customer may typically utilize in con-
tract can be used in “utility services” RFP.
The major thing that has to be specific in each ”utility services” RFP
is the portion of the RFP that relates to the “utility services” being re-
quested. This portion of the RFP is generally relatively small, but very
critical, part of the total RFP. Structuring ”utility services” RFP is sim-
ply seeking provider of ”utility services” much other services might
be solicited.
Do not make the RFP process more difficult than is required, but do
recognize that the portion of the RFP relating to the specific ”utility ser-
vices being solicited” is critical to successful contract with provider.

A.
Customer. The legal name of the Customer.

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 Services. A brief description of the services being requested.
3. Bidder Candidate. Definesthe term ”bidder candidate.”
4. RFP. Defines what ”RFP” means.
5. Bidder.Defines the word ”bidder.”
6. Facilities. Defines what ”facilities” means in relation to this
RFI?
Supplier(s). Defines what ”supplier(s)” means.
B. Overview. Describes the required qualifications that bidders
must possess.
C. Explanation. Explains the purpose of the RFP.
1. Evaluation and Qualification Process. Explains the evalua-
tion and qualification process.
Phase 1. Explains the bidder selection process.
Phase 2. Explains bidder interview process.
Phase 3. Explains method of contract awarding process.
2. Proprietary Information. Defines propriety information
utilized in this RFP.

11. GENERAL REQUIREMENTS-

A. Introduction. Defines the legal obligations of both the customer
and the bidders.
B. Equal Employment Opportunity requirements. Outlined here
are the EEO requirements with which any bidder must comply.
C.Legal Documents, Laws and Regulations. Describes the vari-
ous legal documents that any successful bidder must comply
with together with the various laws and regulations that may
be referenced in the RFP.
Insurance. Describes the various insurance requirements with
which the bidder must comply.
E. Substitutions. Addressed here is the question of substitutions
of products and/or subcontractors by the bidder.

111. QUALITY SPECIFICATIONS-

A. Performance Specifications.
1. Electricity. Outlined here is the fact that all services (elec-
tricity) will physically be delivered after any contracts be-
tween the customer and bidder the same before the
contract. Discounting of electricity commodity should in no
way erode the quality level of the physical delivery of the
electricity commodity to the customer’s use-point electric

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Wheeling

meter. Make certain that any RFP submitted to bidders

specifically addresses the delivery quality level expected by
the customer.
2. Response Specification. Here is addressed the ”response to
problems,” expected by the customer from provider.

ODtion #l-Fixed Discount from Serving Utility Retail Tar-

iff Rate. This discount structure is different from the previ-
example (Figure 6.1). In the previous example an incre-
mental approach to the total electricity cost (See VII, 1 and
A-M) was detailed since the discount applied only to
the electricity commodity cost.

In this example, the incremental electricity costbreakdown is

not required since any discount is calculated on thetotal retail
tariff rate. In this option fixed discount is calculatedfrom
the total utility retail tariff rate. The calculation by the pro-
vider will be essentially the same for this option in this
sample it was in the previous sample but the total cost
paid by thecustomer is the basis for the discount, not theelec-
tricity commodity cost only was in the previous example.

2.ODtion #2”Shared Savings with Minimum Guaranteed

Discount. In this option the savings opportunity for the
customer comes in the form of guaranteed minimum dis-
count with the potential for extra savings if the provider
can actually reduce the overall electricity cost to greater
extent than the guarantee provides. Generally, the guaran-
tee portion of savings will be less than in Option but the
opportunity for greater savings exists where in Option #l,
it did not.
This method can result in larger savings for the customer if
method can be developed and agreed-to by both the cus-
tomer and the provider where the customer can determine
if savings in excess of the guarantee are occurring in the
successful bidders cost structure. This requires that the
provider allow the customer to inspect the provider’s ac-

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 tual cost data on what is generally referred to an "open
b o o k arrangement. a customer is not adverse to some
margin of risk or uncertainty in their savings structure, this
option is probably better choice than Option #l. this
option is utilized, the customer will have to be satisfied that
the provider is allowing the customer to have an unre-
stricted look at the provider's books so that the shared
portion the savings truly reflect what they should be.

A typical share ratio excess savings over the guaranteed

base savings between the customer and the provider would
be 50/50 split between the parties. Other share splits can
be negotiated but generally the 50/50 split is fair and
agreeable to both parties.
3. Option#3"Shared Savings Onlv-No Guaranteed Sav-
In this option, there is no guarantee of any savings but
the opportunity for greater savings than either Option #l
or does exist. The key tousing this type of agreement is
the ability of the customer to have access to and under-
stand the providers actual cost data so that an accurate
determination can be made what savings are actually
available. The savings split is typically 50/50 split be-
tween the parties.

4. Bidder Conditions Amlicable toAll Pricing Options. This

section outlines the various terms and conditions that ap-
ply to this RFP. Also required in this section i s specific bid-
der responses to the itemization of various terms and con-
ditions.

V. SPECIALPROVISIONS-
A. Type of Contract(s). Outlined here are the types of contracts
that will be considered by the customer.
B. Proposed Contract(s) Terms. This section describes the contract
lengths or time periods that will be considered by the customer.

VI. AWARD OF CONTRACT-

A. Award of Contract. This section details the terms under which
contract will be awarded.

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 Retail

3FP for Electricity, Natural Gas, Water/Sewer and Engineering Services

TABLE OF CONTENTS

PREFACE
A. Definitions
Services
2. Bidder Candidate
3. RFP
4. Bidder
5. Facilities
6. Supplies
B. Overview of Bidders
C. Explanation
Evaluation and Qualification Process
2. Proprietary Information
GENERAL REQUIREMENTS
A. Introduction
Equal Employment Opportunity Requirements
2. Permits, Laws, and Regulations 5
3. Insurance Requirements 5
4. Substitutions

QUALITY SPECIFICATIONS
A. Performance Specifications
Electricity
2. Natural Gas 7
3. WaterISewer 7
4. Response Specifications 7
5. Energy Service Projects 7

IV. PROPOSAL SPECIFICATIONS 8

A. General AgreementTerms 8
Required Services 8
2. Energy Service Structure
3. Detailed Energy Services Analysis 8

V. SPECIAL
PROVISIONS 9
A. Type of Contracts 9
B. Proposed Contract Terms 9
C. References 9

VI. AWARD OF CONTRACT

A. List of Attachments

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116 Retail Electricity Wheeling Handbook

PREFACE
A. Definitions
Services
SERVICES refers to all tasks, procedures, activities and work-
associated with electricity, natural gas and waterlsewer energy
cost reduction, as defined in this document.

2. Bidder Candidate
BIDDER@) refers to the single or multiple companies selected
as candidates to participate in the RFP Process.

RFP
RFP refers to “Request for Proposal.”

4. Bidder
BIDDER(S) is qualified company(s) in the business of providing
integrated energy and facility management services including-
gas and electric commodities, engineering and construction ca-
pabilities,and energy equipment management and/or SER-
VICES.

5. Facilities
The term FACILITIES incorporates any real estate utilized by
Customer included in this RFP.

Supplier(s)
SUPPLIER(S) are those BIDDER(S) under contract with Cus-
tomer to provide Goods and/or SERVICES at mutually agreed-
upon prices, standards and intervals for a specified term in ac-
cordance with the Terms and Conditions specified in a contract
between the parties.

B. OverviewofBidders

This RFP will be used to evaluate selected BIDDER(S) who wish to

establish a long-term contractual alliance with Customer. In addition
to being cost competitive, the selected BIDDER(S) must have the
ability to excel in the quality of SERVICES delivered.

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 Only a BIDDER, who has an established strategy, structure and man-
agement process for providing the highest level of professional ser-
vice, will be considered.

C. Explanation
This Customer is soliciting proposals for utility cost reduction SER-
VICES for its FACILITIES as outlined in this RFP. is this
intention to identifythebestmatchbetweentheirneedsand
capabilities.
1. Evaluation and Qualification Process
The participation and information requested by the RFP are in-
tended to facilitate the evaluation and qualification process. This
process serves as the means for selecting the B I D D E W ) who
appears best suited to meeting the needs of Customer.
PHASE A description of the services required, the key FACIL-
ITY statistics and the various terms and conditions under which
a contract agreementmay bereachedwiththesuccessful
BIDDER(S) will be provided. Any questions will be answered at
the mandatory RFP Conference. At that time, ad-
ditional documents and forms will be distributed for your use in
the proposal process. Companies who successfully complete the
Phase 1 requirements will be evaluated under the next phase of
the process.
PHASE Responses will be evaluated by Customer to identify
those BIDDERS whose proposals appear “most likely” to satisfy
the needs. The evaluation will also include an inves-
tigation of ability to perform and related experi-
ence. BIDDER(S) who satisfactorily complete this phase of the
selection process will be eligible for the next phase of the pro-
cess.
PHASE Customer willconductfinalinterviewswiththe
and ask any questions necessary to make the de-
cision for the final award of a contract.
PHASE 4. Customer/BIDDER will finalize pricing and contract
terms. Awarding of the contract will be at the sole discretion of
Customer.

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 2. Proprietary Information

Any specifications, drawings, models, samples,technical or

business information which represents “information,” furnished
to BIDDER(S) in this RFP, will remain property; and
will be returned to Customer if BIDDER@) declines to partici-
pate, are eliminated in the evaluation, or at any time upon re-
quest by Customer. BIDDER@) agrees to keep information con-
fidential associated with this RFP and not use same for any
other purpose except upon such terms as may be agreed upon
by BIDDER@) and Customer in writing.

GENERAL REQUIREMENTS

A. Introduction
This document is part of a RFP from the Customer. This RFP is not
intended to constitute an offer or binding agreement between the
parties, nor does it consummate a contract between Customer and
any BIDDER(S). The only legal obligations between the parties shall
be those set forth in an executed contract subsequent to the RFP.
The Customer reserves the right to refuse any offer made to it at its
sole discretion. In the event a contract is not consummated, the Cus-
tomer shall not be obligated for any expenses of any BIDDER(S) or
for any charges or claims whatsoever arising out of this
The Customer does not seek to obtain any of propri-
etary or confidential information. All information and data contained
in the submitted proposal must be and will be treated as material
Customer may use or distribute without restriction. However, Cus-
tomer does not intend, and will use all reasonable efforts not to
disclose, any information from proposal to those sub-
mitting competing proposals. All proposals become the property of
Customer upon receipt and will not be returned. Customer reserves
the right to reject any or all proposals received if such action is
considered to be in the best interest of Customer.
This RFP is contingent upon compliance with all provisions con-
tained herein. Consideration will be given only to BIDDER(S) that
respond to all requirements.

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 3-RFP

All potential SERVICES to be executed and MATERIALS deliv-

ered under this RFP are subject to applicable laws and regula-
tions of federal, state, county and local governments and and/all
city or municipal laws or ordinances.

No BIDDER(S) shall disclose to others that Customer has ten-

dered this RFP to them, except as may be required to complete
the requirements of this RFP and Proposal Information Package.

1. Equal Employment Opportunity Requirements

Customer complies with Equal Employment Opportunity laws,
orders and regulations in the conduct of its activities. Customer
requires that those with whom it has business dealings involving
the furnishing of any SERVICES or products, be in compliance
withEqualEmploymentOpportunityrequirements.All
BIDDER@) responding to this RFP must agree to be in compli-
ance with all applicable laws, orders, and regulations relating to
Equal Employment Opportunity requirements.

2. Permits, Laws and Regulations

The successful BIDDER(S) shall observe and comply with the
provisions of any present and future federal, state and municipal
laws, rules, regulations, requirements, ordinances, orders and
directives which apply to its operations, except where stricter
requirementsarecontainedinthis RFP. Thesuccessful
BIDDER@) shall procure all necessary licenses, certificates,
permits or other authorizations from all governmental and other
authorities having jurisdiction over its operations. The successful
BIDDER(S) shall give all notices, pay all fees and take all other
actions that may be necessary to ensure that its SERVICES are
delivered in accordance with applicable law.

3. Insurance Requirements
The successful BIDDER(S) shall be required, at a minimum, to
carry Workman's Compensation, employee liability, public liabil-
ity, bodily injury, and property damage insurances as required by
law.

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120 Electricity Retail Wheeling

4. Substitutions
Whenever any product or subcontractor is specified by reference
to name, trade name, make, model or catalog number of any
supplier, all bidders shall base their bids only on those specified
products or subcontractors.
In order not to limit competition, and so that the Customer may
consider alternatives that may be of benefit, the bidders may
propose substitutions that they consider equivalent to the speci-
fied products, manufacturers andlor subcontractors.
All proposed substitutions must be submitted in writing as part of
the bid submission. After thebids are received, engineering
project alternative products or subcontractors will be considered
by Customer based upon the specific engineering project being
undertaken.
All subcontractors' names and alternatives (if used) must be
submitted as part of the bid along with proposed prices.

It is the intent of this RFP to ensure that the facilities of Customer shall,
after the issuance of the contract, continue to receive utility services at
the same or improved level of quality, deliverability and reliability as was
available prior to the issuance of the contract.

PerformanceSpecificationUtilityServices(Electricity,Natural
Gas, Water/Sewer)

Electricity
Electricity services will continue to be provided through wires,
formers, meters, etc., as is currently provided prior to issuance of a
contract. No greater risk of interruption except as agreed-to by the
parties on a specific facility-by-facility basis will be considered in the
delivery of the commodity (electricity); no change in quality of the
commodity (electricity) volts, hertz, interruptions; etc., will be allowed.

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 Wheeling

NOTE: Nothing in this section will preclude the utilization of co-

generation, peak saving or other strategies as may be mutually
agreed-to by Customer/Successful BIDDER in an energy ser-
vices arrangement.

Natural Gas
Natural gas will continue to be provided through pipes, meters,
etc. as is currently provided prior to issuance of this contract. No
greater risk of interruption except as agreed-to by the parties on
a specific facility-by-facility bases than is currently allowed will
be considered in the delivery of the commodity (natural gas), no
change in the quality of the commodity (natural gas) will be al-
lowed.

WaterISewer
Water/Sewer will continue to be provided through pipesand
meters as is currently provided prior to issuance of this contract.
No change in the quality of the commodity (watedsewer) will be
allowed.

4. Response Specification
The BIDDER(S) shall respond to all problems presented by des-
ignated Customer representatives upon notification. This would
include, but not be limited to, delivery reliability to serving utility
(electricity, natural gas, and watedsewer) receipt point.

5. Energy Service Projects

The selected BIDDER(S) will secure required funds to invest in
energy services projects with pay-back terms applicable to for
the proposed contract term and may include any of the following
projects as applicable; upgrading, replacing and/or combining
meters for the benefit of demand diversity, reduced customer
service charges, real-time data for demand load shedding and
hourlypricing,step rate benefits,peakshaving equipment,
HVAC upgrades, lighting retrofits, motor replacement, capacitors
for power factor corrections, compressed air renovations, back-
up generators, dual fuel arrangements for interruptible service,
cogeneration orother energy reduction items as agreed-to by
the parties.

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 IV.
PROPOSAL SPECIFICATIONS

A. General Agreement Terms

1. Required Services
Guaranteeslminimum annual savings stated as a percent of
annual electric, natural gas and waterkewer costs adjusted
annually. Savings can be a result of electricity, natural gas,
waterlsewer and/or energy services savings or any combi-
nation of these items.
Savings above guaranteed minimum annual savings per-
centage will be shared ona predetermined split between
Customer and BIDDER.
At the signing of the Agreement between Customer and
BIDDER, Customer will receive 1/12 of the first guar-
anteed annual minimum savings with monthly payments to
continue thereafter.

2. Energy Services Structure

a. All savings will benet of investment required.

b. Pay-back periods will not extend longer than the contractual

agreement between the parties on a project specific basis.

c. Customer personnel will approve all energy service projects

prior to their inception.

d. Rationale for substantiating savings from energy projects

will be determined during negotiations prior to Agreement
completion.

3. Detailed Energy Services Analysis

This type of analysis will require a considerable amount of se-

lected time and resources, and a method of com-
pensation must be considered. To this end, the following strategy
will be utilized:

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 ‘d.)
l

Detailed analysis of facilities will be mutually agreed-to by

Customer and selected BIDDER.

The mutually agreed-to analyses will be performed by se-

lected BIDDER at no cost to Customer, except as outlined
in 3.b.2., following:

If Customer agrees-to enter into an agreement with selected

BIDDER, there will be no charge to Customer.

If Customer does not enter into an agreement with the se-

lectedBIDDER,andallanalyses criteria wassatisfied,
Customer will reimburse selected BIDDER up to a “not-too-
exceed” amount to be determined by both parties prior to
the actual analyses taking place.

V.
SPECIAL PROVISIONS

A. Type of Contracts

Customer contemplates that this qualification process will result in

the award of a “FixedDiscountNariable Energy Services Cost
Contract(s).” Customer reserves the right to accept a proposal other
than the lowest cost proposal submitted and to reject any and all
proposals received, at its sole discretion.

B. Proposed Contract(s) Term

The resulting Contract(s) will be for a term not to exceed ten (10)
years from date of initial signing by both parties (Customer/selected
BIDDER).

C. References-Case History Requirements

References and documentation of comparable project examples will

be required by Customer to verify selected ability to
provide the services required.

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 ‘d.)

OF
An award of a Contract will not be made until the necessary inves-
tigations have been made of proposals and other re-
quirements in evaluation process. Award of any Contract
will be made in a period of time as may be decided by Customer.
Customer reserves the sole right to decline to award any Contract
resulting from this evaluation process.

EXPLANATION OF FIGURE 6.3-RFP FOR ELECTRICITY,

NATURAL GAS, WATER/SEWER AND ENGINEERING SERVICES

NOTE: The provisions of this RFP that relate to commodity items (elec-
tricity, natural water/sewer) are structured in the same manner in
Figures 6.1 and 6.2, and the explanations will not be repeated here.
This RFP is the only one of the (3) detailed here that part of
its structure-energy services. This type of RFP for both electricity, natu-
ral and water/sewer commodity, well engineering services, is
the most frequently utilized structure in use at this time. The key to
satisfactory agreement of this type is that the customer understands the
energy services savings structure in detail.
The most important aspects to understand, well the most
confusing, are the energy services structure and savings calculations.
Before energy service projects are instituted, the customer has to under-
stand and approve the specific projects well their structure and
impact potentially on employees, products, services provided, quality,
length of pay-back and/or other customer specific criteria.
Energyservicesagreementsstartwith evaluation of
customer’s facilities for potential energy savings opportunities. Gener-
ally these evaluations start with simple walk-through analysis the
customer’s facilities. If opportunities are found andagreed upon by both
the customer well the potential energy services provider, at least
to the viability of the opportunities, more detailed analysis is required.
Generally there will be no cost to the customer for the simple walk-

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through analysis. As potential energy savings opportunities are agreed-
to by both parties, much more detailed evaluations will be required.
These evaluations, because of their complexity and time requirements,
will incur cost to someone. The best way to structure the cost for the
comprehensive evaluations is to attempt to structure an agreement simi-
lar to the following example that is fair to both the customer as well
to the potential provider.

There will be mutual agreement between customer and potential

provider on customer’s facilities to be evaluated and items to be
considered.

Agreement between the customer and the potential provider that

there will be no out-of-pocket cost for evaluations detailed in
item except follows in 4.B following.

Evaluation expectations parameters and not-to-exceed costs will be

mutually agreed-to by the customer and the potential provider
prior to the actual evaluation being performed.

4. If evaluation expectation and parameters are accomplished, then

of the following (2) events will take place:
A. If customer and potential provider enter into contractual ar-
rangement for the performance of energy services, there will be
no out-of-pocket cost to the customer.
B. If customer does not enter into contractual arrangement with
the potential provider, customer will pay all costsup to the not-
to-exceed maximum established in item previously.

Although this is very abbreviated explanation of the energy sav-

ings determinations procedure, it should provide enough insight to start
the process. Once energy projects have been determined, the next item
that needs to be addressed is the savings pay-back rationale.
There is no specific procedure for verifying savings related to en-
ergy projects. Most companies have their own financial protocol for
determining pay back periods, which with some modification can be
used for energy projects.
There are some things that are peculiar to energy projects that
should be included in any savings analysis follows:

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 Are savings tied to current utility rates? If so, how are utility rate
changes factored into actual vs. projected savings?

How are changes in utility usage levels factored into projected sav-
ings levels? What if usage is increased? What if usage is reduced?
What if utility usage characteristics change-first shift vs. second
and third shifts, 5 days week vs. 6 or 7 days week?

Are savings pay-back periods realistic when compared to projected

facility life?

4. happens if the facility is disposed of prior to the pay-

back period being completed?

5. Are there provisions early buy-out options? If so, are they real-
istic insofar penalties are concerned?

What happens if projected savings do not materialize? Is the

provider’s portion of the projected savings reduced proportionally
to the reduction in savings?

7. What happens if the energy usage reduction associated with

project causes the applicable tariff rate to change to one that has
higher incremental cost?

Will monthly reports be available from the provider that docu-

ments actual savings both on monthly well on accumu-
lated basis?

After reading of these questions relating to energy projects, it

may seem there are more problems than benefits. This is only true if you
do not ask the appropriate questions before entering into project.
Energy projectsare neither good nor bad in and of themselves, their
success is strictly function of preparation, planning, execution and fol-
low-up. Any project has thesame opportunity and/or problem potential.
Energy projects only seem somewhat more complicated if there is lack
of knowledge to what they are and how they work.

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 Wheeling

HOW TO STRUCTURE
AN ELECTRICITY COMMODITY
PURCHASE (RETAIL WHEELING) CONTRACT

Now that the various forms of RFPs have been analyzed, the next
step in the process is contract with the selected provider. Following in
Figure 6.4 is outlined typical contract that can be altered in three sepa-
rate configurations.

1. Option l-A-Electricity Commodity Only-FixedPrice.

2. Option l-B-Electricity Commodity Only-Spot Market Pricing.

3. ElectricityMeter Point Cost Reduction in variations:

A. Option l-C-Meter Point Pricing with Fixed Discount.

B. Option l-D-Meter Point Pricing with Fixed Discountwith

Shared Savings.

C. Option l-E-Meter Point Pricing with Shared Savings with No

Fixed Discount.

4. Option l-F-Electricity Commodity and Energy Services.

The Contract Process

Figure 6.4 outlines the contract process and the items that contract
should contain that will be fair to both parties buyer and seller). The
outline shown here can be used guide in any retail wheeling trans-
action; and, its provisions should cause no problems to either the seller
or buyer. The contract is simple and straightforward.

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128 Wheelinx Retail Electricity

Figure 6.4-Retail Wheeling Sale Agreement

Retail Wheeling (Electricity) Sale Agreement

Between

Date Contract No.

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 Wheeling Sale
l

Cover Sheet

Index
Definitions
2. Purchase and Sale
3. Term of Agreement

4.A Option l - A : Electricity Commodity Only-Fixed Price 5

4.8 Option l-B: Electricity Commodity Only-Spot Market 6
4.C Option 1-C: Electricity Commodity Only-Meter
Point Pricing-Fixed Discount
4.D Option l-D: Electricity Commodity Only-Meter Point
Pricing-Fixed Discount With
Shared Savings
4.E Option l-E: Electricity Commodity Only-Meter Point
Pricing-Shared Savings With No
Fixed Discount 8
4.F Option l - F : Electricity, Natural Gas, Water/Sewer
and Energy Services 9

5. Deliveries 9

6. Billing and Payment 9-10

7. Transmission Agreements
8. Title to Wheeled Electricity 11

9. Force Majeure 11

Notices 12

11. Miscellaneous 13
Signatory Page 14
Acknowledgments 14
Exhibit “ A (Point of Usage) 15
Exhibit “B” (Point of Delivery) 15
Exhibit “ C Fee) 15

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 Retailed Wheeled Electricity Sale Agreement

THIS AGREEMENT, made and entered into this (day)

(year).of (month),

By and Between:

With principle offices at:

[Hereinafter referred to as “BUYER” (Customer).]

Who agree as follows:

Definitions.

1.1 “Usage” will be in MWhor kwh.

1.2 “Expiration Date” refersto 8:OO a.m. on the date, whichis

electricity
(date)
after delivered
first
byis
SELLER to BUYER hereunder.

1.3
serving electric utility.

1.4 “Point of Usage” is the location at which BUYER will consume

or otherwise use said wheeled electricity.

2. Purchaseand Sale.

2.1 SELLER agrees to sell to retail wheeling BUYER (Customer),

and BUYER agrees to purchase from SELLER to the quantity
of electricity used each month during the term of this Agree-
ment. Said wheeled electricity will be provided to the BUYER
as provided for in this Section. Delivery and acceptance shall
be atPointof Delivery (as defined hereinafter.)

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 BUYER may use any volume for any specific month or months.

SELLER agrees to nominate, balance, and pay any serving

utilitypenaltiesrelating to electricitydeliveryerrorson
during the term of this Agreement.

2.4 If in any month SELLER fails to tender an amount of wheeled

electricity equal to may atis sole
option elect to terminate this Agreement.

2.5 SELLER warrants that it has permanent title to wheeled elec-

tricity for the entire term of this Agreement hereunder and the
right to sell same.

3. Term of Agreement.

This Agreement shall become effective upon execution and shall

remain in effect for an initial term of (months) after wheeled
electricity is first delivered hereunder.

OPTION l - A

ELECTRICITY COMMODITY ONLY-FIXED PRICE

4-A. Price of Wheeled Electricity-Fixed Price for

Month Period.

4-A.lThe purchase price shall be per MW/kWh

delivered
at
Point of Delivery during
theinitial
month period.

4-A.2SELLER shall provide to BUYER a new purchase price at

leastforty-five(45)daysprior to expiration of the initial
month periodany
of
(or extended period).
Any such new price shall be evidenced by a written amend-
ment to this Agreement executed by both parties. Failure to
agree upon a price shall permit either party to cancel this
Agreementeffective at theend of thethencurrent
month period.

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 Wheelin2

will (in addition to paying the prices established in

4-A.2 above) pay state and local sales, use and public
utility taxes (associated with the sale contemplated by this
Agreement) and all other costs associated with the trans-
portation, handing, ownership, sale, distribution and use of
wheeled electricity after acceptance by at Point of
Title Transfer as set forth herein.

shall have no responsibility to pay generation or

other taxes, or to make royalty or other payments due out
of generation revenue.

The prices established in 4-A.l above, shall apply to all

wheeled electricity delivered pursuant to this Agreement.

HOW TO ESTABLISH A FIXED PRICE

FOR WHEELED ELECTRICITY

Generally, the fixed price method is more costly than the spot
market method because the supplier has to speculate on what the cost of
wheeled electricity will be at some point in the future. Fixed price con-
tracts are generally for or 12 months. The longer the term, the more
uncertain is the cost of wheeled electricity. Unless for some reason,
known wheeled electricity cost is required on month-by-month basis
for some future period of time, it is less costly to utilize the spot market
or monthly pricing scenario for wheeled electricity purchases. If fixed
wheeled electricity price is required, then it is best to utilize some bench-
mark to at least make the process logical and not pure speculation.
One of the most readily accessible electricity price indices is the ”D.
J. Electricity Price Index” which is found daily in The Wall Street Journal
in the Money and Investment Section. This electricity price data is gen-
erally located adjacent to the Futures price sheets.
The electricity prices in this index represent actual weighted aver-
age prices for electricity traded atvarious delivery points in the power

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pool regions. Prices are quoted in dollars per megawatt and are for Firm
Delivery-on- and off-peak, and for Non-Firm Delivery (interruptible)-
on- and off- peak. Although not all delivery points on all power pools
are currently listed in this index, retail wheeling becomes more widely
available, more delivery points will be developed.
Remember, if any index is utilized, it will only include the com-
modity (electricity) at point of generation or delivered to common
transmission power pool point. Added to the costs shown in an index
will be the agent’s fee, the transmission costs to the wheeling customer’s
serving utility receipt point, and the serving utility’s specific costs in-
cluding distribution, transformation and miscellaneous customer fees.

OPTION l - B

ELECTRICITY COMMODITY ONLY-

SPOT MARKET PRICING

4-B. Price of Wheeled Electricity with Spot Market Pricing.

4-8.1 The purchase price shall be determined by the Spot Market

Pricing Guide chosen, per MW/kWh in effect on date of
nomination.
4-B.2 Not used with spot market pricing.
4-8.3 BUYER will (in addition to paying the prices established in
4-B.l above) pay all state and local sales, use and public
utility taxes (associated with the sale contemplated by this
Agreement); and, all other costs associated with the trans-
portation, handling, ownership, sale, distribution and use of
wheeled electricity after acceptance by BUYER at Point of
Title Transfer as set forth herein.
4-B.4 BUYER shall have no responsibility to pay generation or
other taxes or to make royalty or other payments due out of
generation revenue.

4-8.5 Theprices established in4-8.1 above shall apply toall

wheeled electricity delivered pursuant to this Agreement.

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 Retail

OPTION l - C
Electricity Commodity Only
METER POINT PRICING-FIXED DISCOUNT

4-C. Meter Point Pricing with Fixed Discount.

4-C. 1 Thefixeddiscountshallbecalculatedbasedupon
total use point meter electricity cost at time of
contract signing and will be adjusted monthly during the
term of this contract to reflect any changes that would occur
in the use point electricity meter cost if this fixed
discount contract were not in effect.

4-C.2 Not used with Fixed Discount Pricing.

4-c.3 BUYER will (in addition to paying the prices established in

4-C.1 above) pay all state and local sales, use and public
utility taxes (associated with the sale contemplated by this
Agreement); and, all other costs associated with the trans-
portation, handling, ownership, sale, distribution and use of
wheeled electricity after acceptance by BUYER at Point of
Title Transfer as set forth herein.

442.4 BUYER shall have no responsibility to pay generation or

other taxes or to make royalty or other payments due out of
generation revenue.

4-c.5 The prices established in4-Caboveshall applytoall

wheeled electricity delivered pursuant to this Agreement

OPTION l - D
Electricity Commodity Only
METER POINT PRICING-
FIXED DISCOUNT WITH SHARED SAVINGS

4-D Meter Point Pricing, Fixed Discount with Shared Savings.

4-D.l The fixed discount and shared savings shall be calculated

based upon total use point meter electricity cost

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 at time of contract signing, and will be adjusted monthly
during the term of this contract to reflect any changes that
would occur in point meter electricity cost
if this fixed discount with shared savings contract were not
in effect.

4-D.2BUYER shall have no responsibility to pay generation or

other taxes or to make royalty or other payments due out of
generation revenue.

4-D.3 The prices established in 4-D.1 above shall apply to all

wheeled electricity delivered pursuant to this Agreement.

OPTION l - E
Electricity Commodity Only
METER POINT PRICING-
SHARED SAVINGS WITH NO FIXED DISCOUNT

4-E. Meter Point Pricing, Shared Savings with No Fixed Discount.

4-E.l The shared savings with no fixed discount shall be calcu-

lated based upon total use point meter electricity
cost at time of contract signing and will be adjusted monthly
during the term of this contract to reflect any changes that
would occur in the use point meter electricity cost
if this shared savings with no fixed discount contract were
not in effect.

4-E.2 BUYER shall have no responsibility to pay generation or

other taxes or to make royalty or other payments due out of
generation revenue.

4-E.3. The prices established in 4-E.l above shall apply to all

wheeled electricity delivered pursuant to this Agreement.

Page

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136 Retail Electricity Wheeling

Sale

OPTION l-F

Electricity, Natural Gas, WaterlSewer and Energy Services

4-F Electricity, Natural Gas, WaterlSewer and Energy Services.

4-F.1 The electricity, natural gas, watertsewer and energy savings

amounts and methodology shall be determined between the
parties in a separate “Letter of Understanding.” Savings will
be based upon the total electricity, natural gas,
and waterkewer costs at use point meter location less any
incrementally detailed taxes that are required to be paid by
the BUYER.

4-F.2 BUYER shall have no responsibility to pay generation or

other taxes or to make royalty or other payments due out of
generation revenue.

5. Deliveries.

Deliveries shall commence by no later than fifteen (15) days after

execution of this Agreement. If deliveries do not so commence,
BUYER may terminate this Agreement.

6. Billing and Payment.

6.1 Billings shall be rendered monthly. The monthly billing period

(‘Billing Period” hereinafter) shall end on the last day of each
calendar month. The first Billing Period will end on the last day
of the month in which deliveries commence, whether or not a
full month of deliveries is involved. BUYER will be required to
accept and to pay each month for the delivered monthly vol-
ume, pursuant to Section 2 above, (prorated for billing periods
of less than one month) and for all additional quantities of
wheeled electricity delivered by mutual agreement of the par-
ties pursuant to Item 2.3 above.

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6.2 Monthly billings will be made based on the monthly quantities
ordered by BUYER pursuant to Section 2 and corrections to
billings (if any) will be reflected in the next billing rendered after
the need for correction is discovered. Payment (or credit) for
corrected monthly billings will be made or reflected in the next
due payment. Corrections will not be made more than one (1)
year after the original billing date.

6.3 BUYER shall pay all amounts due less any penalties incurred
by incorrect order quantities which would result in
serving utility company penalties, surcharges and/or supplying
of tariff electricity, natural gas, waterkewer at a cost in excess
of what could have been purchased under provisions of this
contract.

Payments shall be made by electronic transfer, within five days

after receipt of a billing from SELLER or by the fifteenth (15th)
day following the month of delivery, whichever shall last occur.
billing may be submitted in writing, by fax, or elec-
tronically.

Payments will be made into an Escrow Account at (any bank

selected by SELLER). BUYER agrees to execute any neces-
sary instructions to the Escrow Bank (as directed by SELLER)
so long as said instructions do not changeor enlarge any
obligation of BUYER under this Agreement.

6.4 The interest equal to prime rate at the Escrow Bank plus two
percent (2%) per annum shall be paid on all late payments.
BUYER shall, in addition, be responsible for paying for collec-
tion costs and reasonable attorney fees incurred by SELLER in
its efforts to collect delinquent payments.

6.5 If failure to pay shall continue for ten days after receipt of
a billing by BUYER, SELLERmay, in addition to any other
remedies available, suspend further deliveries to BUYER until
all amounts due are paid.

6.6 It is contemplated that credit circumstances and requirements

of the BUYER will be determined after execution of this Agree-
ment. Item 6.6 is reserved for any mutually satisfactory provi-
sions which may result from said determination. In the event no

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 mutually satisfactory credit arrangements are made, SELLER
may terminate this Agreement without further obligation here-
under.

Transmission Agreements.

Point of Usage is identified in Exhibit “ A hereto. SELLER,as di-

rected by BUYER, will negotiate and arrange all transportation and
delivery contracts for transmission of electricity to the serving utility
companies. BUYER recognizes it may be called upon to aid and
assist SELLER in the negotiation of said transmission serving utility
Agreements. BUYER recognizes that it will be a required signatory
party to such transportation and/or delivery agreements and agrees
to execute same.

8. Title to Wheeled Electricity, Natural Gas, Water/Sewer.

8.1 Title to wheeled electricity, natural gas, waterkewer sold pur-

suant to this Agreement will pass to BUYER at Point of Deliv-
ery. Point of Delivery is identified in Exhibit “ B hereto, which is
incorporated herein by reference.

9. Force Majeure.

9.1 All obligations of the parties to this Agreement (except for the
payment of money for wheeled electricity, natural gas, water/
sewer delivered) shall be suspended while and for so long as
compliance is prevented in whole or in part by an act of God,
strike, lockout, war, civil disturbance, explosion, breakage, ac-
cident, federal, state or local law, inability to secure materials
or right-of-way, or permits or approvals or licenses, binding
order of a Court or Governmental Agency, the failure, inability
or refusal of any or serving utility to accept wheeled electricity,
natural gas, watedsewer for delivery, or otherwise transport,
the default of any part to Other Contracts (other than BUYER
or SELLER), or by any other cause beyond the reasonable
control of BUYER or SELLER.

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The

9.2 No part of this Force Majeure clause shall be construed to

provide for the discontinuance of wheeled electricity, natural
gas, waterkewer delivery by the SELLER due to wheeled elec-
tricity, natural gas, waterhewer not being available at a favor-
able cost to the SELLER. The SELLER shall be obligated to
providewheeledelectricity to the BUYER, subjecttoother
provisions of the Agreement, at the agreed-to price. Ability of
the SELLER to realize a profit on the transaction shall not be
considered as a Force Majeure condition providing for suspen-
sion of the obligation of the SELLER to provide wheeled elec-
tricity, natural gas, waterhewer to the BUYER.

Any notice or other communication required or desired to be given

to any party under this Agreement shall be in writing and shall be
deemed given when: (a) delivered personally to thatparty,or (b)
delivered by the United States mail, certified postage prepaid, re-
turn receipt requested, or delivered by overnight delivery,fax,or
courierreturn receipt requested, addressedtothatparty at the
address specified for that party earlier in this Agreement or at any
other address hereafter designated by that party by written notice.

SELLER BUYER

Payments Payments

Name Name

Address Address

Attention Attention

Correspondences Correspondences

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140

Sale

11.l If any provisions this Agreement is found to be invalid or

unenforceable (other than the requirement concerning pay-
ment for wheeled electricity, natural gas, waterkewer deliv-
ered), it is intended that the balance of this Agreement re-
main in force and effect.

11.2 This Agreement is intended for the exclusive benefit of the

parties to this Agreement and their respective heirs, succes-
sors, and assigns and may not be assigned without written
approval of the non-assigning party. Nothing contained in
this Agreement shall be construed as creating any rights or
benefits in or for any third party.

The obligation of BUYER(S), if more than one (l), shall be

joint and several.

11.4 This document (including Exhibits and Addenda, if any)

containstheentire Agreement between the parties and
supersedes all entire Agreements between the parties and
supersedes all prior or contemporaneous discussions, ne-
gotiations, representations, or agreements relating to the
subject matter this Agreement. No change to this Agree-
ment shall be made orbebinding on any party, unless
made in writing and signed by each party of this Agreement.

11.5 This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, there respective heirs, succes-
sors and assigns.

This contract is expressly made subject to all present or

future valid rules, orders or regulations of duly constituted
governmental authorities having jurisdiction over the subject
matter hereof.

The failure, by either party hereto, to act in the event of

default shall not constitute a waiver of the right to so act
unless otherwise provided herein.

13

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 EXECUTED

SELLER
BY
Title

BUYER
BY
Title

ACKNOWLEDGMENTS

SELLER

of STATE

Executed and acknowledged by as the act

and deed of
Before the undersigned Notary Public
this (day) (month)
(year)

Notary Public In and For

County

State

My Commission Expires

BUYER

STATE of of COUNTY

Executed and acknowledged by as the act and

deed of Before the un-
dersigned Notary Public this (day) (month) (year)

Notary Public In and For

County
State

My Commission Expires

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 EXHIBIT “A”
POINT OF USAGE

Company Name:

Facility Address to Receive Wheeled Electricity:

Serving Utility:

EXHIBIT “B”
POINT OF DELIVERY
(To be completed by SELLER)

Receiving TranIsmission Grid:

Transmission Grid

Point of Delivery:
All interconnect points on:

Transmission Grid

EXHIBIT “C”
AGENT’S FEE
(Used with Options 4-A and 4-B only.)

fees per unit of wheeled electricity delivered under terms

enumerated in this contract shall be as follows:

Fee per unit delivered from generation point to serving utility receipt
point will be-

per MW/kWh

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EXPLANATION FIGURE 6.4 CONTRACT TERMS

Retail Wheeled Electricity Sale Agreement

This Retail Wheeled Electricity SaleAgreement outlines the parties
to the Agreement, the effective dates, and the addresses of both the
SELLER (agent) and the BUYER (customer).

Definitions
1.1 “Demand”
This item identifies the measurement criteria to be used for
delivery of the electricity. Demand is measured in kVA/kW.

1.2 “Usage”
This item identifies the measurement of megawatt-hours/
kilowatt-hours and is function of connected electrical load,
times hours in use. Usage is measured in MW/kWh.

1.3 ”Expiration Date”

This determines the date upon which this contract becomes
null and void.

1.4 ”Serving Utility”

This refers to the BUYERS (customer’s) serving utility that is
delivering the wheeled electricity.

1.5 “Point of Usage”

This identifies the end location of the actual consumption of
the wheeled electricity.

Purchaseand Sale-
The six paragraphs contained in this section constitute the Agree-
ment between the SELLER and BUYER (customer) in its entirety. It
outlines the conditions for acceptance of wheeled electricity and
limits the BUYERS responsibility to the SELLER.

2.1 “Agreement setting forthquantities of wheeled electricity

the SELLER is obligated to provide.”
This does not obligate the BUYER to any specific volume
purchases.

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 2.2 “Agreement setting forth the BUYERS optionsrelating to
wheeled electricity volumes delivered.”
The BUYER has the right to purchase all electricity used
set forth in 2.1 above.

2.3 ”Nomination balancing andpayment of penalties.”

This section defines the responsibility of the SELLER regard-
ing nomination, balancing, and payment of penalties in be-
half of the customer.

”SELLER’S failure to tender (deliver) wheeled electricity.”

This item allows the BUYER to terminate the contract if the
SELLER cannot or does not deliver the quantity of wheeled
electricity used. (Always have this provision in the contract.)

“Titleto wheeled electricity.”

Title to wheeled electricity is important since actually taking
title is the only way to assure that the specified quantities are
available when needed.

NOTE: The descriptive words ”Permanent” and “For the

Entire Term of This Agreement.” These are important since
the term ”Title to Wheeled Electricity”may not extend to the
entire length of the Agreement. Permanent title does not
guarantee deliverability of wheeled electricity, but it does
assure that interruption will not occur for other than actual
physical supply or transmission constraints. (Always have
this provision in the contract.)

Term of Agreement-
This section defines the Agreement time boundaries both beginning
and ending.

4.A Electricity CommodityOnly

Two pricing methods are provided: “Fixed Price” and ”Spot Market
Price.” The Fixed Price Method is detailed following:

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4A.1 “Wheeledelectricitypriceperspecified quantity(MW/
kwh).”
This item sets the agreed-upon price for the wheeled electric-
ity during the term of the Agreement.

*4A.2 ”Newpurchase price notification by SELLER to BUYER”

(used only with Fixed Price Method).
This item sets forth the details of negotiating of new pur-
chase price at the end of the agreed-to period.

NOTE: That either the SELLER or BUYER can cancel the

contract if Agreement cannot be reached on new price. Do
not sign contract if clause such the following is in-
cluded-”SELLER fo
BUYER
What this says is that the current SELLER has the
right to match any wheeled electricity prices you might re-
ceive. If SELLER cannot arrive at competitive price on
their own, then you, in all probability, do not want them
supplier. (Always have this provision in the contract.)

4A.3 ”BUYER assumed taxes and other costs.”

Since the SELLER is selling only wheeled electricity, it is not
their responsibility to pay for any transmission handling or
distribution charges after transfer of title to the BUYER oc-
curs. (Title transfer is detailed in 8.1.)

4A.4”SELLER assumed taxes and other costs.”

The SELLER assumes responsibility for all taxes and other
costs so long they have title to the wheeled electricity.
Simply put, the information in 4A.3 and 4A.4 means that
whoever has title to the wheeled electricity assumes thecosts
related to that wheeled electricity whether they are in the
form of taxes or other expenses.

*4A.5 ”Applicability of wheeled electricity priceestablishedin

4A.1.”

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 The price established in 4A.1 applies to all wheeled electric-
ity delivered by the SELLER. This clause is important since
its utilization means that the SELLER cannot change the
wheeled electricity costs because of monthly usage varia-
tions. (Always have this provision in the contract.)

4B. Electricity CommodityOnly

l-B-Spot
4B.1 “’Wheeled’ electricity price per month per specified quantity
(MW/kWh).”
This item names the agreed-upon spotprice for the wheeled
electricity during the month of delivery. When the “spot
pricing guide” method is utilized for wheeled electricity, the
wheeled electricity cost will probably vary every month.
There will probably be several spot pricing guides from
which to choose there are currently in natural

This method of wheeled electricity purchasing is probably

the lowest cost of electricity for the BUYER. The primary
reason for this is that it is difficult for either the SELLER or
the BUYER to determine accurately that the price of wheeled
electricity will be or months in the future. This
uncertainty can possibly lead to higher priced wheeled
electricity. realize the lowest cost wheeled electricity fig-
ure on monthly basis, the spot price guide method is the
best system to utilize. The only advantage to the fixed price
method is that known wheeled electricity cost can be de-
termined to some point into the future. If retail wheeling
customer must know the wheeled electricity incremental
costs for some future period of time, the fixed price method
will have to be utilized. In any other situation, if true lowest
cost electricity is the goal, the spot pricing guide method
should be utilized.

Not used with spot market pricing.

”BUYER assumed taxes and other costs.”

Since the SELLER is selling only wheeled electricity, it is not

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 the SELLERS responsibility to pay any sales, local, utility or
other taxes. Also, it is not their responsibility to pay for any
transmission handling or distribution charges after transfer
of title to the BUYER occurs. (Title transfer is detailed in 8.1)

*4B.4”SELLER assumed taxes and other costs.”

The monthly price established in 4B.1 applies to all wheeled
electricity delivered by the SELLER including those taxes
that are in the wheeled electricity commodity cost.

*4B.5 “Applicability of wheeledelectricitypriceestablishedin

4B.1.“
The price established in 4B.1 applies to all wheeled electric-
ity delivered by the SELLER. This clause is important since
its utilization means that the SELLER cannot change the
wheeled electricity costs because of monthly usage varia-
tions. (Always have this provision in the contract.)

4-C Electricity Commodity

Meter Point Pricing with Fixed Discount

“Fixed Discount.”
This option is different from either 4-A or 4-B in that it is
addressing fixed discount from the entire use point meter
cost not just the electricity commodity cost. This type of dis-
count and 4-D, 4-E and 4-F following consider the entire
electricity cost so that the commodity cost becomes simply
part of the total overall cost reduction process.

In options 4-D, 4-E and 4-F, provider is given more latitude

in how to structure total electricity discount which has
potential advantages for the provider. In these types of dis-
counting arrangements, it is important to understand that
the discount percentages could appear smaller than in op-
tions 4-A or 4-B, but actually result in larger savings bottom
line. The reason for this is that in options 4-A and 4-B, only
the electricity commodity cost is involved. But in options 4-
D and 4-E and to some extent in 4-F, the entire electricity cost
at use meter point is included. The following example will
help explain this difference.

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Assume situation where the total meter point cost of elec-
tricity is $.OG/kWh and the electricity commodity portion of
this total cost is $.02/kWh. In this scenario, would 10%
discount on electricity commodity cost be better than
discount on the entire meter point cost?

(Electricity commodity cost-$.02/kWh $.002/kWh

savings)

(Total meter point cost of electricity-$.06/kWh

$.0024/kWh savings)

In this example, discount on the total meter point elec-

tricity cost-($.0024/kWh) was worth more than dis-
count on the electricity commodity cost-($.002/kWh).
When trying to determine total bottom line savings poten-
tial, always remember to consider the portion of the total to
which discount would apply, part of the total cost (elec-
tricity commodity) or the total cost (meter point cost). The
types of discounting illustrated in options and espe-
cially are those that are most frequently utilized in retail
wheeling transactions.

"Not used with this option."

"Buyer will pay all state and local sales, use and public util-
ity taxes, etc."
Buyer will be required to pay any/all sales, local and/or
utility taxes the same they do on their bundled tariff rate
schedule through their serving utility.

The discount established in applies to the total meter

point electricity cost including those taxes that are in the
wheeled electricity commodity cost portion of the total
transaction.

The price established in applies to all electricity deliv-

ered to Buyer's usage meter point by the Seller. This clause
is important since its utilization means that the seller cannot

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 change the electricity costs because of monthly usage varia-
tions. (Always have this provision in the contract.)

4-D Electric Commodity Only-

Meter Point Pricing-Fixed Discount with Shared Savings

4D.1 ”Fixed/Shared Savings Discount.”

This option is the same option 4-C except that it includes
combination of fixed/shared savings components. In this
arrangement there i s more potential for bottom line savings
than in 4-C, but all of the savings potential is not guaranteed.
As with most transactions, generally the more the risk (not
all savings guaranteed) the more the opportunity for reward
(shared savings potential). Neither 4-C or 4-D are best-they
are just different in their structure. Which to utilize depends
upon customer’s wants or needs-(a guaranteed known
value, 4-C) or guaranteed minimum with the potential for
increased savings, 4-D).

4-D.2 Not used with this option.

4-D.3 Buyer will be required to pay any/all sales, local and/or

utility taxes the same they do on their bundled tariff rate
schedule through their serving utility.

4-D.4 The discount established in 4-D.l applies to the total meter

point electricity cost including those taxes that are in the
wheeled electricity commodity cost portion of the total
transaction.

4-D.5 The price established in 4-D.l applies to all electricity deliv-

ered to Buyer‘s usage meter point by the Seller. This clause
is important since its utilization means that electricity costs
cannot be changed because of monthly usage variations. (Al-
ways have this provision in the contract.)

4-E Electricity Commodity Only-

Meter Point Pricing-Shared Savings with Fixed Discount

4-E.l ”Shared Savings Discount.”

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 This option is the same Option 4-C except there are no
fixed or guaranteed savings associated with it. Again, if
more risk is acceptable,this option has the potential to result
in greater bottom line savings than either Option 4-A, 4-B, 4-
C or 4-D.

4-E.2 Not used with this option.

4-E.3Buyer will be required to pay any/all sales, local and/or

utility taxes the same they do on their bundled tariff rate
schedule through their saving utility.

4-E.4 The discount established in 4-E.l applies to the total meter

point electricity cost including those taxes that are in the
wheeled electricity commodity cost portion of the total
transaction.

4-E.5 The price established 4-E.l applies to all electricity delivered

to customer’s usage meter point by the seller. This clause is
important since its utilization means that they cannot change
the electricity charges because of monthly usage variations.
(Always have this provision in the contract.)

Electricity, Natural Gas, WatedSewer and Energy Services

l-F
4-F.l ”Electricity, Natural Water/Sewerand Energy Ser-
vices.”
This option is probably utilized more than any of the other
options because it allows greater flexibility in where
savings can be generated. In this type of arrangement, the
customer and provider agree together those electricity,
natural water/sewer and energy services projects that
are most beneficial to both of them. Also, this option gener-
ally results in the largest bottom line savings for the cus-
tomer. Typically savings in the range of 5% to of the
customer’s total electricity, natural and water/sewer
costs will be realized with the customer not investing any
capital up-front.

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 The contractual agreement for this type of arrangement is
highly individualized depending upon both the customer’s,
well the provider’s needs. There is no ”standard” con-
tract language for these types of arrangements, but there are
some generally items that should be considered by the cus-
tomer they develop the contract guidelines.
A. Pay-back periods for energy service projects and meth-
ods to quantify savings.
B. Guideline qualifications for energy service projects.
C. Rationalization criteria for energy service projects.
D. Maximumcontracttermbetweentheparties (6-10
years typically).
Contract language with respectto:
Increased/decreased electricity, natural and
water/sewer usages.
2. Added/deleted customer facilities.
3. Change in electricity, natural and water/sewer
usage patterns.
4. Individual customer facility input into approving/
rejecting energy service projects.
Contracts of this type are only successful if both parties
want to establish long-term partnership with each
other. No matter what contract does or does not ad-
dress, it is no better than the parties good faith in want-
ing to have honest arrangement that is beneficial to
each of them.

4-F.2 Not used with this option.

4-F.3 Not used with this option.
4-F.4 Not used with this option.
4-E5 Not used with this option.

This section outlines the responsibilities for beginning

initial deliveries and the BUYERS remedies if delivery does not begin
outlined.

6.1 ”Billing periods.”

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 This item sets forth the billing periods, in this case and nor-
mally-monthly.
6.2 “Monthly billing amount computation.”
This item details what shall constitute monthly billing
amount.
“6.3 ”Payments of amounts due by BUYER.
This item outlines the time parameters agreed-to by both the
SELLER and BUYER for payment of monthly billings by the
SELLER. Also, identified are those items that the BUYER
may deduct from the payment due, caused by the SELLERS
incorrect nomination procedures. (Always have this provi-
sion in its contract.)
“Delinquent payment charges.”
The interest penalty amount and the SELLER’S legal re-
course in the case of delinquent payments by theBUYER are
outlined here.
”Suspension of delivery for delinquent payments.”
Detailed here is the SELLERS recourse in the event of non-
payment in excess of specified period of time by the
BUYER.
6.6 ”Determination of credit worthiness ofBUYER.”
This item covers any special provisions that might be neces-
sitated due to an unusual credit circumstance of BUYER.
Before any provisions can be attached to this item, they must
be mutually agreeable to by both parties.

This section covers where the BUYER wants the wheeled electricity
delivered and outlines the BUYER’S responsibility in assisting the
SELLER in obtaining the transmission Agreement.

*8
*8.1 “When title passes to BUYER.”
This item defines when title passes to the BUYER. Also,
when the BUYER becomes responsible for taxes and other
costs (when title passes from SELLER to BUYER). Title
passes at 3 distinct locations-(l) electricity generation meter
point, natural wellhead point, (2) serving utility receipt
meter point, and BUYER’S electricity usage meter point.

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 Generally, the best place for title to pass from the BUYER’S
viewpoint is at the electricity/natural serving utility re-
ceipt point. This is because state sales tax normally is not
charged on the portion of the transaction from the electricity
generation to the serving utility receipt meter point if title
passes to the BUYER at the electricity generation location.
For BUYERS in states that levy sales tax on electricity pur-
chases, title pass point is an important consideration. (Al-
ways have this provision in the contract.)

*9. Force Majeure(Superior or Irresistible Force)-

9.1 “Responsibility limits.”
This item limits the responsibility of both parties for circum-
stances over which neither of them have control-acts of
God, war, accident, etc. If the SELLER cannot deliver or the
BUYER cannot accept wheeled electricity due to one of the
reasons outlined in this item, neither of them have legal
responsibility to do so.
“Non-Force Majeure items.”
This item limits the SELLERS ability to not deliver wheeled
electricity due simply to the SELLERS not being able to
obtain wheeled electricity at cost which will allow profit
to be realized. Force Majeure applies only to circumstances
over which neither party has any control, detailed in 9.1.
(Always have this provision in the contract.)

10. Notices by or to Either Seller Buyer-

This section outlines the acceptable methods and forms of commu-
nication between the SELLER and BUYER. The information would only
be used if either party wanted to amend or change provisions in the
contract during its term. Specific addresses and names of individuals are
designated in the section to be used correspondence by either party.

11. Miscellaneous Provisions-

11.1 “Unenforceability of contract provisions.”
If any section of the contract is or becomes legally invalid or
unenforceable, it does not negate the remainder of the
Agreement. This is common contract clause and protects
both parties against unenforceable conditions.

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 “Benefit of this contract.”
This details the intended beneficiaries of the Agreement

“Joint and several obligations of the BUYER(S).”

All BUYERS who are party to the Agreement are equally
liable. For example, if more than one company were to pur-
chase and use wheeled electricity under this Agreement, ei-
ther would be liable in the event of non-performance (non-
payment) by the other.

”Entirety of Agreement.”
This item states that the Agreement signed by the SELLER
and BUYER is complete written with unattached side
clauses or agreements.

”Binding of parties to the Agreement.”

This item protects both SELLER and BUYER in the event
there is sold absorbed by another company. If this hap-
pens, then the successor company is obligated by the terms
of the Agreement to the same extent were the original
party.

”Contract validity clause.”

This states that the Agreement was made subject to current
rules by governmental bodies having jurisdiction over agree-
ments of this type. If governmental body would enact leg-
islation that changed or restricted provisions in the Agree-
ment, then the legislated changes would supersede the
Agreement provisions.

“Failure to act clause.”

If either party would violate provisions of the Agreement
and the other party fails to act, that failure will not constitute
waiver of the right to do so.

Acknowledgments Page-
Both parties are identified by company and name and the signa-
tures of the responsible parties are notarized in the SELLER’S and
BUYERS individual locations. When both parties properly sign this page
and notarized it, the Agreement becomes binding upon both parties.

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Exhibit "A"-
This exhibit identifies the point-of-use of the wheeled electricity
contracted for and the serving utility who will deliver the wheeled elec-
tricity to the BUYER.

Exhibit "B"-
This exhibit identifies the points-of-delivery by the SELLER to the
transporting transmission grid. It also identifies the receiving transmis-
sion grid that would deliver the wheeled electricity to the serving utility.

*Exhibit "C"-
This exhibit requires the SELLER to list their fees per unit of elec-
tricity delivered to the BUYER. This is an important exhibit to the
BUYER since the SELLERS charge effects the overall cost of the wheeled
electricity to BUYER. Many wheeled electricity SELLERS do not like this
provision but should provide the required information if the BUYER is
insistent. (Always have this exhibit part of the contract.)

NOTE: Items indicated with an asterisk are critical to the retail

wheeled electricity BUYER. Always have these items in any contract
that is utilized for retail wheeling of electricity.

HOW TO BE ASSUREDTHATTHECONTRACTWILLSERVETHE
NEEDS OF THE WHEELED ELECTRICITY BUYER

Questions to ask a potential wheeled electricity seller and points to

consider prior to the signing of a contract.
Is title to the wheeled electricity for the entire term of the agree-
ment?

How many electricity generation entry points to the interstate

transmission grid are available?

3. Has non-delivery of wheeled electricity by this seller ever oc-

curred? If so, why?
4. Always have seller quote not only the wheeled electricity cost but
also the total point-of-use cost. This point-of-use (commonly called
"customer meter point") cost is what will be paid in total for the

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wheeled electricity delivered. It includes-(l) electricity, (2) inter-
state transmission grid transportation and line loss, and (3) serving
utility intrastate distribution grid transportation and line loss. This
is the buyer use point meter cost and will be the one to use in de-
termining savings.

Always obtain quotes and terms from more than one seller and
compare them to see if one is more favorable than the other.

Do not be afraid to negotiate on agreement terms wheeled elec-

tricity cost since most sellers, if not all are probably willing to do
this.

After doing the other six steps in this questioning exercise, do what
is probably the most important step-find seller you will feel
comfortable working with and one that will sincerely wants your
business. If the right seller is selected, they will be able to provide
much insight and assistance in all steps of this wheeled electricity
process.

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 Cbupter

Where Do We
Go Here?

Now that we have discussed retail wheeling of electricity and how

to structure agreements for wheeled electricity-what do we do next?
The next thing to consider is how to structure agreement with
provider that is fair for both the provider well the customer. We
have shown in this publication what typical RFDs and contracts look
like, but now we need to address underlying needs and strategies that
will shape the actual agreements themselves. We have to know what we
are expecting prior to the actual signing of any contract. In the following
items we will learn what needs to be considered prior to the actual sign-
ing of any contractual agreement with any provider. These items are
more related to customer characteristics than toelectricity characteristics.

WHAT LENGTH OF TIME AM I WILLING TO

AGREE-TO TO PARTNER WITH A PROVIDER.

Commodity only agreements are generally for time period from

1year to more than 5 years, depending upon the customer’s tolerance
for risk. There is trade-off between agreement length and cost protec-
tion. Generally the longer the length of the agreement, the greater is the
commodity cost assuredness.
The downside is that long-term cost assuredness doesnot necessar-
ily translate into long-term cost minimization. Many things can change
in both electricity commodity pricing well customer needs and/or
usage characteristics. Most customers will tend to negotiate 1- to 2-year
agreement when they initially start retail wheeling of electricity, espe-
cially in electricity commodity only types of arrangements.

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Electricity Commodity and Engineering Services Agreements
Electricity commodity and engineering services agreements will
require customer commitments that are longer than for electricity com-
modity only. Because of engineering services pay-back periods, agree-
ments for electricity commodity and engineering services will typically
be for time period from 5 to years.
Since electricity commodity and engineering services do extend for
many years, make certain that you will feelcomfortable with the selected
provider over period of years. Also make certain, to the extent possible,
that the contract language adequately addresses any questions that could
effect the long-term benefits of the agreement.

DETERMINE, WITHIN LIMITS, THE COST

REDUCTION THAT SHOULD RESULT FROM THE
SPECIFIC TYPE OF CONTRACT THAT IS BEING UTILIZED.

Electricity Commodity Only Agreements

Contracts of this type will generally result in cost reductions of
between 2% to 4% of the total customer meter point electricity cost, ex-
cluding taxes.

Electricity Commodity and Engineering Services Agreement

Contracts for periods from 5 to years in length will generally
result in cost reductions of from 6% to 10% of the total customer meter
point electricity cost, excluding taxes. Actual cost reductions can vary
greatly depending upon the energy efficiency of the customer’s facilities
prior to the inception of the contract. It is not unusual, but not typical,
for quantifiable cost reductions in electricity commodity and energy ser-
vice arrangements to reach to of the total customer meter point elec-
tricity cost, excluding taxes.

RECOGNIZE THAT YOU, AS THE CUSTOMER,

HAVE THE ULTIMATE RESPONSIBILITY FOR THE VALUE
OF ANY CUSTOMER/PROVIDER AGREEMENT.

This statement may seem unfair especially since it will probably

seem that everyone more insight and information about the agree-

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ment process and content than do you the customer. Whether this is
true or not, the fact remains that generally the customer will get what
they ask or negotiate for. No more and no less!
Following are the steps that should be considered by any customer
that expects to have satisfactory relationship with provider over time:

Recognize that you the customer must set the agenda for any
potential provider meetings.
Potential providers will be willing to discuss many options and
strategies but the customer will be the primary mover in the process. It
will also be the customer’s responsibility to document, schedule and
follow-up on the process. It is best to have definite method of action
planned before ever entering into dialogue with any potential provider.
A structure follows in Figure 7.1 could be utilized if appropriate.
The total time that typically elapses between Items l.A. and 3.C. is
from 9 to months. While this may seem to be an inordinately long
period of time, there are many things to determine and people to be
involved. Since the time period is lengthy, it is critical to the success of
the process to keep all of the involved parties updated on at least
monthly basis. this responsibility falls to the customer, not the
provider. A time period might be follows in Figure 7.2.
A successful arrangement between customer and provider
whether for an Electricity Commodity Only Contract or for Electricity
Commodity and Engineering Services Contract is to great extent de-
pendent upon the customer’s input to the process. To assist customer
they try to figure out what to do to make the process valuable
possible, the list following in Figure 7.3 is given.
This list is intended to serve general guide to things that any
customer should at least consider before doing anything with potential
provider of wheeled electricity commodity/services. This list will not
answer all questions, but it can raise the right questions that might oth-
erwise have been overlooked.
After reading this chapter, you may feel that the effort required to
achieve cost reductions through retail wheeling processes is more trouble
than it is worth.If this is your feeling, you are not alone, but with any
new endeavor, there is uncertainty and misunderstanding initially.
The thing to remember is that time passes, there will be more
and more requirements for individual participation in electricity procure-

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 CUSTOMER RESPONSIBILITIES
1. RFPProcess
A. Develop RFP scope and language.
B. Select list of potential providers
to contact.
C. Send out RFP materials and
pre-RFP meeting data.
D. Hold pre-RFP meeting.
E. Determine RFP response period
with input from potential providers.
F. Evaluate RFP proposals.
G. Contact and discuss RFP specifics
with selected RFP respondents.
H. Select specific RFP respondent to
work with.
2. Post RFPlContract Process
A. Set goals and time parameters
B. Establish periodic follow-up
meetings and progress reports.
C. Complete post-RFP work prior to
the negotiation of a contract with
the preferred provider.
Contract/Post-Contract Process
A. Evaluatehign provider contract.
B. Begin work as defined in the
contract.
C. On a periodic basis, hold progress
meetings to evaluate progress.
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POTENTIAL PROVIDER
RESPONSIBILITIES
A.NIA
B.NIA
C. Receivelevaluate materials.
D. Mandatory attendance.
E. Work with customer to
determine response period.
F. N/A
G. Work with customer to arrive at a
satisfactory RFP scope of work.
H. Develop scope of work and
begin process.
A. Work with customer to develop
satisfactory goals/time parameters.
B.Be responsive to customer needs.
C. Work with customer to arrive at
a mutually agreeable process that
can be quantified in a contract.
A. Sign contract.
B. Begin work as defined in the
contract.
C.Be responsive to and active in
periodic progress meetings.
 DevelopRFPScopeandLanguage
1-3 Months

Select List of Potential Providers

1 Month

Send Out RFP Materials and Pre-RFP Meeting

1-2 Months

RFP Response Period

1-2 Months

Evaluate RFP Responses and Select Provider

1-2 Months

Post RFPIContract Process

2-4 Months

Begin Work as Defined in the Contract

2-4 Months

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 CUSTOMER CHECKLIST

1. Can you adequately describe what you want in written form?

2. Do you have a project time period defined?

3. your immediate supervisor aware of and in agreement with the

goals and requirements of the project?

4. Is top management of your company in agreement with and supportive

of the project-CEO, CFO, Legal, etc.?

5. Do the appropriate support people in your company realize what will

be expected of them in this project?

6. When a potential provider presents a cost reduction strategy, how will

you determine if it is realistic?

7. Is “cheapest” least expensive in the long run? How do you decide this?

8. How long is the proposed potential contract period? Is the

period realistic in terms of cost reductions?

9. When do actual quantifiable savings start? If savings do not start at

contract signing, why not; and, can the start date be changed?

10. Is what the potential provider receives in the contract realistic in terms
of what you receive? Can you measure this? If not, why not?

11. What happens if your utility usage changes-Up? Down? Hours used?
Days used? Characteristics of use?

12. Are cost reduction guarantees in the contract? If so, can you quantify
them? Do your financial people agree with the quantification rationale?

13. Are there early contract opt-outs and if so, are they fair to both par-
ties?

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 14. What happens if guaranteed savings are not achieved? Who makes up
the deficit? Is contract cancelable if guaranteed savings do not mate-
rialize?

15. Have your company financial and legal entities been involved in all
aspects of the RFP contract process? Do they understand its financial
and legal implications?

16. Have all people that will be involved/affected been included during the
entire RFP/contract process so they buy into the process?

17. Have you developed an accurate, easily understood tracking process

to keep everyone updated on how the project cost reductions are pro-
gressing?

18. Are you,or is someone in your company, responsible on an ongoing

basis for coordinating and substantiating cost reductions as they oc-
cur?

19. Is this project, coordination, and follow-up consuming an inordinate

amount of your time? If so, something wrong with the process.

ment and pricing. There may be time, not to distant in the future,
where an electricity customer will have choice except to select their
own provider or have some third party do it for them. If you learn the
process correctly now, you will be much better prepared for the deregu-
lated future that awaits all electricity users, even residential customers.

ENERGY /ENGINEERING SERVICES COMPANIES (ESCOS)

We have detailed the ways to do agreements with providers, now

we need to find companies that may have an interest in partnering with
us. Who are these entities? Generally the parties that will have interest
in retail wheeling of electricity and/or engineering services partnerships
will be that type of company called an ESCO (Energy/Engineering Ser-
vice Company).

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 These companies may be unregulated affiliates of for-profit electric
utilities or they may be independent non-utility affiliated companies.
These companies sometimes are regional in their scope of activity and
sometimes are national in scope.
The first place to investigate is your serving electric utility. Find out
whether they have an unregulated services group (ESCO) that might
have an interest in partnering with you in your effort to reduce your
electricity costs. Many times these (ESCO) groups will have real inter-
est in working with you to reduce your electricity well general
energy costs. Even if your local utility (ESCO) has an interest in working
with you, it is good to investigate more than one supplier.
To help you in this, Figure 7.4 is following with the names and
telephone numbers of 70 different (ESCO) type companies. The compa-
nies in this list are both utility and non-utility affiliated. There are large
and small companies represented. There are no "best" or "worst" com-
panies in this list, but these are ones that may be better for specific
purpose, location or financial consideration. I do not purport that this is
complete or comprehensive list or isevery "good" company listed. This
list is simply included place to start your investigation for potential
providers. Most of these companies provide the following services:

Construction management.
Electricity commodity marketing.
3. Design engineering.
4. Shared savings/performance arrangements.
New construction services.
6. Retrofit services.
Project financing.

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 Custom Energy LLC

Aguila Energy

-D-
Alliant Industrial Services
DTE Energy

AllEnergy Marketing Co., LLG

DukeSolutions

BGE Energy Project Service

Edison Source

Bosek, Gibson Association

EMCOR Energy Services

Energis Resources
-C-

Cenerprise Inc. The Energy Group

Central Hudson Enterprises Energy Masters Int.

CESNVay Energy Pacific

CMS Marketing, Service Trading Energy Systems Solutions

Coneco Corp. Energy USA

Connectiv Energy Vision

Constellation Energy Source Engage Energy

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ER1 Services -J-

Johnson Controls
EUA Cogenex Corporation

Evantage -K-

Kapadia Energy Services

Exelon Energy Services

Keyspan Energy Management

-F-

FPL Energy Services Inc. -L-

Landis Staefa
-G-

GPU Advanced Resources

Madison Gas Electric

Montana Power Trading Marketing

HL&P Energy Services

Honeywell, Inc. -N-

NESl Solutions, Inc.

Ida-West Energy Company NORESCO

lllinova Energy Partners

IllurnElex Corporation Onsite SYCOM Enterprises

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 SCANA Energy Marketing

Palisdes Energy Services

Strategic Energy Ltd.

Pepco Services Inc.

Syska Hennessy CEM

PG&E Energy Services

System Solutions of GA

Plum Street Enterprises

Unicorn Energy Services

PNM Energy Partners

-V-
ProSolutions
Viron Energy Services

-Q-

QST Westar

Quad Three Group, Inc.

Quality Energy Services WPS

-R/S- -WIZ-

Siebe Environmental Controls Xenergy

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 Appendix A

This listing includes United States Federal and State Regulatory

agencies. This information was obtained from the National Association
of Regulatory Utility Commissioners (NARUC), 1101 Vermont Avenue,
Suite 200, Washington DC 20005. Mailing Address: PO Box 684, Washing-
ton DC 20044-0684. Telephone: 202-898-2200; Fax: 202-898-2213; http:/
www.naruc.org.

REGULATORY AGENCIES

888 First Street, NE

Washington, DC20426
Tel.202-208-1088
Fax. 202-208-2106
http://www.ferc.fed.us

11555 Rockville Pike

Rockville, MD 20852
Tel.301-415-7000
Fax. 301-415-1672
http://www.nrc.gov/

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1400 Independence Avenue SW
Washington, 20250
Tel.202-720-9540
Fax 202-720-1725
http://www.rus.usda.gov

1000 Independence Avenue, SW

Washington DC 20585
Tel.202-586-6210
Fax. 202-586-8134, 202-586-4403
http://www.doe.gov

100 North Union Street

Montgomery, AL 36104
Tel. 334-242-5218, http://www.psc.state.al.us

1016 West Sixth Avenue

Anchorage, AK 99501
Tel. 907-276-6222, http://www.state.ak.us/apuc/

1200 West Washington Street

Phoenix, AZ 85007
Tel. 602-542-2237, http:/ /www.cc.state.az.us

1000 Center Building

Little Rock, AR 72201
Tel. 501-682-2051, http://www.state.ar.us/psc

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 A

505 Ness Avenue

San Francisco, CA 94102
Tel. 415-703-2782, http:/ /www.cpuc.ca.gov

1516 9th Street

Sacramento, CA 95814
Tel. 916-654-4420, http://www.energy.ca.gov

1580 Logan Street

Denver, CO 80203
Tel. 303-894-2000, http:/ /www.puc.state.co.us

10 Franklin Square
New Britain, CT 06051
Tel. 860-827-1553,

861 Silver Lake Boulevard

Dover, DE 19904
Tel.302-739-4247
http://www.state.de.us/delpsc

717 14th Street, NW

Washington, DC 20005
Tel.202-626-5100

2540 Shumard Oak Boulevard

Tallahassee, FL 32399
850-413-6344, http:/ /www2.scri.net/psc

47 Trinity Avenue
Atlanta, GA 30334
Tel. 404-656-4501, http://www.psc.state.ga.us

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465 South King Street
Honolulu, HI 96813
Tel.808-586-2020

472 West Washington Street

Boise, ID 83702
Tel. 208-334-0300, http:/ /www.puc.state.id.us

160 North LaSalle Street

Chicago, IL 60601
Tel. 312-814-2850, http://www.ice.state.il.us

302 West Washington Street

Indianapolis, IN 46204
http://www.state.in.us/iurc/index.html

350 Maple Street

Des Moines, IA 50319
Tel. 515-281-5979, http:/ /www.state.ia.us/iub

1500 SW Arrowhead Road

Topeka, KS 66604
Tel. 785-271-3100, http://www.kcc.state.ks.us

730 Schenkel Lane

Frankfort, KY 40602
Tel. 502-564-3940, http://www.state.ky.us/agencies/psc.pschome

One American Place

Baton Rouge, LA 70825
Tel.225-342-4404

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 http://www.state.me.us/mpuc/

MD
http://www.psc.state.md.us/psc/

http://www.magnet.state.ma.us/dpu/

MI
http://ermisweb.cis.state.mi.us/mpsc

MN
Tel.

19th
MS
http://www.mslawyer.com/mpsc/mpsc.html.

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Truman State Office Building
Jefferson City, MO 65102
Tel. 572-751-3234, http://www.ecodeve.state.mo.us/psc/

1701 Prospect Avenue

Helena, MT 59620
Tel. 406-444-7618, http:/ /www.psc.mt.gov

1200 N Street
NE 68509
Tel. 402-471-3101
http://www.nol.org/home/npsc

1150 East William Street

Carson City, NV 89701
Tel.775-687-6007

Suncook
Concord, NH 03301,
Tel.603-271-2442
http://www.state.nh.us/puc/puc.html

Two Gateway Center

Newark, NJ 07102
Tel. 972-648-2026, http:/ /www.njin.net/njbpu

PO Box 1269
Santa Fe, NM 87504
Tel. 505-827-4500

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 A 177

3 Empire State Plaza

Albany, NY 12223
Tel. 518-474-7080, http://www.dps.state.ny.us.

430 North Salisbury Street

Raleigh, 27603
Tel. 919-733-4249, http://www.ncuc.commerce.state.nc.us/.

600 East Boulevard

Bismarck, 58505
Tel.701-328-2400,
http://www. pc6,psc.state.nd.us/

180 East Broad Street

Columbus, OH 43215
Tel. 614-466-3016, http://www. puc.ohio.gov/

Jim Thorpe Office Building

Oklahoma City, 73152
Tel. 405-521-2211, http://www.occ.state.ok.us

550 Capitol Street, NE

Salem, 97310
Tel. 503-378-6611, http://www.puc.state.or.us/

PO Box 3265
Harrisburg, PA 17105
Tel.717-783-1740,
http: /www.state.pa.us/PA-Exec/Public-Utility,
Puc.paonline.com

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 Wheelina

Rhode Island Public Utilities Commission

Dl00 Orange Street
Providence, RI 02903
Tel. 401-222-3500, http:/ /www.ripuc.org.

South Carolina Public Service Commission

101 Executive Center Drive
Columbia, SC29210
Tel.803-896-5100

South Dakota Public Utilities Commission

500 East Capitol
Pierre, SD 57501
Tel.605-773-3201,
http://www.state.sd.us/state/executive/puc.htm.

Tennessee Regulatory Authority

460 James Robertson Parkway
Nashville, TN 37243
Tel. 615-741-2904, http://www.state.tn.us/tra

Tennessee Valley Authority

400 West Summit Hill Drive
Knoxville, TN 37902
Tel. 423-751-0011, http://www.tva.gov.

Texas Public Utility Commission

1701 North Congress Avenue
Austin, TX 78701
Tel. 512-936-7000, http://www.puc.state.tx.us

Texas Railroad Commission

1701 North Congress Avenue
Austin, TX 78711
Tel. 512-463-7288, http://www.rrc.state.tx.us.

Utah Public Service Commission

160 East 300 South
Salt Lake City, UT 84145
Tel. 801-530-6716, http:/ /www.psc.state.ut.us

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Appendix A 179

112 State Street

Montpelier, VT 05620
Tel. 802-828-2358, http://www.state.vt.us/psb

Tyler Building
kchmond, VA 23218
Tel. 804-371-9967, http://www.state,va.us/scc

Chandler Plaza Building

Olympia, WA 98504
Tel. 360-664-1160, http://www. wutc.wa.gov

201 Brooks Street

Charleston, WV25323
Tel. 304-340-0300

610 North Whitney Way

Madison, W1 53705
Tel. 608-266-5481, http://www.psc.state.wi.us

2515 Warren Avenue

Cheyenne, WY 82002
Tel. 307-777-7427, http://www.psc.state.wy.us

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 B
Listing o f
For-Profit Utilities
Listed in this section are the for-profit electric utilities or investor
owned utilities (IOU’s). These electric utilities, listed state-by-state, gen-
erate in excess 75% of all electricityused in the United States. Included
in this listing are the utility companies’ telephone numbers and the web
site numbers, when available.

ALABAMA

Alabama Power Company

Tel.205-247-1000
http://www.alapower.com

ALASKA

Alaska Electric Light Power Company

Tel. 907-486-2222
http://www.olympus.net

Alaska Power Telephone Company

Tel.360-385-1853
http://www.olympus.net

Aniak Light Power Company

Tel. 907-675-4334

181

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787

Bethel Utilities Corporation

Tel.907-562-2500

Haines Light Power Company, Inc.

Tel.907-766-2331
http://www.olympus.net

Hughes Power Light Company

Tel. 907-889-2239

McGrath Light Power Company

Tel.907-524-3009

Northway Power Light Company

Tel.360-385-1853
http: www.olympus.net

Pelican Utility Company

Tel. 907-735-2204

ARIZONA

Arizona Public Service Company

Tel.602-250-1000
http: www.apsc.com

Citizens Utilities Company (Arizona Division)

http://www.czn.net

Morenci Water Electric Company

Tel.520-865-368

Tucson Electric Power Company

Tel.520-571-4000
http://www.tucsonelectric.com

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 B 183

Tel. 501-377-4000
http:/ /www.entergy.com

Tel. 501-954-5000
http://www.entergy.com

Tel. 405-553-3000
http://www.oge.com

Tel.318-673-3000
http://www.csw.com/ele/swep/swep.html

Tel. 415-973-7000
http: www.pge.com

Tel.503-464-5000
http://www.pacificorp.com

Tel.619-696-2000
http://www.sdge.com

Tel.626-302-1212
http://www.sce.com

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284 Electricity Retail Wheeling

COLORADO

Public Service Company Colorado

Tel.303-571-7511
http://www.ncenergies.com

UtiliCorp United, Inc.

Tel.816-421-6600
http:/ /www.utilicorp.com

CONNECTICUT

Citizens Utilities Company

Tel.203-614-5600
http: www.czn.net

Connecticut Light Power Company

Tel. 860-665-5000
http://www.nu.com

United Illuminating Company

Tel.203-499-2000
http://www.uinet.com

DELAWARE

Delmarva Power Light Company

Tel.302-429-3011
http:/ /www.delmarva.com

DISTRICT OF COLUMBIA

Potomac Electric Power Company

Tel.202-872-2000
http: www.pepco.com

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 B 185

FLORIDA

Florida Power Light Company

Tel. 561-694-4000
http://www.fpl.com

Florida Power Corporation

Tel.816-866-5151
http://www.fpc.com

Florida Public Utilities Company

Tel. 561-832-2461

Gulf Power Company

Tel.850-444-6111
http://www.gulfpower.com

Tampa Electric Company

Tel. 813-228-4111
http://www.teconet.com

GEORGIA

Georgia Power Company

Tel. 404-506-6526
http:/ /www.georgiapowerco.com

Savannah Electric Power Company

Tel. 912-644-7171
http://www,southernco.com/sec.htm

HAWAII

Citizens Utilities Company

(Kauai Electric)
Tel. 808-246-4300
http://www.czn.net

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Hawaii Electric Light Company
Tel.808-935-1171
http://www.hei.com/heco/heco.html

Hawaiian Electric Company, Inc.

Tel. 808-543-7771
http://www.hei.com/heco/heco.html

Maui Electric Company, Ltd.

Tel. 808-871-8461
http://www.hei.com/heco/heco.html

IDAHO

Avista Corporation
Tel. 509-489-0500
http://www.avistacorp.com

Idaho Power Company

Tel.208-388-2200
http://www.idahopower.com

PacificCorp
Tel. 503-464-5000
http://www.pacificorp.com

ILLINOIS

AmerenCIPS
Tel.217-523-3600
http://www.ameren.com

AmerenUE
Tel.314-621-3222
http:/ /www.ameren.com

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 B 187

Central Illinois Light Company

Tel.309-672-5271
http://www.cilco.com

Commonwealth Edison Company, IL

Tel. 312-394-4321
http:/ /www.ucm.com

Illinois Power Company

Tel.217-424-6600
http://www.illinova.com/illpower/illpw.htm

Interstate Power Company

Tel.319-582-5421
http: /www.interstate-power.com

MidAmerican Energy Company

Tel. 515-281-4300
http://www.midamerican.com

Mount Carmel Public Utility Company

Tel.618-262-5151

INDIANA

Indiana Michigan Power Company

Tel.219-425-2111
http://www.aep.com

Indianapolis Power Light Company

Tel. 317-261-8261
http://www.ipalco.com

Northern Indiana Public

Tel. 219-853-5200
http://www.nipsco.com

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188 Retail Electricity Wheeling

PSI Energy, Inc.

Tel.317-839-9611
http:/ /www.cinergy.com/indiana/partners/

Southern Indiana Gas Electric Company

Tel.812-465-5300
http://www.sigcorpinc.com

West Harrison Gas Electric Company

Tel.513-381-2000
http://www.cinergy.com

IOWA

Amana Society Service Company

Tel.319-622-3052

Interstate Power Company

Tel. 319-582-5421
http: /www.interstate-power.com

MidAmerican Energy Company

Tel.515-281-4300
http://www.midamerican.com

KANSAS

Empire District Electric Company

Tel.417-625-5100
http://www.empiredistrict.com

Kansas City Power Light

Tel.816-556-2200
http://www.kcpl.com

Kansas Gas Electric Company

Tel.316-383-8600
http://www.wstnres.com

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 189

Southwestern Public Service Company

Tel.806-378-2121
http://www.ncenergies.com

UtiliCorp United, Inc.

Tel.816-421-6600
http://www.utilicorp.com

Western Resources, Inc.

Tel.786-575-6300
http://www.wr.com

KENTUCKY

Berea College Utilities

Tel.606-986-3451
http:/ /www.mike-bethurem@berea.edu

Kentucky Power Company

Tel. 800-572-1141
http: /www.aep.com

Kentucky Utilities Company

Tel.606-255-2100
http://www.lgeenergy.com

Louisville Gas Electric Company (KY)

Tel. 502-627-2000
http://www.lgeenergy.com

Union Light Heat Power Company (KY)

Tel. 513-421-9500
http:/ /www.cinergy.com

LOUISIANA

Cleco Corporation
Tel.318-484-7400
http://www.cleco.com

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Entergy Gulf States, Inc.
Tel.409-838-6631
http://www.entergy.com

Entergy Louisiana, Inc.

Tel. 504-569-4000
http://www.entergy.com

Entergy New Orleans, Inc.

Tel.504-529-5262
http://www.entergy.com

Southwestern Electric Power Company (LA)

Tel.318-673-3000
http://www.csw.com/ele/swep/swep.html

MAINE

Bangor Hydro-Electric Company (ME)

Tel.207-945-5621
http://www.bhe.com

Central Maine Power Company

Tel. 207-623-3521
http://www.cmpco.com

Maine Electric Power Company

Tel.207-623-3521
http://www.cmpco.com

Maine Public Service Company

Tel.207-768-5811
http://www.mainerec.com/mpsco.html

MARYLAND

Baltimore Gas Electric Company

Tel.410-234-5000
http://www.bge.com

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 B

Tel. 302-429-3011
http://www.delmarva.com

Tel.301-790-3400
http: www.alleghenypower.com

Tel.202-872-2000
/www.pepco.com

Tel.888-423-2364
http://www.eua.com

Tel.617-424-2000
http: www.bedison.com

Tel.617-225-4000
http:/ /www.cornenergy.com

Tel. 508-291-0950
http://www.comelectric.com

Tel.617-357-9590
http://www.eua.com

Tel.888-301-7700
http://www.unitil.com/Profile/fitchbrg.htm

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 Wheeling

Tel. 508-389-2000
http://www.nees.com

Tel. 508-389-2000
http://www.nees.com

Tel. 617-357-9590
http://www.eua.com

Tel. 413-785-5871
http: /www.nu.com

Tel.517-357-2293

Tel.517-788-0550
http://www.cpco.com

Tel. 313-235-8000
http:/ /www.detroitedison.com

Tel. 906-632-2221
http://www.eselco.com

Tel.219-425-2111
http://www.aep.com

Tel.906-487-5000
http://www.wpsr.com

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 B

Tel. 414-221-2345
http://www.wisconsinelectric.com

Tel.920-433-1598
http://www.wpsr.com

Tel.319-582-5421
http: wwwinterstate-power.com

Tel.218-722-2641
http://www.mnpower.com

Tel.612-330-5500
http://www.nspco.com

Tel.218-739-8200
http://www.otpco.com

Tel.601-969-2311
http://www.entergy.com

Tel.228-864-1211
http://www.mispower.com

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 MISSOURI

AmerenUE
Tel.314-621-3222
http://www.ameren.com

Empire District Electric Company (MO)

Tel. 417-625-5100
http://www.empiredistrict.com

Kansas City Power Light Company

Tel.816-556-2200
http://www.kcpl.com

Saint Joseph Light Power Company

Tel.816-233-8888
http://www.sjlp.com

UtiliCorp United, Inc.

Tel.816-421-6600
http://www.utilicorp.com

MONTANA

Avista Corporation
Tel. 509-489-0500
http://www.avistacorp.com

Black Hills Corporation

Tel.605-342-3200
http:/ /www.blackhillscorp.com

Montana Power Company

Tel.406-723-5421
http: www.mtpower.com

Montana-Dakota Utilities Company

Tel.701-222-7900
http://www.mdures.com

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 B 195

Tel. 503-464-5000
http://www.pacificorp.com

Tel.702-367-5000
http: www.nevadapower.com

702-728-4422

Tel.775-834-3600
http:/ /www.sierrapacific.com

Tel. 802-773-2711
http://www.cvps.com

Tel. 800-852-3339
http://www.unitil.com/Profiles/concord.htm

Tel.603-543-3188
http:/ /www.cvx.com

Tel. 800-582-7276
http:/ /www.unitil.com/Profile/exeter.htm

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Granite State Electric Company
Tel.603-448-0363
http:/ /www.nees.com

New England Power Company

Tel. 408-389-2000
http: www.nees.com

Public Service Company New Hampshire

Tel. 603-669-4000
http://www.psnh.com

NEW JERSEY

Atlantic City Electric Company

Tel.609-645-4100
http://www.publicsector.com/states/nj/trade/a/atlanOlO.htm

Jersey Central Power Light Company

Tel.610-929-3601
http://www.gpu.com

Public Service Electric Gas Company

Tel.973-430-7000
http://www.psegcorp.com

Rockland Electric Company (NJ)

http://www.oru.com

NEWMEXICO

El Paso Electric Company

Tel. 915-543-5711
http://www.whc.net/epec/

Public Service Company New Mexico

Tel. 505-848-2700
http://www.pnm.com

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 197

Southwestern Public Service Company

Tel.806-378-2121
http://www.ncenergies.com

Texas-New Mexico Power Company

Tel. 817-731-0099
http://www.tnpe.com

NEW YORK

Central Hudson Gas Electric Corporation

Tel.914-452-2000
http://www.cenhud.com

Consolidated Edison Company of New York, Inc.

Tel.212-460-4600
http://www.coned.com

Fishers Island Electric Corporation

Tel. 516-788-7543

New York State Electric Gas Corporation

Tel.607-729-2551
http://www.nyseg.com

Niagara Mohawk Power Corporation

Tel.315-474-1511
http://www.nimo.com

Orange Rockland Utilities, Inc.

Tel. 914-352-6000
http://www.oru.com

Rochester Gas Electric Corporation

Tel.716-546-2700
http://www.rge.com

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 NORTH CAROLINA

Carolina Power Light Company

Tel. 919-546-6111
http: /www.cpic.com

Duke Energy Corporation

Tel. 704-594-6200
http://www.duke-energy.com

Nantahala Power Light Company

Tel.828-369-4500
http:/ www.duke-energy.com

Virginia Electric Power Company

Tel. 804-771-3000
http://www.vapower.com

NORTH DAKOTA

Montana-Dakota Utilities Company

Tel.701-222-7900
http://www.mdures.com

Northern States Power Company

Tel.612-330-5500
http://www.nspco.com

Otter Tail Power Company

Tel.218-739-8200
http://www.otpco.com

OHIO

Cincinnati Gas Electric Company

Tel.513-421-9500
http://www.cinergy.com

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Tel.216-622-9800
http://www.illuminatingco.com

Tel.614-223-1000
http://www.aep.com

Tel. 937-224-6000
http://www.waytogo.com

Tel.330-384-5100
http://www.ohioedison.com

Tel. 330-456-8173
http://www.aep.com

Tel. 419-249-5000
http:/ /www.firstenergy.corp.com

Tel.417-625-5100
http://www.empiredistrict.com

Tel. 405-553-3000
http://www.oge.com

Tel.918-599-2000
http://www.csw.com/ele/pso/pso.html

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Southwestern Public Service Company
Tel.
http://www.ncenergies.com

OREGON

Idaho Power Company

Tel.
http://www.idahopower.com

PacificCorp
Tel.
http: www.pacificorp.com

Portland General Electric Company

Tel.
http://www.pge-online.com/

PENNSYLVANIA

Citizens Electric Company (PA)

Tel.
http://www.citizenselectric.com

Duquesne Light Company

Tel.
http://www.dqe.com

Jersey Central Power Light Company

Tel.
http://www.gpu.com

Metropolitan Edison Company

Tel.
http://www.gpu.com

PECO Energy Company

Tel.
http:/ /www.peco.com

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Pennsylvania Electric Company
Tel. 610-929-3601
http://www.gpu.com

Pennsylvania Power Company

Tel. 412-652-5531
http://www,firstenergycorp.com

Pike County Light Power Company

Tel.717-296-7323
http://www.oru.com

PP&L, Inc.
Tel.610-774-5151
http: www.papl.com

UGI Utilities, Inc.

Tel. 717-830-1190
http://www.ugicorp.com

Waverly Electric Light Power Company (PA)

Tel.610-929-3601
http://www.gpu.com

Wellsboro Electric Company

Tel.570-724-3516
http:/ /www.wellsboroelectric.com

West Penn Power Company

Tel.724-837-3000
http:/ /www.alleghenypower.com

RHODE ISLAND

Blackstone Valley Electric Company

Tel.617-357-9590
http://www.eua.com

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Block Island Power Company
Tel. 401-466-5851

Narragansett Electric Company

Tel. 401-784-7000
http://www.ici.net/custpages/bobb/neco.htm

Newport Electric Corporation

Tel.617-357-9590
http: www.eua.com

SOUTH CAROLINA

Carolina Power Light Company

Tel. 919-546-6111
http:/ /www.cplc.com

Duke Energy Corporation

Tel.704-594-6200
http://www.duke-energy.com

Lockhart Power Company (SC)

Tel.864-545-2211

South Carolina Electric Gas Company

Tel.803-748-3000
http://www.scana.com

SOUTH DAKOTA

Black Hills Corporation

Tel.605-342-3200
http://www.blackhillscorp.com

Black Hills Power Light Company

Tel.605-342-3200
http://www.blackhillspower.com

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MidAmerican Energy Company
Tel. 515-281-4300
http://www.midamerican.com

Montana-Dakota Utilities Company

Tel.701-222-7900
http://www.mdures.com

Northern States Power Company

Tel.612-330-5500
http://www.nspco.com

Northwestern Public Service Company (SDI

Tel.605-352-8411
http:/ /www.northwestern.com

Otter Tail Power Company

Tel. 218-739-8200
http://www.otpco.com

TENNESSEE

Kentucky Utilities Company

Tel.606-255-2100
http://www.lgeenergy.com

Kingsport Power Company

Tel.615-378-5000
http://www.aep.com

TEXAS

Central Power Light Company (TX)

Tel. 512-881-5300
http://www,cse.com/ele/cpl/cil.html

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El Paso Electric Company
Tel. 915-543-5711
http://www.whc.net/epec/

Entergy Gulf States, Inc.

Tel. 409-838-6631
http://www.entergy.com

PacifiCorp
Tel. 503-464-5000
http://www.pacificorp.com

Reliant Energy HL&P/Entex Metro

Tel.713-228-9211
http://www.hlp.com

Southwestern Electric Power Company (LA)

Tel.318-673-3000
http://www.csw.com/ele/swep/swep.hi tml

Southwestern Electric Service Company (TX)

Tel.214-812-4887
http: /www.tu.com

Southwestern Public Service Company

Tel. 806-378-2121
http:/ www.ncenergies.com

Texas Utilities Electric Company

Tel.214-812-4600
http://www.tu.com

Texas-New Mexico Power Company

Tel.817-731-0099
http://www.tnpe.com

West Texas Utilities Company

Tel.915-674-7000
http://www.csw.com/ele/wtu/wtu.html

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 05

UTAH

PacifiCorp
Tel.503-464-5000
http://www.pacificorp.com

VERMONT

Allied Power Light company

Central Vermont Public Service Corporation

Tel.802-773-2711
http://www.cvps.com

Citizens Utilities Company

(Vermont Division)
Tel.802-334-6538
http://www.czn.net

Franklin Electric Light Company

Tel. 802-285-2912

Green Mountain Power Corporation

Tel.802-864-5731
http://www.gmpvt.com

Rochester Electric Light Power (VT)

Tel.802-767-4291

Vermont Marble Power

Tel.802-770-7168

VIRGINIA

Appalachian Power Company (VA)

Tel. 540-985-2300
http://www.aep.com

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Delmarva Power Light Company
Tel.302-429-3011
http://www.delmarva.com

Kentucky Utilities Company

Tel.606-255-2100
http://www.lgeenergy.com

Potomac Edison Company

Tel.301-790-3400
http: www.alleghenypower.com

Virginia Electric Power Company

Tel. 804-771-3000
http://www.vapower.com

WASHINGTON

Avista Corporation
Tel. 509-489-0500
http://www.avistacorp.com

PacifiCorp
Tel. 503-464-5000
http:/ /www.pacificorp.com

Puget Sound Energy

Tel.425-454-6363

WEST VIRGINIA

Appalachian Power Company (VA)

Tel.540-985-2300
http://www.aep.com

Black Diamond Power Company

Tel. 304-342-2721

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Monongahela Power Company
Tel.301-790-1766
http:/ /www.alleghenypower.com

Ohio Power Company

Tel.330-456-8173
http://www.aep.com

Union Power Company (WV)

Tel.304-342-2721

United Light Power (WV)

Tel. 304-342-2721

UtiliCorp United, Inc.

Tel.816-421-6600
http://www.utilicorp.com

War Light Power

Tel 304-342-2721

Wheeling Power Company

Tel.304-234-3000
http: /www.aep.com

WISCONSIN

Consolidated Water Power Company

Tel.715-422-2582

Dahlberg Light Power Company

Tel.715-378-2205

Madison Gas Electric Company (W11

Tel.608-252-7000
http: www.mge.com

Northern States Power Company

Tel.612-330-5500
http://www.nspco.com

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http://www.wpl.com/wplh/subs/sbwgl.html

/www.wisconsinelectric.com

http://www.wpsc.wpsr.com

/www.blackhillspower.com

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 B

Cheyenne Light Fuel Power Company

Tel.307-638-3361
http://www.psco.com

Montana Power Company

Tel. 406-723-5421
http://www.mtpower.com

Montana-Dakota Utilities Company

Tel.701-222-7900
http://www.mdures.com

PacifiCorp
Tel. 503-464-5000
http://www.pacificorp.com

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 Appendix

Listed in the section is the miscellaneous information relating to the

regulation of electric utilities. This information was obtained from the
National Association of Regulatory Utility Commissioners (NARUC),
1101 Vermont Avenue, Suite 200, Washington, DC 20005; telephone-202-
898-2200; fax-202-898-2213; http:/ /www.naruc.org. For more detailed
insight into utility regulatory matters, obtain copy of “Utility Regula-
tory Policy in the United States and Canada Compilation” from NARUC
address.

Table 1 State Regulatory Agencies That Regulate Rates On Retail Sales to End-
Users

Table 2 State Agencies/Authorities That Regulate Standards For Meter Accu-

racy And Voltage Levels

Table 3 State Regulatory Agencies That Require Uniform Practices For Electric
Billing Format

Table 4 State Regulatory Agencies That Do Not Require Uniform Practices For
Electric Billing Format

Table 5 State Regulatory Agencies That Allow Electric Utilities To Offer Tariffs
Designed To Promote Sales Of Electricity For Specific End-Users

Table 6 State Regulatory Agencies That Do Not Approve Or Allow Electric

Utility Companies To Offer Tariffs Designed To Promote Sales Of Elec-
tricity For Specific End-Users

Table 7 State Regulatory Agencies that have the Authority to Determine the
Rate of Return for For-Profit Electric Utilities

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Table 8 StateRegulatory Agencies That Allow Interruptible Rate Tariffs For
Commercial Electricity Customers

Table 9 State Regulatory Agencies That Do Not Allow Interruptible Rate Tar-
iffs For Commercial Electricity Customers

Table StateRegulatory Agencies That Allow Interruptible Rate Tariffs For

Industrial Electricity Customers

Table State Regulatory Agencies That Do Not Allow Interruptible Rate Tar-
iffs For Industrial Electricity Customers

FOR-PROFIT
I. ELECTRIC
UTILITIES
All states, except-
Nebraska PUC which has for-profit utilities

11. MUNICIPAL
ELECTRIC
UTILITIES
PUC New Hampshire PUC
Connecticut DPUC (limited) New York PSC
Washington DC PSC Pennsylvania PUC
Florida PSC Rhode Island PUC
Indiana URC Texas PUC
Kansas SCC West Virginia PSC
Maine PUC Wisconsin PSC
Maryland PS Wyoming PSC
Mississippi PSC

111. COOPERATIVEELECTRICUTILITIES
Alaska PUC Mississippi PSC
Arizona CC New Hampshire PUC
Arkansas PSC New Jersey BPU
Delaware PSC New Mexico PUC
Washington DC PSC New York PSC

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 C

Florida PSC Oklahoma CC

Indiana URC Rhode Island PUC
Kansas SCC Texas PUC
Kentucky PSC Utah PSC
Louisiana PSC Vermont PSB
Maine PUC Virginia SCC
Maryland PSC West Virginia PSC
Michigan PSC Wyoming PSC

FOR-PROFIT
I. ELECTRIC
UTILITIES
All states, except-
Nebraska PSC
New Mexico SCC

11. MUNICIPAL
ELECTRIC
UTILITIES
Alaska PUC New Jersey BPU
Iowa PUC New York PSC
Kansas SCC North PSC
Kentucky PSC Rhode Island PUC
Maine PUC Utah PSC
Maryland PSC Vermont PSB
Massachusetts DPU West Virginia PSC
Montana PSC Wisconsin PSC
New Hampshire PUC Wyoming PSC

111. COOPERATIVEELECTRICUTILITIES
Alaska PUC Colorado PUC
Arizona CC Delaware PSC
Arkansas PSC Indiana URC
California PUC Iowa UB

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Kansas SCC New Mexico PUC
Kentucky PSC North Dakota PSC
Louisiana PSC Oklahoma CC
Maine PUC Texas PUC
Maryland PSC Utah PSC
Michigan PSC Vermont PSB
Minnesota PUC Virginia SCC
Mississippi PSC West Virginia PSC
Nevada PSC Wyoming PSC
New Hampshire PUC

Washington DC PSC
Florida PSC
Illinois CC
Nevada PSC
Ohio PUC
Tennessee PSC

Alaska PUC Missouri PSC

Arkansas PSC Montana PSC
Connecticut DPUC New Hampshire PUC
Delaware PSC North Carolina UC
Georgia PSC North Dakota PSC
Hawaii PUC Oregon PUC
Idaho PUC Pennsylvania PUC
Indiana URC South Carolina PSC
Iowa UB South Dakota PUC
Kansas SCC Texas PUC
Kentucky PSC Utah PSC
Maine PUC Virginia SCC
Massachusetts DPU Washington UTC
Michigan PSC

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Alabama PSC Minnesota PUC
Arizona CC Mississippi PSC
Arkansas PSC Missouri PSC
Delaware PSC New Hampshire PUC
Washington DC PSC New Jersey BPU
Florida PSC New Mexico PUC
Illinois CC Ohio PUC
Indiana URC Oklahoma CC
Kansas SCC Pennsylvania PUC
Kentucky PSC South Dakota PUC
Louisiana PSC Tennessee PSC
Maine PUC Virginia SCC
Maryland PSC Wyoming PSC
Massachusetts DPU

Alaska PUC New York PSC

California PUC North Carolina UC
Colorado PUC North Dakota PSC
Connecticut DPUC Oregon PUC
Georgia PSC Rhode Island PUC
Hawaii PUC South Carolina PSC
Idaho PUC Utah PSC
Iowa UB Washington UTC
Michigan PSC West Virginia PSC
Montana PSC Wisconsin PSC
Nevada PSC

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Alabama PSC Missouri PSC
Alaska PUC Montana PSC
Arizona CC Nevada PSC
Arkansas PSC New Hampshire PUC
California PUC New Jersey BPU
Colorado PUC New Mexico PUC
Connecticut DPUC New York PSC
Delaware PSC New Carolina UC
Washington DC PSC North Dakota PSC
Florida PSC Ohio PUC
Georgia PSC Oklahoma CC
Hawaii PUC Oregon PUC
Idaho PUC Pennsylvania PUC
Illinois CC Rhode Island PUC
Indiana URC South Carolina PSC
Iowa UB South Dakota PUC
Kansas SCC Tennessee PSC
Kentucky PSC Texas PUC
Louisiana PSC Utah PSC
Maine PUC Vermont PSB
Maryland PSC Virginia SCC
Massachusetts DPU Washington UTC
Michigan West Virginia PSC
Minnesota PUC Wisconsin PSC
Mississippi PSC Wyoming PSC

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 Arizona CC Nevada PSC
California PUC New Hampshire PUC
Colorado PUC New Jersey BPU
Connecticut DPUC New Mexico PUC
Delaware PSC New York PSC
Washington DC PSC North Carolina UC
Florida PSC North Dakota PSC
Georgia PSC Ohio PUC
Hawaii PUC Oklahoma CC
Illinois CC Pennsylvania PUC
Iowa UB Rhode Island PUC
Kansas SCC South Carolina PSC
Maine PUC South Dakota PUC
Massachusetts DPU Virginia SCC
Michigan PSC Washington UTC
Minnesota PUC Wisconsin PSC
Missouri PSC Wyoming PSC
Montana PSC

Alabama PSC Maryland PSC

PUC Alaska Mississippi PSC
Arkansas PSC PUCOregon
PSC
Tennessee
Idaho PUC
Indiana URC Utah PSC
Kentucky
PSC
Virginia
WestPSC
Louisiana PSC

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 For

Alabama PSC Mississippi PSC

Alaska PUC Missouri PSC
Arizona CC Montana PSC
Arkansas PSC Nevada PSC
California PUC New Hampshire PUC
Colorado PUC New Jersey BPU
Connecticut DPUC New Mexico PUC
Delaware PSC New York PSC
Florida PSC North Carolina UC
Georgia PSC North Dakota PSC
Hawaii PUC Ohio PUC
Idaho PUC Oklahoma CC
Illinois CC Oregon PUC
Indiana URC Pennsylvania PUC
Iowa UB Rhode Island PUC
Kansas SCC South Carolina PSC
Kentucky PSC South Dakota PUC
Louisiana PSC Utah PSC
Maine PUC Virginia SCC
Maryland PSC Washington UTC
Massachusetts DPU West Virginia PSC
Michigan PSC Wisconsin PSC
Minnesota PUC Wyoming PSC

Not
For

Washington DC PSC
Tennessee PSC

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 Appendix D

The following are terms associated with the electric utility

industry. These are excerpted from the following:

1. ”ElectricSales and Revenue”

(United States Department of Energy-USDOE)

2. “Energy Information Administration Electric Power Monthly”

(United States Department of Energy-USDOE)

”Utility Regulatory Policy in the United States and Canada”

(National Association Regulatory Utility Commissioners-
NARUC)

4. “Glossary for the Industry”

(American Association-AGA)

Abandonment. Abandonment of facilities-retirement of utility plant on

the books without its physical removal from its installed location.
Abandonment of service-ceasing to provide service.

Above-the-Line.Expensesincurredin operating utilitythatare

charged to the ratepayer (utility customer), by being allowed in
utility’s rate base. The term originated because they are written
above line drawn on the income statement separating them from
costs paid by investors (shareholders).

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Accelerated Depreciation. Accounting methodallowingcompanyto
write-off more quickly in early years, with progressively smaller
increments in later years.

Access. Ability of user to enter given network.

Access Charge. A charge levied on power supplier, or its customer, for

access to utility’s transmission or distributionsystem. It is
charge for the right to send electricity over another’s wires.

Accrued Depreciation. Monetary difference between the original cost of

article and its remaining value.

Accumulated Deferred Income Taxes. Income taxes collected by utilities

through their rates in advance of the time they are actually owed to
the government.

Acquisition Adjustment. The difference between the price paid to ac-

quire an operating unit or system of utility and the rate base of
the acquired property

Administrative Law Judge (ALJ). A Commission staff member who

serves hearing officer at formal PUC proceedings. He/she may
conduct public hearings, issue subpoenas, question witnesses, and
prepare draft decisions and orders for the Commission’s consider-
ation. See also Hearing Examiner.

Advice Letter. A filing by letter made by utility to change rate or ser-

vices. An advice letter filing usually does not require public hear-
ings.

Aggregator. entity that puts together customers into buying group

for the purchase of commodity service. The vertically integrated
investor owned utility, municipal utilities and rural electric coop-
erativesperform this function in today’s powermarket.Other
entities such buyer cooperatives or brokers could perform this
function in restructured power market. This is opposed to mar-
keter who will be defined an entity that represents different
suppliers.

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Allocation of Costs. See Cost Allocation.

Allowance for Funds Used During Construction. See AFUDC.

Alternate Current (AC). An electric current that reverses its direction of

flow periodically contrasted to direct current.

Alternate Energy Production. Means of producing energy other than

those in common use by large companies. Generally include solar,
wind, water, photovoltaics and other technologies.

Alternative Delivery Procedure (ADP). A provision in futures contract

that allows buyers and sellers to make and take delivery com-
modity under terms or conditions that differ from those specified in
the standard contract.

Alternative Regulatory Scheme (or Framework). A means of regulating

utility other than by the traditional rate base, rate of return
method.

AM/FM. Automated Mapping/Facilities Management.

American Public Power Association (APPA). Represents the interests of

publicly owned electric power utilities.

Amortization. Similar to depreciation. Amethodby which costs for

non-tangible assets, such patent, are charged to ratepayers over
number years until the costs have been recovered by the utility.

Amp (Ampere). Unit of measurement electric current; proportional to

the quantity of electrons flowing through conductor past given
point in one second.

Appellate Authority. The authority to hear and decide an appeal to

decision. See also Original Authority.

ASCII (American Standard Code of Information Interchange). Computer

language recognized by many different software packages.

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Automated Mapping/Facilities Management (AM/FM). Digitized geo-
graphic maps on which is shown the infrastructure of interest (such
location and type of utility poles, transmission lines, substations,
generating plant, etc.)

Automatic Adjustment Clause. Allows utility to increase or decrease

its rates to cover costs of specific items without formal hearing
before Commission. Utility can automatically raise its rates only
when the price it pays for those specified items goes up. Changing
fuel costs are the primary example of such clauses.

Average Cost. The revenuerequirement of utilitydivided by the

utility’s sales. Average cost typically includes the costs of existing
power plants, transmission, and distribution lines, and other facili-
ties used by utility to serve its customers. It also include operat-
ing and maintenance, tax, and fuel expenses.

Average Demand. The demand on, or power output of, an electric sys-
tem over any interval of time, determined by dividing the total
number of kilowatt-hours by the number of units of time in the
interval.

Average Rate Base. Rate base determined on average investment during

the test year.

Average Service Life.Used in determining depreciation, theaverage

expected life of all the units in group of assets.

Avoided Cost. The cost an electric utility would otherwise incur to gen-
erate power if it did not purchase electricity from another source.
Also the basis of the rate required to be paid to QFs (Qualifying
Facilities) for purchased power under PURPA (Public Utility Regu-
latory Policy Act of 1978).

Backup Power. Electric energy supplied by utility to replace power

and energy lost during an unscheduled equipment outage.

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 D

Base Bill. A charge calculated by taking the rate from the appropriate
electric rate schedule and applying it to the level of consumption.

Base Load Capacity. Generating capacity which serves the base load,
usually the utility’s largest, most efficient facilities with the lowest
operating cost.

Base Load. The minimum quantity of electric power or delivered

over given period of time; minimum demand on the system.
Excludes peak usages.

Base Load Plant. A plant, usually housing high-efficiency steam-electric

units, which is normally operated to take all or part of the mini-
mum load of system, and which consequently produces electricity
at an essentially constant rate and runs continuously. These units
are operated to maximize system mechanical and thermal efficiency
and minimize system operating costs.

Base Rate. A fixed per kilowatt-hour charge for electricity consumed that
is independent of other charges and/or adjustments.

Below-the-Line. Expensesincurredinoperation of utilitythatare

charged to the investor, not the ratepayer. These expenses are not
allowed in rate base.

Bilateral Contract. A direct contract between the power producer and

user or broker outside of centralized power pool.

Blanket Certificate. Board approval by the FERCof particular type of

energy transaction, allowing qualifying transactions to take place
without case-by-case litigation and approval.

Block Rate Schedule. An electric rate schedule with provision for

charging different unit cost for various increasing blocks of de-
mand or energy. Usually reduced price is charged on succeeding
blocks.

Boiler. A device for generating steam for power, processing, or heating

purposes or for producing hot water supply. Heat from an external

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 combustion source is transmitted to fluid contained within the
tubes in the boiler shell. This fluid is delivered to an end-user at
desired pressure, temperature, and quality.

Bonneville PowerAdministration (BPA). One of five federalpower

marketing administrations that sell low-cost electric power pro-
duced by federal hydroelectric dams to agricultural and municipal
users.

Bottleneck Facility. A point on the system such transmission line,

through which all electricity must pass to get to its intended buy-
ers. If there is limited capacity at this point, some priorities must
be developed to decide whose power gets through. It also must be
decided if the owner of the bottleneck may, or must, build addi-
tional facilities to relieve the constraint.

British Thermal Unit (Btu). The standard unit for measuring quantity of
heat energy. The amount of heat energy needed to raise the tem-
perature of one pound of water one degree Fahrenheit.

Broker. A retail agent who buys and sells power. The agent may also
aggregate customers and arrange for transmission, firming and
other ancillary services as needed.

Brownout. A reduction or cutback in electric power, especially result

of shortage.

Bulk Power Supply. Often this term is used interchangeable with whole-
sale power supply. In broader terms, it refers to the aggregate of
electric generating plants, transmission lines, and related-equip-
ment. The term may refer to those facilities within one electric
utility, or within a group of utilities in which the transmission lines
are interconnected.

Bundled Rate. Several serviced combined into one tariff offering for
single charge. See also Unbundled Rate and Vertical Service.

Bus Bar. A conducting bar that carries heavy currents to supply several
electric circuits.

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 D

Buyback Rates. Rates paid to an electric utility’s customer who produces

his own electricity in excess of his needs.

Buy Through. An agreement between utility and customer to import

power when the customer’s service would otherwise be inter-
rupted.

Bypass. Use of transmission facilities which avoid local utility company

network.

-C-

Call. An option to buy (or “call”) share of stock at specified price

within specified period of time.

Capacity Costs. Fixed costs of facilities required for the utility to provide
service.

Capacity Purchased. The amount of energy and capacity available for

purchase from outside the system.

Capacity Release. A secondary market for capacity that is contracted by

customer which is not using all of its capacity.

Capital Asset Pricing Model. A method of estimating cost of equity in

determining rate of return.

Capital Structure. The permanent long-term financing of firm repre-

sented by relative proportions of long-term debt, preferred stock
and net worth.

Capitalized Costs. Costs are capitalized when they are expected to pro-
vide benefits over period longer than one year. Capitalized costs
are considered investments and are included in rate base to be re-
covered from customers over number of years.

Captive Customer. customer who does not have realistic alternatives

to buyingpower from the local utility,even if that customer had the
legal right to buy from competitors.

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Census Divisions. The ten geographic divisions of the United States
established by the Bureau of the Census, U S Department of Com-
merce for statistical analysis. The boundaries of Census divisions
coincide with State boundaries.

Circuit. A configuration of electrically or electromagnetically connected

devises or components.

Circuit Breaker. automatic switch that stops the flow electric cur-
rent in an overloaded or otherwise abnormally stressed electric cir-
cuit.

Classification of Service. A group of customers with similar characteris-

tics (i.e., residential, commercial, etc.) which are identified for the
purpose of setting rate for utility service.

Class Rate Schedule. An electric rate schedule applicable to one or more

specified classes of service, groups of businesses, or customer uses.

Cogeneration. Production of electricity from steam, heat, or other forms

of energy produced by-product of another process.

Cogeneration Deferral Rates. Special discount rates offered to large us-

ers who may have the potential capacity to generate their own
power via cogeneration.

Coincidental Demand. The sum of two or more demands that occur in

the same time interval.

CoincidentalPeak.Anydemand for electricity that occurs simulta-

neously with any other demand for electricity on the same system.

Coincidental Peak Load. The same of two or more peak loads that occur
in the same time interval.

Collocation of Facilities. Generally the requirement that an embedded

utility allows access to its network by others on non-discrimina-
tory basis.

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 D

Combined Cycle. The increased thermal efficiency produced by steam

electric generating system when otherwise waste-heat is converted
into electricity rather than discharged into the atmosphere. One of
the technologies of cogeneration in which electricity is sequentially
produced from two or more generating technologies. An electricity
generating technology in which hot gases turn turbine and then
heat boiler, which makes steam to turn another turbine.

CombinedPumped-StoragePlant. A pumped-storagehydroelectric
power plant that uses both pumped water and natural streamflow
to produce electricity.

Commercialization. Programs or activities that increase the value

decrease the cost of integrating new products or services into the
electricity sector.

Commercial Operation. Commercial operation begins when control of

the loading of the generator is turned over to the system dispatcher.

Commercial Sector. The commercial sector is generally defined non-

manufacturing business establishments, including hotels, motels,
restaurants, wholesale businesses, retail stores, and health, social
and educational institutions. Electric utilities may classify commer-
cial service that includes all consumers whose demand and annual
use exceeds some specified limit. The limit may be set by theutility
based on the rate schedule of the utility. Consumers (i.e., farms and
irrigation) that the utility has nosystem for separating intoresiden-
tial, commercial, and industrial classifications, should be classified
based on the schedule they most closely resemble. If there is no
rate schedule distinction, utilities may define commercial consum-
ers those having demand of less than 1,000 kilowatts.

Commodity Charge. Charge for each unit of service actually received.

Common Costs. Costs incurred jointly for two more types of opera-
tions that must be allocated among the operations.

Compressor. A pump or other type of machine using turbine to com-

press a gas by reducing the volume.

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Consumer Charge. An amount charged periodically to consumer for
such utility costs billing and meter reading, without regard to
demand or energy consumption.

Consumption (Fuel). The amount of fuelused for gross generation,

providing standby service, start-up and/or flame stabilization.

Contract Path. The most direct physical transmission tie between two
interconnected entities. When utility systems interchange power,
the transfer is presumed to take place across the ”contract path,”
notwithstanding the electrical fact that power flow in the network
will distribute in accordance with network flow conditions. This
term can also mean to arrange for power transfer between systems.

Contract Receipts. Purchases based on negotiated agreement that gen-

erally covers period of one or more years.

Contracts for Differences (CD). A type of bilateral contract where the

electric generation seller is paid fixed amount over time which is
combination of the short-term market price and an adjustment
with the purchaser for the difference. For example, generator
may sell distribution company power for ten years at 6/kWh.
That power is bid into Poolco at some low/kWh value (to ensure
it is always taken). The seller then gets the market clearing price
from the pool and the purchaser pays the producer the difference
between the Poolco selling price and 6/kWh (or vice versa if the
pool price should go above the contract price).

Contributions inAid of Construction (CIAC). Non-refundable donations

or contributions in cash or properties from individuals to pay for
construction of facilities.

Cooperative (Co-op). A group of persons organized in joint venture to

supply services to specified area.

Cooperative ElectricUtility. A group organized under the law into

utility company that will generate, transmit, and/or distribute sup-
plies of electric energy to specified area not being serviced by
another utility. Such ventures are generally exempt from the Fed-

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 D

era1 income tax laws. Most electric cooperatives have initially been
financed by the Rural Electrification Administration, US Depart-
ment of Agriculture.

Costs. The amount paid to acquire resources, such plant and equip-
ment, fuel or labor services.

Cost Allocations. Method of separating and assigning different costs to

interstateorintrastate operations. Generally used for costsnot
readily assignable or for common costs.

Cost of Service. A ratemaking concept used for the design and develop-
ment of rate schedules to ensure that the filed rate schedules re-
cover only the cost of providing the electric service at issue. These
costs include operating and maintenance expenses, depreciation
and amortization expenses, and income and other taxes found just
and reasonable by the regulatory agency for ratemaking purposes
plus, in the case of privately owned electric utilities, an allowance
for return on capital (usually computed by applying rate of
return to the rate base). This concept attempts to equate the cost
incurred by the utility to the revenue received for the service pro-
vided to each of the consumer classes.

Cost of Service Pricing. Method of pricing service strictly in accordance

with the costs (expenses and allowable profit) that are attributable
to it. Customers of services priced below cost are generally subsi-
dized by customers paying above cost for their services.

Cross-Subsidization. Practice of using revenues generated from one (of-

ten unregulated) product or service to support another (often regu-
lated) one.

Current (Electric). A flow of electrons in electrical conductor. The

strength or rate of movement of the electricity is measured in am-
peres.

Customer Charge. A component of electric rates designed to cover those

costs (such metering and billing costs) that are related to the
existence of the customer rather than to either the size and extent

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 of the facilities needed to be served or the quantity of electricity the
customer uses.

Declining Block Rates. As more energy is consumed the unit price goes
down. For example, the first 500 kilowatt-hours cost 8 cents each;
the next block of 500 kwh is priced at 6 cents each; etc.

Decommissioning. The process of removing nuclear facility from op-

eration.

Deferred Fuel Costs. Those fuel costs spent in one accounting period
which are not reflected in billings to customers until later billing
period.

Deferred Tax Treatment. Actual taxes plus deferred taxes are included in
the income statement.

Demand. The maximum rate at which energy is delivered to specific

point at given moment. Demand is createdby customer’s
power consuming equipment and differs from load in that load is
measurement of the amount of energy delivered.

Demand/Capacity Cost. The expenses incurred by utility on behalf of

an individual customer in providing sufficient capacity to meet that
customer’s maximum demand on an as-needed basis.

Demand Change Credit. A credit applied against the buyer’s demand

charges when the delivery terms of the contract cannot be met by
the seller.

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 appli-
cable rate schedule.

Demand Factor.The ratio of the maximum demand over specified

time period to the total connected load on any defined system.

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Demand Interval. The time period during which the flow of electricity
is measured (usually in 15-, 30-, or 60-minute increments.

Demand Rate. A method of pricing under which prices vary according

to differences in usage or costs.

Demand-SideManagement (DMS). Generallyreferstoreducing

consumer’s demand for energy through many means, including
conservation, more efficient appliances, weatherization, etc. De-
mand and Supply Side Management are combined in Least Cost
Utility Planning (LCUP).

Depreciation. Accounting procedureused to set asidethe difference

between the first cost of an item of plant (capital) and its estimated
net salvage at the end of its expected life. This ”amount to be
depreciated” is treated an expense to offset revenues for tax
purposes over the years of expected life.

Derivatives. A specialized security or contract that has no intrinsic over-

all value, but whose value is based on underlying security or
factor index. A generic term that, in the energy field, may
include options, futures, forwards, etc.

Differential Revenue Requirement. A method of calculating utility’s

avoided cost. One calculates the utility’s revenue requirement both
with and without the costs that would be incurred if the utility
were to obtain the power in questions from some other source, then
one calculates the difference.

Direct Access. The ability of retail customer to purchase commodity

(electricity) directly from the wholesale market rather than through
local distribution utility.

Direct Load Control (DLC). When the utility has the ability to directly
control customer’s devices and can turn them on or off neces-
sary to control load.

Disaggregation. The functional separation of the vertically integrated

utility into smaller, individually owned business units (i.e., genera-

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 tion, dispatch/control, transmission, distribution). The terms
”deintegration,” ”disintegration” and ”delamination” are some-
times used to mean the same thing.

Discounted Flow. Method of determining the cost of common

equity capital where the cost of common equity is equal to the
dividends per share divided by the market price per share plus an
assumed growth rate.

Distributed Generation. A distributed generation system involves small

amounts of generation located on utility’s distribution system for
the purpose of meeting local (substation level) peak loads and/or
displacing the need to build additional (or upgrade) local distribu-
tion lines.

Distribution. The delivery of electricity to the retail customer’s home or

business through low voltage distribution lines.

Distribution Line. For electricity, the line which carries electricity from
substation to the ultimate consumer.

Distribution Utility (Disco). The regulated electric utility entitythat

constructs and maintains the distribution wires connecting the
transmission grid to the final customer. The Disco can also perform
other services such aggregating customers, purchasing power
supply and transmission services for customers, billing customers
and reimbursing suppliers, and offering other regulated or non-
regulatedenergy services to retail customers. The ”wires” and
“customer service” functions provided by distribution utility
could split so that two totally separate entities are used to supply
these two types of distribution services.

Divestiture. The stripping offof one utility function from the others by
selling (spinning-off) or in some other way changing the ownership
of the assets related to that function. Most commonly associated
with spinning-off generation assets so they are no longer owned by
the shareholders that own the transmission and distribution assets.

Docket. Formal regulatory proceeding; may also be referred to case.

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 D

Dual-Fuel Plant. Any plant which can operate on either of two different
fuels, such coal or natural

Earnings/Price Ratio. The annual earnings per share of common stock

divided by the market price per share of common stock.

Economic Development Rates. Special discount rates offered to attract

new businesses to the area.

Economic Efficiency. term that refers to the optimal production and

consumption of goods and services.This generally occurs when
prices of products and services reflect their marginal costs. Eco-
nomic efficiency gains can be achieved through cost reduction, but
it is better to think of the concept actions that promote an in-
crease in overall net value (which includes, but is not limited to,
cost reductions).

Economy of Scale.The principle that larger production facilities have

lower unit costs than smaller facilities.Economies of scale exist
where the industry exhibits decreasing average long-run costs with
size.

Electric Plant (Physical). facility containing prime movers, electric

generators, and auxiliary equipment for converting mechanical,
chemical, and/or fission energy into electric energy.

Electric Power Industry. The privately, publicly, federally and coopera-

tively owned electric utilities of the United States taken whole.
This includes all electric systems serving the public-regulated in-
vestor-owned electric utility companies, Federal power projects;
state municipal, and other government owned systems, including
electric public utility districts; electric cooperatives, including gen-
eration and transmission entities. Excluded from this definition are
the special purpose electric facilities or systems that do not offer
service to the public.

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Electric Rate. The price set for specified amount of electricity in an
electric rate schedule or sales contract.

Electric RateSchedule. A statement of the electric rate and the termsand

conditions governing its application, including attendant contract
terms and conditions that have been accepted by regulatory body
with appropriate oversight authority.

Electric Utility. An enterprise that is engaged in the generation, trans-

mission, or distribution of electric energy primarily for use by the
public and that is the major power supplier within designated
service area. Electric utilities includeinvestorowned,publicly
owned, cooperatively owned, and government owned (municipals,
federal agencies, state projects, and public power districts) systems.

Electro-Magnetic Field(EMF)Effect.Effect on healthresultingfrom

proximity to energized electricfacilities. Whether there are such
effects and how significant they may be is still being argued by the
experts. A common form radiation generated by appliances,
equipment, machinery, transmission lines, distribution lines.

Embedded Costs. Money already spent for investment in plant and in

operating expenses.

Embedded Costs Exceeding Market Prices (ECEMP). Embedded costs of

utility investments exceeding market prices are: costs incurred
pursuant to regulatory or contractual obligation; 2. costs that are
reflected in cost-based rates; and 3. cost-based rates that exceed the
price of alternatives in the marketplace. ECEMPs may become
”stranded costs” where they exceed the amount that can be recov-
eredthroughthe asset’s sale.Regulatoryquestionsinvolve
whether such costs should be recovered by utility shareholders and
if so, howtheyshould be recovered.”Transitioncosts”are
stranded costs which are charged to utility customers through some
type of fee or surcharge after the assets are sold or separated from
the vertically-integrated utility. “Stranded assets are assets which
cannot be sold for some reason. The British nuclear plants are an
example of stranded assets which no one would buy.

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 D

Emissions Trading. A company that reduces emissions beyond what is

required by law at one pollution source can use the excess reduc-
tion to permit higher emissions at other sources.

En Banc (Argument). An oral argument before the Regulatory Commis-

sioners.

Energy. The capacity for doing work measured by the capability of

doing work (potential energy) or the conversion of this capability to
motion (kinetic energy). Energy has several forms, some of which
are easily convertible and can be changed to another form useful
for work. Most of the world's convertible energy comes from fossil
fuels that are burned to produce heat that is then used transfer
medium tomechanical or other means in order toaccomplish tasks.
Electrical energy is usually measured in kilowatt-hours, while heat
energy is usually measured in British thermal units.

Energy Charge. A component of rates which covers the cost of the en-
ergy actually used.

Energy Cost Adjustment clause. The utility may adjust its rates to offset
changes in the cost of fuel used to produce electricity. In some
states, these adjustments may be made automatically by the utility,
subject to Commission review; other states require an Adjustment
Clause Hearing first.

Energy Service Company (ESCO). A company that offers to reduce

client's electricity consumption with the cost savings being split
with the clients.

Equal Life Group Method of Depreciation. Utility plant items with the
same life expectancy are depreciated under common formula.

Equity. The utility investment supplied by the sale of common stock.

There is no fixed interest on these common stocks.

ExcessCapacity.The amount energy available over and above the

amount of energy needed, plus reasonable reserves, at any given
period.

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Excess Deferred Taxes. When utility collects from its ratepayers some
portion of the income taxes it will owe in the future, the difference
between the amount collected (including future tax obligation) and
the amount of its current tax liability.

Exempt Wholesale Generator (EWG). A wholesale power generator that

is exempt from the provisions of the Public Utility Holding com-
pany Act (PUHCA). This legal class of companies was created by
the Energy Policy Act of 1992 in order to allow registered public
utility holding companies, other corporate entities and individuals
to own wholesale generating assets that are leased or sell power to
non-affiliates without subjecting the owners to regulation under
PUHCA.

Externality. Benefit or cost, generated buy-product of economic

activity, that does not accrue to the parties involved in the activity.
Must be considered to determine the true cost or benefit to society.

-F-

Facilities Charge. Component of rates which reimburses the utility for

investment in facilities which benefit the ratepayer.

Fahrenheit. A temperature scale on which the boiling point of water is

at 212 degrees about zero the scale and the freezing point is at
32 degrees above zero at standard atmospheric pressure.

Fair Rate of Return. The rate of return utility is entitled to have the
opportunity to earn on either its rate base or its common equity.
Fair implies balancing keeping rates low for ratepayers, financial
integrity of the utility, and investment return for shareholders.

Fair Value Method of Valuation. The value which would be ascertained

by prudent purchaser making thorough inquiry relating to all
circumstances affecting value.

Federal Energy Regulatory Commission (FERC). Federal agency estab-

lished in 1977, concurrently with the creation of the Department of

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 D

Energy, charged with regulating sale, transportation and price of

natural gas and of wholesale electric power moved in interstate
commerce. Successor to the Federal Power Commission (FPC),
which was established in 1930.

Feebates. A feebate is revenue neutral strategy which imposes fee on

polluting resources and rebates those fees to cleaner technologies.
This can be accomplished directly through the revenue paid to
generators by the Poolco or through incorporation of these values
into the dispatch/pricing mechanism of the pool.

Firm Power. Delivery of utility service on non-interruptible-always-

available basis. A utility must supply its firm power customers
whenever they demand it, despite conditions.

Firm Wheeling. Transmission of electricity for another party that is not

subject to interruption except for circumstances beyond the trans-
mitting utility’s control.

Fixed Costs. Business costs that remain unchanged regardless of

tity of output traffic.

Flat and Meter Rate Schedule. electric rate schedule consisting of two
components, the first of which is service charge, and the second
price for the energy consumed.

Flat Demand Rate Schedule. An electric rate schedule based on billing

demand that provides no charge for energy.

Flat Rate. A rate structure in which everyone within customer class

pays the same price per unit for all energy consumed.

Flow-Through Tax Treatment. Only actual taxes to be paid for the period
are included in the income statement and collected from ratepayers.

Forecast Test Year. Use of future 12-month period projected utility finan-
cial data to evaluate proposed tariff revision.

Forwards. A forward is commodity bought and sold for delivery at

some specific time in the future. It is differentiated from futures

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 markets by the fact that forward contract is customized, non-ex-
change traded, and non-regulated hedging mechanism.

Fossil Fuel. Any fuel, such coal, oil and natural derived from the
remains of ancient plants or animals.

Franchise. A privilege to do business which may be limited to specified

period of time or geographical area and may or may not be exclu-
sive. In electric utility, "franchise" relates to protected service
territory that cannot be served by any other electricity provider.
(As in franchise territory.) In retail wheeling the franchise exclusiv-
ity will not extend to electricity commodity but only to distribution
of electricity commodity from utility receipt point to customer
meter point.

Freedom of"1nformation(Sunshine) Statutes. Any laws designed to guar-

antee public access to governmental actions.

Fuel Adjustment Clause. See Automatic Adjustment Clause.

Fuel Factor. A component of rates designed to recover changes in the

cost of fuel; differs from automatic adjustment in that it requires
prior Commission approval.

Fully Distributed Costs (FDC). Regulatory accounting procedure that

directly assigns, or arbitrarily allocates, to specific service catego-
ries the total costs of providing that service.

Futures Market. Arrangement through contract for the delivery of

commodity at future time and at price specified the time of
purchase. The price is based on an auction or market basis. Stan-
dardized, exchange-traded, and government regulated hedging
mechanism.

Generating Plant. A facility where electricity is generated.

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 D

Generation and Transmission (G&T). Identifies utility that both gener-

ates and transmits electricity distinguished from an entity which
provides transmission only.

Generation Company (Genco). A regulated or non-regulated entity (de-

pending upon the industry structure) that operates and maintains
existing generating plants. The Genco may own the generation
plants or interact with the short-term market on behalf of plant
owners. In the context of restructuring the market for electricity,
Genco is sometimes used to describe specialized ”marketer” for
the generating plants formerly owned by vertically-integrated
utility.

Generation Dispatch and Control. Aggregating and dispatching (send-

ing off to some location) generation from various generating facili-
ties, providing backup and reliability services. Ancillary services
include the provision of reactive power, frequency control, and load
following.

Generator. A machine that converts mechanical energy into electrical

energy.

Generator Nameplate Capacity. The full-load continuous rating of

generator, prime mover, or other electric power production equip-
ment under specific conditions designated by the manufacturer.
Installed generator nameplate rating is usually indicated on
nameplate physically attached to the generator.

Geothermal Energy. The natural heat available in the rocks, hot water
and steam of the earth’s subsurface. Geothermal energy can be
used to generate electric power.

Geothermal Plant. A plant in which the prime mover is 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 rocks
or fluids at various depths beneath the surface of the earth. The
energy is extracted by drilling and/or pumping.

Gigawatt (GW). One billion watts.

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Gigawatt-hour (GWh). One billion watt-hours.

Grid. A system of interconnected power lines and generators that is

managed so that the generators are dispatched needed to meet
the requirements of the customers connected to the grid at various
points. "Gridco" is sometimes used to identify anindependent
company responsible for the operation of the grid.

Gross Generation. The total amount of electric energy produced by

generating facility, measured at the generator terminals.

Heat Rate. A measure of efficiency of generating facilities. The number

of Btus used to produce kilowatt-hour of electricity; low heat
rate indicates high efficiency.

Hedging. buy and sell commodity (electricity) futures protection

against loss due to price fluctuation; and/or to minimize the risk of
loss.

Hedging Contracts. Contracts which establish future prices and quanti-

ties of electricity independent of the short-term market. Deriva-
tives may be used for this purpose.

Historical Test Year. Use of past 12-month period (usually the imme-
diately preceding period) utility financial data to evaluate pro-
posed tariff revision.

Historical Cost. Original cost minus any expenditures deemed by

Commission to be fraudulent, unwise or extravagant.

Horsepower. unit for measuring the rate of work (or power) equiva-
lent to 33,000 foot-pounds per minute 746 watts.

Hydroelectric. An electric generating station driven by water power.

Hydroelectric Plant. A plant in which the turbine generators are driven

by falling water.

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 D

Incremental Costs. The additional amount of money it takes to generate

or transmit energy above previously determined base amount.

Incremental Pricing. A method of charging customers for energy con-

sumption based on the incremental costs involved in energy pro-
duction.

Independent Power Producer (IPP). As defined by FERC under PURPA,

generating entity, other than qualifying facility (QF) and not
utility, that is: (1) unaffiliated with the utility purchaser and (2)
lacks significant market power. The facility must not be in the
utility’s rate base.

Independent System Operator (ISO). A neutral operator responsible

maintaining instantaneous balance of the grid system. The IS0
performs its function by controlling the dispatch of flexible plants
to ensure that loads match resources available to the system.

Industrial Sector. The industrial sector is generally defined including

manufacturing, construction, mining, agriculture, fishing and for-
estry establishments under Standard Industrial Classification (SIC)
Codes 01-39. The utility may classify industrial service using the
SIC Codes, or based on demand or annual usage exceeding some
specified limit. The limit may be set by the utility based on its own
rate schedule. Sales for consumers (i.e.-farm and irrigation) that
the utility has no system for separating into residential, commer-
cial, and industrial classifications, should be classified based on the
classification of their rate most closely resembles. If there is no rate
schedule distinction, utilities may define industrial consumers
those having demand equal to or greater than 1,000 kilowatts.

Informal Complaint. Informal request for assistance from Commission

where resolution is attempted without public hearing or Commis-
sion order.

Instantaneous Peak Demand. The maximum demand at the instant of

greatest load.

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Integrated Demand. The summation of the continuously varying instan-
taneous demand averaged over specified interval of time. The
information is usually determined by examining demand meter.

Integrated Resource Planning (IRP). Apublicplanningprocess and

framework within which the costs and benefits of both demand-
side and supply-side resources are evaluated to develop the least-
total-cost mix of utility resource options. In many states, IRP in-
cludes means for considering environmental damages caused by
electricity supply/transmission and identifying cost-effective en-
ergy efficiency and renewable energy alternatives. IRP has become
formal process prescribed by law in some states and under some
provisions of the Clean Air Act Amendments of 1992.

Integrated Resource Planning Principles. The underlying principles of

IRP can be distinguished from the formal process of developing an
approved utility resource plan for utility investments in supply-
side and demand-side and transmission resource costs and at-
tributes outside of the basic provision (or reduction) of electric ca-
pacity and energy. These resources may be owned or constructed
by any entity and may be acquired through contracts well as
through direct investments. Another principle is the incorporation
of risk and uncertainty into the planning analysis. The public par-
ticipation aspects of allow public and regulatory involvement
in the planning rather than the siting stage of project development.

Integrated Services Digital Network (ISDN). A 128 kbps (kilobytes per

second) digital telephone service available in many parts of the
country though not universally available that may be able to sub-
stitute for fiber optic cable in every respect except possibly televi-
sion transmission.

Interim Rates. Rates that are allowed to go into effect, usually subject to
refund and sometimes under bond, until the Commission issues its
final order.

Interim Relief Request. An application to a Commission showing that

the applicant will suffer irreparable injury, immediate special hard-
ship or inequity if relief from regulation is denied.

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Internal Combustion Plant. A plant in which the prime mover is an
internal combustion engine. internal combustion enginehas
one or more cylinders in which the process of combustion takes
place, converting energy released from the rapid burning of fuel-
air mixture into mechanical energy. Diesel or gas-fired engines are
the principle types used in electric plants. The plant is usually
operated during periods of high demand for electricity.

Interruptible Rates. Special rates for energy consumers who are willing
to have their energy delivery service interrupted by the utility
when necessary. This is low-priority service with generally lower
unit rates.

Interstate. From one state to another, or across state lines. Interstate

activities generally fall under the jurisdiction of the Federal govern-
ment.

Intervenor. A third party who receives permission from Commission

to participate in rate case.

Intrastate. Completely within the borders of single state. Intrastate

activities generally fall under the jurisdiction of the State govern-
ment.

Inverted Rate Structure. A rate design in which the unit price increases
with usage.

Investor Owned Utility (IOU). A company, owned by stockholders for-

profit, that provides utility services. A designation used to differ-
entiate utility owned and operated for the benefit of shareholders
from municipally owned and operated utilities and rural electric
cooperatives.

Joule. The International System unit of energy, equal to the work done
when current of one ampere is passed through resistance of one
ohm for one second. (To convert (1)joule into watt-hours, multiply
by 2.778 X 10-4.)

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Jurisdictional. Within thejurisdiction,orauthority,of particular
agency.

-K-

Kilovolt (kV). One thousand volts; measure of electromotive force.

Kilowatt (kW). One thousand watts; measure of electric capacity or load.

Kilowatt-hour (kwh). 1,000 watts of consumption for one hour. Electric

bills are measured in kilowatt-hours.

Least-Cost Planning. See Integrated Resource Planning (IRP)

Least Expectancy. Time period during which an article is expected to

render efficient service.

Least-Cost Utility Planning (LCUP). See Least Cost Planning.

LifeExpectancy.Time period during which an article is expected to

render efficient service.

"Lifeline" Rates. Special local telephone rates for low-income customers.

As approved by the FCC, customers meeting certain eligibility tests
may apply to have an amount equal tothe Subscriber Line Charge
(SLC) deducted from their monthly bills. Also used generically to
designate special rate plans offering very basic utility service at low
rates to eligible customers. May also be called "Baseline: rates.

Load. The amount of electric power or delivered at any specified

point or points system. Load originatesprimarily at the
power-consuming equipment of customers.

Load Centers. A geographical area where large amounts of power are

drawn by end-users.

Load Factor. The ratio of the average load supplied during designated
period to the peak load occurring during that period.

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 D 245

Load Management. Techniques designed to reduce the demand for elec-

tricity at peak times, such remote devices to temporarily turn off
appliances.

Long-Term Debt. Indebtedness (notes, drafts, bonds, etc.) payable over

period of time longer than one year.

Low-Income Home EnergyAssistance Program (LIHEAP). Federally-

funded program to help low-income customers afford basic energy
utility service. Generally administered at the local, municipal or
regional level, rather than by state government.

Maintenance Expenses. Part of operating expenses, including labor,

materials, and other expenses, incurred for preserving the operat-
ing efficiency and/or physical condition of utility plant.

Management Audit. Analysis of the management practices of company

with an eye toward improving efficiency and effectiveness.

Marginal Cost. In the utility context, the cost to the utility of providing
the next (marginal) kilowatt-hour of electricity, irrespective of sunk
costs.

Market-Based Prices. Prices fixed in the free market under conditions of

pure competition.

Marketer. agent for generation projects who markets power on be-

half of the generator. The marketer may also arrange transmission,
firming or other ancillary services as needed. Though marketer
may perform many of the same functions broker, the difference
is that marketer represents the generator while broker acts
middleman.

Market Retention Rates. Special discount rates offered to large users to

keep them from leaving the system.

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Market-to-Book Ratio. Comparison of the market and book value of
stock. A one-to-one market-to-book ratio means the stock is selling
on the market at book value.

Master Metering. Installation one bulk power meter for multiple ten-
ants.

Maximum Demand. The greatest of all demands of the load that has
occurred within specified period of time.

Megawatt (MW). One million watts of electric energy. Used to designate

the capacity of an electric generating plant and/or measure de-
mand or load.

Megawatt-hour One megawatt of power for one hour.

Metered Service. Meters record actual energy use in order to accurately

bill customer.

"Btu. One million British thermal units of energy

Municipal Utility. A provider of utility services owned and operated by

municipal government.

National Association of Regulatory Utility Commissioners (NARUC).

Represents state regulatory agencies in Washington, DC.

National Association of State UtilityConsumer Advocates (NASUCA). A

national association composed of governmental agencies of the fifty
States, the District of Columbia, Puerto Rico and the Virgin Islands
engaged in the regulation of utilities and carriers. The chief objec-
tive is to serve the consumer interest by seeking to improve the
quality and effectiveness of public regulation in America.

National Regulatory Research Institute (NRRI).Established in 1976, the

research arm of the NARCU.

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 D 247

National Rural Electric Cooperative Association(NRECA). Represents

the interests of rural electric cooperatives.

Natural Monopoly. A situation where one firm can produce given level
of output at lower total cost than can any combination of multiple
firms. Natural monopolies occur in industries which exhibit de-
creasing average long-run costs due to size (economies of scale).
According to economic theory, public monopoly governed by
regulation is justified when an industry exhibits natural monopoly
characteristics.

Negawatt. A watt of electric energy that is created by conservation

rather than generation.

Net Generation. Gross generation minus plant use from all electric util-
ity owned plants. The energy required for pumping at pumped-
storage plant is regarded plant use and must be deducted from
the gross generation.

Net Original Cost. The original cost of utility property minus any accu-
mulated depreciation.

Net Summer Capability. The steady hourly output, which generating

equipment is expected to supply to system load exclusive of auxil-
iary power, demonstrated by tests at the time of summer peak
demand.

Net Worth. Capital plus capital surplus plus retained earnings.

Non-Coincident Peak. When one customer class reaches maximum en-

ergy use. This peak may or not coincide with the peak for the
total system.

Non-Coincidental Peak Load. The sum of two or more peak loads on

individual systems that do not occur in the same time interval.
Meaningful only when considering loads within limited period of
time, such day, week, month, heating or cooling season, and
usually for not more than one year.

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Non-Discrimination. In general usage, reasonably equal treatment for
all.

Non-FirmPower. See Interruptible.

Non-Interruptible Rates. SeeFirmPower.

Non-Utility Generator (NUG). A generation facility owned and operated

by anentity who is no defined utility in that jurisdictional area.

Normalization. accounting method that allows a utility to recover

from its customers’ income taxes that it must pay evenly over its
years of operation.

North American Electric Reliability Council (NERC). A council formed

in 1968 by the electric utility industry to promote the reliability and
adequacy of bulk power supply in the electric utility systems of
North American. NERC consists of ten regional reliability councils
and encompasses essentially all the power regional of the contigu-
United States, Canada, and Mexico. The NERC Regions are:
ASCC- AlaskanSystemCoordinationCouncil
ECAR- East Central Area Reliability Coordination Agreement
FRCC- Florida Reliability Coordinating Council
MAAC- Mid-Atlantic Area Council
MAIN- Mid-American Interconnected Network
MAPP- Mid-Continent Area Power Pool
NPCC- Northeast Power Coordinating Council
SERC- Southeastern ElectricReliabilityCouncil
SPP- Southwest Power Pool
WSCC- WesternSystemsCoordinatingCouncil

Notice of Inquiry (NOI). Public notice soliciting information and com-

ments on specific subject.

Notice of Intent (NOI). A filing of preliminary data which indicates the

applicant’s intent to pursue formal proceeding.

Notice of Proposed Rulemaking (NOPR). Notice to the public that an

agency is proposing specific new rules.

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 D 249

Nuclear Power Plant. A facility in which heat produced in reactor by

the fissioning of nuclear fuel is used to drive steam turbine.

Nuclear Reactor. Any of several devices in which chain reaction is

initiated and controlled with the consequent production of heat
typically used for power generation.

Nuclear Regulatory Commission (NRC). Established in 1946 to oversee

the nuclear industry.

Obligation to Serve. The obligation of utility to provide electric service

to any customer who seeks that service, and is willing to pay the
rates set for that service. Traditionally, utilities have assumed the
obligation to serve in return for an exclusive monopoly franchise.

Off-peak Period. Period of relatively low system demands.

Ohm. The practical mks (meter-kilogram-second) unit of electric resis-

tance equal to the resistance of circuit in which potential differ-
ence of one volt produces current of one ampere.

On-Peak. Period of relatively high system demands.

Operable Nuclear Unit. A nuclear unit is "operable" after it completes

low-power testing and is granted authorization to operate at full
power. This occurs when it receives its full power amendment to
its operating license from the Nuclear Regulatory Commission.

Operating Costs. Expenses related tomaintainingday-to-dayutility

functions, including operation and maintenance expenses, taxes
and depreciation and amortization costs, but not interest payments
or dividends. Operating costs are recovered from customers
current basis, opposed to capitalized costs.

Operating Revenues. Amounts billed by the utility for utility services

rendered.

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Operating Unit or System. Complete and self-sustaining facility or
group of facilities acquired and operated intact.

Options. An option is contractual agreement that gives the holder the

right to buy (call option) or sell (put option) fixed quantity of
security or commodity (i.e., commodity or commodity futures
contract), at fixed price, within specified period of time. May
either be standardized, exchange-traded, and government regu-
lated, or over-the-counter customized and non-regulated.

Original cost Depreciated. See Net Original Cost.

Original Cost Method of Valuation. The cost of the property to the per-
son first devoting it to public service.

Other Generation. Electricity originating from these sources-biomass,

fuel cells, geothermal heat, solar power, waste, wind, and wood.

Other Sector. Electricity supplied to public street and highway lighting,

other service to public authorities, service to railroads and railways,
and interdepartmental service.

Other Unavailable Capability. Net capability of main generating units

that are unavailable for load reasons other than full-forced out-
age or schedule maintenance. Legal restrictions or other causes
make these units unavailable.

Outage. The period during which generating unit, transmission line,

or other facility, is out of service.

Overall Rate of Return. The monetary allowance for shareholders and

bondholders granted by Commission. It consists of the fixed rate
return in thebondholders’ contracts and theCommission’s deter-
mination of fair market return to the shareholders’ investment.

Overhead Expenses. Expenditures connected with the development and

operation of any revenue-producing property.

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 -P-
Parallel Path Flow. AS defined by NERC, this refers to the flow of electric
power on electric system’s transmission facilities resulting from
scheduled electric power transfers between two other electric sys-
tems. (Electric power flows on all interconnected parallel paths in
amounts inversely proportional to each path’s resistance.)

Partial Forecast Test Year. A 12-month period, usually comprised of the

immediately preceding 6 months and the immediately following 6
months, utility financial data used to evaluate proposed tariff
revisions.

Party-in-Interest. An individual or group appearing in formal proceed-

ing.

Peak Demand. The maximum level of operating requirements placed on

the system by customer usage during specified period of time.

Peaking Capacity. Capacity of generating equipment normally reserved

for operation during the hours of highest daily, weekly, or seasonal
loads. Some generatingequipmentmay be operated at certain
times peaking capacity and at other times to serve loads on an
around-the-clock basis.

Peak Load (or Peak Demand). The electric load that corresponds to
maximum level of electric demand in specified time period.

Peak Load Plant. A plant usually housing old, low-efficiency steam

units; gas turbines, diesels; or pumped-storage hydroelectric equip-
ment normally used during the peak-load periods.

Peak Load Pricing. Pricing which reflects different prices for system
peak periods or for hours of the day during which loads are nor-
mally high.

Peak Station. Generating station normally in operation only to

provide power during maximum load periods; usually high op-
erating cost facility or facility which cannot be operated for long
periods of time.

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252 Electricitu
Handbook
Retail Wheelina

Peak Shaving. Means by which an electric utility lowers the peak de-
mand on its system.

Percent Differences. The relative change in quantity over specified

time period. It is calculated follows-the current value has the
previous value subtracted from it; this new number is divided by
the absolute value of the previous value; then this new number is
multiplied by

Performance-BasedRegulation (PBR). Anyrate-settingmechanism

which attempts to link rewards (generally profits) to desired results
or targets. PBR sets rates, components of rates, for a period of
time based on external indices rather than utility’s cost-of-service.
Other definitions include light-handed regulation which is less
costly and less subject todebate and litigation. A form of rate regu-
lation which provides utilities with better incentives to reduce their
costs than does cost-of-service regulation.

Petitioner. Any party to proceeding who seeks to appeal Commission

Decision, modify proposed decision, or intervene during Com-
mission hearing. See also Intervenor.

Photovoltaics (PV). A technology that produces electricity directly from

sunlight.

Plant. A facility at which are located prime movers, electric generators,

and auxiliary equipment for converting mechanical, chemical, and/
or nuclear energy into electric energy. A plant may contain more
than one type of prime mover. Electric utility plants exclude facili-
ties that satisfy the definition of qualifying facility under the
Public Utility Regulatory Policies Act of 1978.

Plant Acquisition Adjustment. The difference between the cost to the

utility of acquired plant and the original cost of the plant less the
amount credited at the time of acquisition for depreciation and
amortization and contributions in aid of construction.

Plant in Service. Capacity provided by power pool member in order

for the member to meet installed or reserve capacity obligations.

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 D

Plant Use. The electric energy used in the operation of plant. Included
in this definition is the energy required for pumping at pumped-
storage plants.

Plant-Use Electricity. The electric energy used in the operation of plant.

This energy total is subtracted from the gross energy production of
the plant; for reporting purposes the plant energy production is
then reported net figure. The energy required for pumping at
pumped-storage plants is, by definition, subtracted and the energy
production for these plants is then reported net figure.

Pool Capacity. Capacity provided by power pool member in order for

the member to meet installed or reserve capacity obligations.

Poolco. A specialized, centrally dispatched spot market power pool that

functions short-termmarket. It establishestheshort-term
market clearing price and provides system of long-term transmis-
sion compensation contracts. It is regulated to provide open access,
comparable service and cost recovery. A Poolco would make ancil-
lary generation services, including load following, spinning re-
serve, backup power, and reactive power, available to all market
participants on comparable terms. In addition, the Poolco provides
settlement mechanisms when differences in contracted volumes
exist between buyers and sellers of energy and capacity.

Pooling. Different utilities share their physical plants or resources to

increase their efficiency and conserve energy.

Pool-to-Pool. An arrangement between power pools to provide electric

services to each other.

Power. The rate at which energy is transferred. Electrical energyis

usually measured in Watts. Also used for measurement of capac-
ity.

Power Authorities. Quasi-governmental agencies that perform all or

some of the functions of public utility.

Power (Electrical). An electric measurementunit of powercalled

voltampere (VA) is equal to the product of 1 volt (V) and 1 ampere

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 (A). This is equivalent to 1 watt (W) for direct current system and
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 kilowatts
(kW). Reactive power is the portion of apparent power that does
no work and is referred to kilovars (kvar); this type of power
must be supplied to most types of magnetic equipment, such
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
kilowatt-hours (kwh).

Power An entity established to coordinate short-term operations to

maintain system stability and achieve least-cost dispatch. The dis-
patch provides backup supplies, short-term excess sales, reactive
power support, and spinning reserve. Historically, some of these
services were provided on unpriced basis part of the mem-
bers’ utility franchise obligations. Coordinating short-term opera-
tions includes the aggregation and firming of power from various
generators, arranging exchanges between generators, and establish-
ing (or enforcing) the rules of conduct for wholesale transactions.
The pool may own, manage and/or operate the transmission lines
(”wires”) or be an independent entity that manages the transactions
between entities. Often, the power pool is not meant to provide
transmission access and pricing, or settlement mechanisms if differ-
ences between contracted volumes among buyers and sellers exist.

Preferential Tariffs or Rates. A tariff or rate by which specified class of

customers is given special treatment. For example, ”lifeline” rate
to provide very basic service to low-income customers.

Price. The amount of money or consideration-in-kind for which service

is bought, sold, or offered for sale.

Price Caps. Relatively recently devised means of regulating utility rates

an alternative to rate of return regulation. The prices the utility
charges are capped at certain level, allowing the utility to earn
larger rate-of-return if it cuts expenses, increases productivity, etc.

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 D 255

Price/Earnings Ratio (P/E). The market price per share of common

stock divided by the annual earnings per share of common stock.

Prime Mover. The motive force that drives an electric generator (e.g.,
steam engine, turbine, or water wheel).

Production (Electric). Act or process of producing electric energy from

other forms of energy; also, the amount of electric energy expressed
watt-hours (M).

Pro Se. On person’s own behalf.

Public Authorities. Electricity supplied to municipalities or divisions or

agencies of State and Federal governments, usually under special
contracts or agreements that are applicable only to public authori-
ties.

Publicly Owned ElectricUtility. A class of utility that includes those

utilities operated by municipalities, political subdivisions, utility or
power districts, and State and Federal power agencies.

Public Power. Electric utility owned by government entity such

municipality or utility district.

Public Utilities Holding Company Act (PUHCA). Enacted in 1935, its

intent was to prevent electric and utilities from using complex
corporate structure to evade regulatory oversight.

Public Utility. A business or service engaged in regulatory supplying the

publicwith some commodity or service. Also, utilityowned
and/or operated by public authority, such municipality or
district or public housing authority.

Public Utility District. Publicly owned energy producer or distributor.

Normally districts incorporate areas larger than single municipal-
ity and operate special government districts, independent of
State regulatory agencies.

Public Utility Regulatory PoliciesAct(PURPA). Part of the National

Energy Act of 1978, it requires State regulatory agencies to consider

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256 Retail Electricity Wheeliny

variety of issues affecting electric and utility customers. The

intent is to establish standards and policies that promote energy
conservation, encourage the efficient use of facilities and resources,
and provide equitable rates for consumers. Public Law 95-617,
Statute 3117.

Pumped-Storage Hydroelectric Plant. A plant that usually generates

electric energy during peak-load periods by using water previously
pumped into elevated storage reservoir during off-peak periods
when excess generating capacity is available to do so. When addi-
tional generating capacity is needed, the water can be released from
the reservoir through conduit to turbine generators located in
power plant lower level.

Pure Pumped-Storage Hydroelectric Plant. A plant that produces power

only from water that has previously been pumped to upper
reservoir.

Qualifying Facility (QF). This is cogenerator or small power producer

that meets certain ownership, operating and efficiency criteria es-
tablished by the Federal Energy Regulatory Commission (FERC)
pursuant to the and has filed with the FERC for QF status
or has self-certified. To become QF, the independent power sup-
plier had to produceelectricity with specified fuel type (cogenera-
tion or renewables), and meet certain ownership, size, and effi-
ciency criteria established by the Federal Energy Regulatory Com-
mission.

-R-
Rate Base. Investment in operating plant, less depreciation, upon which
regulated utility is entitled to earn profit.

Rate Base Regulation. Method of regulation in which utility is limited in

operations to revenue level which will recover no more than its
expenses plus an allowed rate of return on its rate base.

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 D

Rate Case. Procedures followed by regulatory authority so that util-

ity may present and justify its need for rate change.

Rate Case Audit. Audit performed in the course of rate case.

Rate of Return (ROR). Percentage allowed by the Commission fair

and reasonable profit. May refer to rate of return on rate base or
overall rate of return.

Rate Structure. The design and organization of billing charges by cus-

tomer class to distribute the revenue requirement among customer
classes and rating periods.

Real-Time Pricing. The instantaneous pricing of electricity based on the

cost of the electricity available for use at the time the electricity is
demanded by the customer.

Regional Transmission Group (RTG). An organizationcomposed of

volunteers from transmission owners, users, and others interested
in coordinating transmission planning and expanding, the opera-
tion and use of, on regional and inter-regional basis. Such groups
are subject to FERC approval.

Regulatory The time elapsed between the filing of an application

for rate change and the issuance of final decision.

Reliability. Electric system reliability has two components-adequacy

and security. Adequacy is the ability of the electric system to sup-
ply the aggregate electrical demand and energy requirements of the
customers at all times, taking into account schedules and unsched-
uled outages of system facilities. Security is the ability of the elec-
tric system to withstand sudden disturbances such electric short
circuits or unanticipated loss of system facilities.

Remaining Life. The expected future service life of an asset at any given
age.

Removal Costs. The costs of disposing of plant, whether by demolish-

ing, dismantling, abandoning, sale or other. Removal costs increase
the amount to be recovered depreciation expense.

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Renewables. Energy sources that in theory are indefinitely sustainable,
such solar energy, geothermal heat, hydropower and wind.

RenewableResources.Renewable energyresourcesarenaturally
replenishable, but flow-limited. They are virtually inexhaustible in
duration but limited in the amount of energy that is available per
unit of time. Some (such geothermal and biomass) may be stock-
limited in that stocks are depleted by use, but on time scale of
decades, or perhaps centuries, they can probably be replenished.
Renewable energy resources include: biomass, hydro, geothermal,
solar and wind. In the future they could also include the use of
ocean thermal, wave, and tidal action technologies. Utility renew-
able resource applications include bulk electricity generation, on-
site electricity generation, distributed electricity generation, non-
grid-connected generation, and demand-reduction (energy effi-
ciency) technologies.

Reproduction Cost. Estimated cost to reproduce existing properties in

their current form and capability at current cost.

Request for Proposal (RFP). Announcement of willingness to consider

bids for specific project or part thereof.

Reregulation. The design and implementation of regulatory practices to

be applied to the remaining regulated entities after restructuring of
the vertically-integrated electricutility.The remaining regulated
entities would be those that continue to exhibit characteristics of
natural monopoly, where imperfections in the market prevent the
realization of more competitive results, and where, in light of other
policy considerations, competitive results are unsatisfactory in one
ore more respects. Reregulation could employ the same or different
regulatory practices those used before restructuring.

Research and Development (R&D). Research is the discovery of funda-

mental new knowledge. Development is the application of new
knowledge to develop potential new service or product. Basic
power sector R&D is most commonly funded ad conducted
through the Department of Energy (DOE), its associated govern-
ment laboratories, university laboratories, the Electric Power Re-
search Institute (EPRI), and private sector companies.

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Reseller. In general, any entity which purchases goods or services to in
turn sell the same goods or services to third party.

Reserve Generating Capacity. A utility’s back-up ability to insure suffi-

cient energy supply despite occasional loss of some production
capability due to mechanical failures or other problems.

Reserve Margin (Operating). The amount of unused available capability

of electric power system at peak load for utility system
percentage of total capability.

Residential Sector.The residential sector includesprivatehousehold

establishments that consume energy primarily for space heating,
water heating, air conditioning, lighting, refrigeration, cooking and
clothes drying. The classification of an individual consumer’s ac-
count, where the use is both residential and commercial, is based
on principle use. Apartment houses are included.

Resource Efficiency. The use of smaller amounts of physical resources to

produce the same product or service. Resource efficiency involves
concern for the use of allphysical resources and materials used in
the production and use cycle, not just the energy input.

Retail. Sales covering electrical energy supplied for residential, commer-

cial, and industrial end-use purposes. Other small classes, such
agriculture and street lighting, also are included in this category

Retail Wheeling. Transmission of electricity to customer who has pur-

chased the electricity from another utility outside the transmitting
utility’s territory.

Retained Earnings. Corporate earnings that are not paid out in divi-
dends.

Return on Common StockEquity. Shareholders’earningsbased on

Commission’sdetermination of fairmarketreturnon
shareholder’s investment.

Returnon Equity (ROE).Rate of returnallowedonCommon Stock

Equity.

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260 Wheeling Retail Electricity

Revenue Requirement. Amount of return (rate base times rate of return)

plus operating expenses.

Right-of-way. The land on which is built public road, railroad or

public utility (as for transmission line).

Running and Quick-Start Capability.The net capability of generating

units that carry load or have quick-start capability. In general,
quick-start capability refers togenerating units thatcan be available
for load within 30-minute period.

Rural Electrification Administration (REA). Part of Department of Agri-

culture established in 1935 and authorized in 1949 to make loads
for extending electric and telephone service into rural areas, by
making available low cost loans. A lending agency of the US De-
partment of Agriculture, the REA makes self-liquidation loans to
qualified borrowers to finance electric and telephone service to
rural areas. The REA also finances the construction and operation
of generating plants, electric transmission and distribution lines, or
systems for the furnishing of initial and continued adequate electric
services to persons in rural areas not receiving central station ser-
vice. Reorganized and renamed in 1995.

Sales. The amount of kilowatt-hours sold in given period of time;

usually grouped by classes of service, such residential, commer-
cial, industrial, and other. Other sales include public street and
highway lighting, other sales to public authorities and railways,
and interdepartmental sales.

ScheduledOutage. The shutdown of generating unit, transmission

line, or other facility, for inspection or maintenance, in accordance
with advance schedule.

Scrubber. A device at an electric generating plant to remove air contami-

nants produced by burning fossil fuels.

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Seasonal Rates. Rates designed to encourage conservation during time
of the year when energy consumption is high.

Securities and Exchange Commission The federal agency which

supervises the operation of securities exchanges and related aspects
of the securities business.

Securitization. An often discussed means of dealing with potential elec-

tric utility ”stranded costs” is securitization. Securitization refers to
the creation of financial security or bond that is backed by rev-
enue stream pledged to pay the principal and interest of that secu-
rity. This device provides utilities an up-front, lump-sum payment
from the sale of the security. Securitization requires the creation of
transferable property right (through far, through legislation) to
collect from the utility’s ratepayers “customer transition charge”
or through some other “non-bypassable” obligation placed on rate-
payers. The charge is usually, but not always, based on some por-
tion of the utility’s “stranded” or uneconomic costs. If this option
is exercised by the utility, the property right can be transferred by
the utility to designated trustee, “bankruptcy remove special
purpose entity”. The trustee then issues bond and pays theutility
the case proceeds from the sale of the security in the financial
market less transaction costs. The securitized bondholders then
have the right to collect the charge from the utility’s customers that
are obligated to pay it. The utility or distribution company collects
the customer charge from the customers and transfers the funds to
the trustee that then transfers it to the securitized bondholders. The
cash proceeds the utility receives should equal the discounted
present value of the customer charge revenue stream.

Self-service Wheeling. Primarily an accounting policy comparableto

net-billing or running the meter backwards. An entity owns gen-
eration that produces excess electricity at one site, that is used at
another site(s) owned by the same entity. It is given billing credit
for the excess electricity (displacing retail electricity costs minus
wheeling charges) on the bills for its other sites.

Separations. Process by which utility’s expenses and investment in

plant are divided between interstate operations and intrastate op-
erations.

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Service Area. Territory in which utility is required or has the right to
supply service to ultimate customers.

Service Life. The period of time from the date unit of property is place
in service until it is taken out of service. Average service life is the
weighted average of the lives for all units within plant account or
group.

Service Value. The difference between original cost and net salvage
value of utility plant.

Small Power Producer. One that production capacity of no more

than 80 megawatts and uses biomass, waste, or renewable re-
sources (such wind, water, or solar energy) to produce electric
power.

Special Contracts. Any contract that provides utility service under

terms and conditions other than those listed in the utility’s tariffs.
For example, an electric utility may enter into an agreement with
large customer to provide electricity at rate below the tariffed rate
in order to prevent the customer from taking advantage of some
other option that would result in the loss of the customer’s load.
This generally allows that customer to compete more effectively in
their product market.

Special Contract Rate Schedule. An electric rate schedule for an electric

service agreement between utility and another party in addition
to, or independent of, any standard rate schedule.

Special Purpose Rate Schedule. An electric rate schedule limited in its

application to some particular purpose or process within one, or
more than one, type of industry or business.

Spot Pricing. commodity’s market price.

Standby Facility. facility that supports utility system and is generally

running under no-load. It is available to replace or supplement
facility normally in service.

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 D

Standby Service. Support service that is available, needed, to supple-

ment consumer, utility system, or to another utility if schedule
or an agreement authorizes the transaction. The service is not regu-
latory used.

Statutory. Deriving from or ordered by state or federal legislation which

has been enacted, thus is statue (law).

Steam-Electric Plant (Conventional). A plant in which the prime mover

is steam turbine. The steam used to drive the turbine is produced
in boiler where fossil fuels are burned.

Stipulation. Prior to rate increase hearing, the different parties may

agree on the resolution of one or more issues. The resulting agree-
ment (stipulation) is presented at the hearing.

Straight Line Average Service Life. Principle objective is the determina-

tion for each year of the expenses of depreciation attributable to
that year’s operation.

Straight Line Method of Depreciation. Thecost of an asset is spread

equally over the number of years the asset is estimated to beuseful.

Straight Line Remaining Life. Depreciation reserve is reviewed before

applying this method; only the rate is reviewed thereafter.

Stranded Benefits. Public interest programs and goals which could be

compromised or abandoned by restructured electric industry.
These potential “stranded benefits” might include: environmental
protection, fuel diversity, energy efficiency, low-income ratepayer
assistance, and other types of socially beneficial programs.

Stranded Investment. Investments or expenditures made byutilities that

become unrecoverable when customer changes the nature of ser-
vices it receives from that utility. Also called stranded assets, sunk
costs, etc.

Substation. An assemblage of equipment for the purpose of switching

and/or changing or regulating the voltage of electricity.

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Sunk Cost. A cost that has already been incurred and therefore cannot
be avoided by any strategy going forward.

Supply-side. Activities conducted on the utility’s side of the customer

meter. Activities designed to supply electric power to customers,
rather than meeting load through energy efficiency measures or on-
site generation on the customer side the meter.

Supply-side Management. Generally refers to the utility’s management

of its generating and transmission facilities formaximum efficiency.
Demand and Supply side Management techniques are combined in
Integrated Resource Planning (IRP).

Switching Station. Facility equipment used to tie together two more

electric circuits through switches. The switches are selectively ar-
ranged to permit a circuit to be disconnected, or to change the elec-
tric connection between the circuits.

System (Electric). Physically connected generation, transmission,and

distribution facilities operated an integrated unit under one cen-
tral management, or operating supervision.

System Integration (of new technologies). The successful integration of

new technology into the electric utility system by analyzing the
technology’s system effects and resolving any negative impacts that
might result from its broader use.

-T-

Tail Block. The last or lowest priced block of energy in declining block
rate structure.

Take and Energy sales contract which requires payment only for
energy actually delivered.

Take or Pay (TOP). Energy sales contract which requires payment for
given amount of energy whether the customer takes it or not.

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 D

Tariff. A document, approved by the responsible regulatory agency, list-

ing the terms and conditions, including schedule of prices, under
which utility services will be provided.

Testimony. A declaration, oral or written, given under oath at public

hearing and subject to cross-examination.

Tennessee Valley Authority (TVA). A Federal Government owned corpo-

ration established in 1933 to conduct unified program of resource
development in the seven state Tennessee River Valley. Principle
efforts are electric power generation, agricultural development and
flood control, water supply and river navigation projects.

Therm (th). Heat measurement equal to 100,000 British Thermal Units

(Btus). Equivalent to about 100 cubic feet of natural

Time-of-Day Rates (TOD). A rate design which prices energy consump-

tion higher during peak usage times of the day. Used to encourage
energy conservation. In telecommunications, TOD rates are used to
encourage calling during off-peak times.

Time-of-Use Rates (TOU). The pricing of electricity based on the esti-

mated cost of electricity during particular time block. Time-of-use
rates are usually divided into three or four time blocks per twenty-
four hour period (on-peak, off-peak and sometimes supper off-
peak), and by seasons of the year (summer and winter). Real-time
pricing differs from TOU rates in that it is based on actual op-
posed to forecast) prices which may fluctuate many times day and
are weather-sensitive, rather than varying with fixed schedule.

Total Factor Productivity (TFP). A method of measuring electric

utility’s overall productivity.

Transformer. A devise employing the principle of mutual induction to

convert variations of current in primary circuit into variations of
voltage and current in secondary circuit.

Transformation. The process by which electricity voltage is increased or

decreased. Generally, voltage is increased before electricity enters
the transmission line, and decreased before it enters the distribution
line.

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Transmission. The movement or transfer of electric energy over an inter-
connected 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 distribu-
tion to the consumer.

Transmission-Dependent Utility. A utility that relies on its neighboring

utilities to transmit to it the power it buys from its suppliers.
utility without its own generation sources, dependent on another
utility’s transmission system to get its purchased power supplies.

Transmission Line.Forelectricity, the line which carries electricity at

high voltage from points of supply (generating plant or intercon-
nection with other utilities) to substation where it is reduced in
voltage and handed off to distribution lines.

Transmission System (Electric). An interconnectedgroup of electric

transmission lines and associated equipment for moving or trans-
ferring 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.

Transmitting Utility (Transco).Thisis regulated entity which owns,

and may construct and maintain, wires used to transmit wholesale
power. It may or may not handle the power dispatch and coordi-
nationfunctions. It is regulated to providenon-discriminatory
connections, comparable service and costrecovery. According to
EPAct, any electric utility, qualifying cogeneration facility, qualify-
ing small power production facility, or Federal power marketing
agency which owns or operates electric power transmission facili-
ties which are used for the sale of electric energy at wholesale.

Turbine. A machine for generating rotary mechanical power from the

energy of stream of fluid (such water, steam, or hot
Turbines convert the kinetic energy of fluids to mechanical energy
through the principles of impulse and reaction, or mixture of the
two.

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 D

-U-

Unbundled Rate. Individual services are listed and priced separately.

Historically, monopoly utilities provided all, or number of, ser-
vices for single rate. With increasing competition, rates for com-
ponent parts of services are being disaggregated (or unbundled)
and offered separately.

Unbundling. Disaggregating electric utility service into its basic compo-

nents and offering each component separately for sale with sepa-
rate rates for each component. For example, generation, transmis-
sion and distribution could be unbundled and offered discrete
services.

Universal Service. Electric service sufficient for basic needs (an evolving
bundle of basic services) available to virtual all members the
population regardless of income.

Unmetered Service. Energy used and billed without being recorded by

meter, usually where the use is constant, such light on
automatic timer.

Used and Useful Test. Criteria for determining the admissibility of util-
ity plant component of rate base. Generally, plant must be in
use (not under construction or standing idle awaiting abandon-
ment) and useful (actively helping the utility provide efficient ser-
vice).

Utility. A regulated entity which exhibits the characteristics of natural

monopoly. For thepurposes of electric industryrestructuring,
”utility” refers to the regulated, vertically-integrated electric com-
pany. ”Transmission utility” refers to the regulated owner/opera-
tor the transmission system only. ”Distribution utility” refers to
the regulated owner/operator of the distribution system that serves
retail customers.

Utility Plant. The summation all equipment used for the purpose of
generation, transmission and/or distribution of utility service. Or,
recorded explanation is maintained of this equipment.

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 -V-

Value of Service Pricing. Method of pricing which puts more weight on

the perceived value of the service, rather than the cost of the ser-
vice.

Variable Costs. Costs which change with the increase or decrease of

output or traffic.

Vertical Integration. An arrangement whereby the same company owns

all the different aspects of making, selling, and delivering product
or service. In the electric industry, it refers to the historically com-
mon arrangement whereby utility would own its own generating
plants, transmission system, and distribution lines to provide all
aspects of electric service.

Vertical Service. The utility company performs all major utility services
for its customers, including production, transforming, transmittal
anddistribution. Monopoly utilities in thepastfrequentlypro-
vided vertical service; with increasing competition, rates for com-
ponent parts of service are being disaggregated (or unbundled) and
offered separately.

Volt. The practical mks unit of electrical potential difference and electro-
motive force equal to the carrying constant current of one ampere
when the power dissipated between these two points is equal to
one watt and equivalent to the potential difference across resis-
tance of one ohm when one ampere is flowing through it. A unit
of electrical potential difference and electromotive force equal to
1.00034 times the International System unit.

Voltampere (VA). A unit of electric measurement equal to the product of

volt and an ampere that for direct current constitutes measure
of power equivalent to watt.

Volumetric Wires Charge. A type of charge for using the transmission

and/or distribution system that is based on the volume of electric-
ity that is transmitted.

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Watt (W). The absolute mks unit of power equal to thework done at the
rate of one absolute joule per second or to the rate of work repre-
sented by current of one ampere under pressure of one volt and
taken the standard in the US; horsepower.

Watt-hour electrical energy unit of measure equal to one watt

of power supplied to, or taken from, an electric circuit steadily for
one hour.

Weatherization. Energy conservation measures, such installing insu-

lation and storm windows, sealing holes in exterior walls, etc., in-
tended to reduce heating and cooling.

Wheeling. The transmission of electricity by an entity that does not own

or directly use the power it is transmitting. Wholesale wheeling is
used to indicate bulk transactions in the wholesale market, whereas
retail wheeling allows power producers direct access to retail cus-
tomers. This term is often used colloquially meaning transmis-
sion.

Wheeling Service. The movement of electricity from one system to an-

other over transmission facilities of intervening systems. Wheeling
service contracts can be established between two or more systems.

WholesaleCompetition.Asystemwhereby distributor of power

would have the option to buy its power from variety of power
producers, and the power producers would be able to compete to
sell their power to variety of distribution companies.

Wholesale PowerMarket. The purchase and sale of electricity from

generators to resellers (who sell to retail customers) along with the
ancillary services needed to maintain reliability and power quality
at the transmission level.

Wholesale Transmission Service. The transmission of electric energy

sold, or to be sold at wholesale in interstate commerce (from
EPAct).

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 70 Wheeling

Wires Charge. A broad term which refers to charges levied on power

suppliers or their customers for the use of the transmission or dis-
tribution wires.

XY Recorder. An output device that sketches the relationship between

two variables onto grid of plane rectangular coordinates. Ex.-
analogue translation of digital demand incremental pulse on XY
coordinates.

-Y-

Yield. Returned profit obtained from an investment. As used in relation

to investor-owned utilities-the rate of return or yield is quoted in
incremental units of on the stock exchange.

Zone Heat. A central heating and/or cooling system which is arranged

so that different temperatures can be maintained in two or more
areas of the building being heated or cooled or simultaneously
heated or cooled.

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 Appendix E

TOCONVERT MULTIPLY BY

6.452
10-4
0.1550
1,550.0

6.452
3,600.0
0.03731
1.257
2.540
100.0
1.257
0.3937
39.37
0.4950
0.01
0.0254
0.01257

-B-

10.409
1.0550 1O1O

71
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TO CONVERT INTO MULTIPLY BY

Btu foot-lbs 778.3

Btu gram-calories 252.0
Btu horsepower-hrs 3.931
Btu joules 1,054.8
Btu kilogram-calories 0.2520
Btu kilogram-meters 107.5
Btu kilowatt-hrs 2,928
Btu/hr foot-pounds/sec 0.2162
Btu/hr gram-cal/sec 0,0700
Btu/hr horsepower-hrs 3.929
Btu/hr watts 0.2931
Btu/min foot-lbs/sec 12.96
Btu/min horsepower 0.02356
Btu/min kilowatts 0.01757
Btu/min watts 17.57
Btu/sq ft/min watts/sq in 0.1221

calories, gram (mean) Btu (mean) 3.9685 X

candle sq cm lamberts 3.142
candle sq inch lamberts .4870
circular mils sq cms 5.067
circular mils sq mils 0.7854

Dyne/cm erg/sq millimeter .01

Dyne/sq cm atmospheres 9.869
Dyne/sq cm inch of mercury at 0°C2.953
Dyne/sq cm inch of water at 4°C4.015
dynes grams 1.020 X 10-3
dynes joules/cm
dynes joules/meter (Newtons)
dynes kilograms 1.020 10-6

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 7

dynes poundals 7.233

dynes pounds 2.248 10-6
dynes/sq cm bars 10-6

-E-

em, pica inch '167

em, pica cm .4233
erg sec dyne-cm/sec 1.ooo
ergs Btu 9.480
ergs dyne-centimeters 1.0
ergs foot-pounds 7.367 10-8
ergs gram-calories 0.2389
ergs gram-cms 1.020 10-3
ergs horsepower-hrs 3.7250
ergs joules 10-7
ergs kg-calories 2.3898 1O-I'
ergs kg-meters 1.020 10-8
ergs kilowatt-hrs 0.2778
ergs watt-hours 0.2778 1O-lo
ergs sec Btu/min 5,688
ergs/sec ft-lbs/min 4.427
ergs/sec horsepower 1.341
ergs sec kg-calories/min 1.433
ergs/sec kilowatts 10-10

farads microfarads 10-6

Faraday/sec ampere (absolute) 9.6500
faradays ampere-hours 26.80
faradays coulombs 9.649
foot-candle lumen/sq meter 10.764
foot-pounds Btu 1.286
foot-po~ds ergs 1.356

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 74 Wheeling

ONVERT TO INTO BY MULTIPLY

foot-pounds gram-calories 0.3238

foot-pounds hp-hrs 5.050
foot-pounds joules 1.356
foot-pounds kg-calories 3.24 10-4
foot-pounds kg-meters 0.1383
foot-pounds kilowatt-hrs 3.766
foot-pounds/min Btu/min 1.286 10”
foot-pounds/min foot-poundslsec 0.01667
foot-pounds/min horsepower 3.030 lom5
foot-pounds/mm kg-calories/min 3.24 10-4
foot-pounds/min kilowatts 2.260
foot-pounds/sec Btu/hr 4.6263
foot-pounds/sec Btu/min 0.07717
foot-pounds/sec horsepower 1.818 10”
foot-pounds/sec kg-calories/min 0.01945
foot-pounds/sec kilowatts 1.356

gilberts ampere-turns 0.7958

gilberts/cm amp-tums/cm 0.7958
gilberts/cm amp-turns/in 2.021
gilberts/cm amp-turns/meter 79.58
gram-calories Btu 3.9683 10”
gram-calories ergs 4.1868
gram-calories foot-pounds 8.0880
gram-calories horsepower-hrs 1.5596
gram-calories kilowatt-hrs 1,1630
gram-calories watt-hrs 1.1630
gram-calories/sec Btu/hr 14.286
gram-centimeters Btu 9.297
gram-centimeters Ergs 5 980.7
gram-centimeters joules 9.807
gram-centimeters kg-cal 2.343
gram-centimeters kg-meters 10-5

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 E

MULTIPLY BY

-H-

horsepower Btu/min
horsepower foot-lbs/min
horsepower foot-lbs/sec
horsepower (metric) horsepower
ft lb/sec) ft Ib/sec)
horsepower horsepower (metric)
ft lb/sec) ft lb/sec)
horsepower kg-calories/min
horsepower kilowatts
horsepower watts
horsepower (boiler) Btu/hr
horsepower (boiler) kilowatts
horsepower-hrs Btu
horsepower-hrs ergs
horsepower-hrs foot-lbs lo6
horsepower-hrs gram-calories
horsepower-hrs joules lo6
horsepower-hrs kg-calories
horsepower-hrs kg-meters lo5
horsepower-hrs kilowatt-hrs

International ampere ampere (absolute)

International volt volts (absolute)
International volt joules (absolute)
International volt joules lo4

joules Btu
joules ergs 107
joules foot-pounds

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2 76 Electricity Retail Wheeling

TO CONVERT INTO MULTIPLY BY

joules kg-calories
joules kg-meters
joules watts-hrs

kilograms-calories Btu
kilograms-calories foot-pounds
kilograms-calories hp-hrs
kilograms-calories joules
kilograms-calories kg-meters
kilograms-calories kilojoules
kilograms-calories kilowatt-hrs
kilogram meters Btu 10”
kilogram meters ergs lo7
kilogram meters foot-pounds
kilogram meters jaules
kilogram meters kg-calories
kilogram meters kilowatt-hrs
kilowatts Btu/min
kilowatts foot-pounds/min lo4
kilowatts foot-pounds/sec
kilowatts horsepower
kilowatts kg-calories/min
kilowatts watts
kilowatts-hrs Btu
kilowatts-hrs ergs
kilowatts-hrs foot-pounds lo6
kilowatts-hrs gram-calories
kilowatts-hrs horsepower-hrs
kilowatts-hrs joules lo6
kilowatts-hrs kg-calories
kilowatts-hrs kg-meters lo5
kilowatts-hrs pounds of water
evaporated from
and at

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 TO MULTIPLY

kilowatts-hrs pounds of water raised

from 62" to 212°F.
22.75

-L-

lumens/sq ft foot-candles 1
Lumen Spherical candle power .07958
.001496Lumen Watt
lumen/sq ft Lumen/sq10.76
meter
lux foot-candles 0.0929

megohms microhms
megohms ohms
microfarad farads
micrograms grams
microhms megohms
microhms
microliters liters

Newton Dynes 1 105

Ohm Ohm (absolute) 1.0005

ohms megohms 10-6
ohms microhms 106

Planck's quantum Erg second 6.624

poundals dynes 13,826.

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TO MULTIPLY BY

poundals joules/cm 1.383 10”

poundals joules/meter (Newtons) 0.1383
poundals kilograms 0.01410
poundals pounds 0.03108
pounds drams 256.
pounds joules/cm 0.04448
pounds joules/meter (Newtons) 4.448
pound-feet cm-dynes 1.356 lo7

quadrants (angle) degrees 90.0

quadrants (angle) minutes 5,400.0
quadrants (angle) radians 1.571
quadrants (angle) seconds 3.24 X 105

-R-

radians degrees 57.30

radians minutes 3,438.
radians quadrants 0.6366
radians seconds 2.063 lo5
radians sec degrees/sec 57.30
radians/ sec revolutions/min 9.549
radians/sec revolutions/sec 0.1592
radians/sec/sec revs/min/min 573.0
radians/sec/sec revs/min/sec 9.549
radians/sec/sec revs sec/ sec 0.1592

seconds (angle) degrees 2.778

seconds (angle) minutes 0.01667
seconds (angle) quadrants 3.087

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Avvendix E

TO CONVERT INTO BY MULTIPLY

seconds (angle) radians

-T-

temperature absolute temperature

temperature temperature

temperature absolute temperature

(OF)

temperature temperature ("C)

(OF)

-V-

Volt/inch Volt/cm
Volt (absolute) Statvolts

watts Btu/hr
watts Btu/min
watts ergs/sec
watts foot-lbs/min
watts foot-lbs/sec
watts horsepower
watts horsepower (metric)
watts kg-calories/min
Watts (absolute) Btu (mean)/min
Watts (absolute) joules/sec
watt-hours
watt-hours ergs
watt-hours foot-pounds
watt-hours gram-calories

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TO CONVERT INTO MULTIPLY BY

watt-hours horsepower-hrs
watt-hours kilogram-calories
watt-hours kilogram-meters
watt-hours kilowatt-hrs 0.001
Watt (International) Watt (absolute)

-X-

none
-Y-

yards centimeters
yards kilometers
yards meters
yards miles
yards miles (stat.)
yards millimeters

none

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 Index

Cogeneration 121
Agents 83 Commodity 46, 160
Agent Charge 78 Commodity Origination Points 5
Aggregator 220 Competitive Service k d e r 35
Agreement (Retail Wheeling Sale) Complete Tariff 26, 27
128 Confidential Information 118
Alaska Power Administration 21 Contracts 79, 83
Alternative Current (AC) 50 Electricity Commodity Only 87
Amperes 271 Explanation 94
Analyzing Utility Costs 27 ElectricityCommodityOnly
Avoided Cost 222 with (3) Pricing Options 101
Explanation 111
-B- Electricity, Natural Gas, Water/
Balancing 144 Sewer Engineering Services
Basic Data Needed 27 115
Bidders 94, 102, 103, 109, 116 Explanation 124
Billing 93, 100, 136 Conversion Factors (Appendix E)
Boiler/Water Heaters 39 271
Bonneville Power Administration Cool Storage 40
21 Cooperative Utilities 20
British Thermal Units (Btu) 66 Cost-of-Service 22
Energy Comparisons 67 Customer Check List 164
Brokers 78, 83 Customer Equipment Fees 92, 99
Bundled Rates 149 Customer Meter point 155
Buss 49
-D-
-C- Daily Usage Cost Printout (Ex-
Capacitors 54 ample) 32
Categories of Retail Wheeled Elec- Death Spiral 46
tricity 70 D. Electricity Price Index 77, 132
Coal 66, 69 Dekatherm (Dth) 66

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Deliveries 136, 151
Demand 143
Demand-Side Planning 39
Direct Current (DC) 53
Discounts 92, 96
Distribution Charge 80
Distribution Grid 74
Docket Number 18
Due Process 19
Dyne 272
-E-
East Central Area Reliability Coor-
dination Agreement (ECAR) 58,
59
Efficient Magnetic Hybrid Ballasts
39
Electric Chillers 39
Electricity Commodity Only RFP
87
Electricity Commodity Only with
(3) Pricing Options RFP 101
Electricity Consumers Resource
Council (ELCON) 56
Electricity, Natural Gas, Water/
Sewer Engineering Services
RFP 115
Electricity, Overview 3
Electricity Retail Wheeling Sale
Agreement 128
ElectricReliabilityCouncil of
Texas (ERCOT) 58, 59
Electronic Ballasts 39
Electronic Transfer 137
Employment Equal Opportunity
(EEO) 90, 95, 105, 119
Energy Btu Comparisons 67
Energy Efficient Motor Drives 40
EnergyManagementSystems
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(EMS) 40
Energy Partnerships 86
Energy Service Companies (ESCO)
37,39,165,167,168,169
Energy Services 121, 122, 124
Engineering Services 115, 124, 160
Ergs 273
Experimental Rates 27,
Experimental Tariff Schedule 30
Facilities 102,116
Farads (faraday) 273
Federal Energy Regulatory Com-
mission (FERC)
Areas Regulated 9
Fees 92, 98
FERC Order 9
Introduction 10
Open Access 12
Transmission/Local Distribu-
tion 13
Stranded Costs 14
Federal Power Act (FPA) 11
Federal Regulatory Agencies 171
Federal Utilities 21
Final Rule 12
Firm Delivery 77, 133
Firm Distribution 16
Firm Service 16, 70
Fixed Discount 107, 123, 147
Fixed Price 132
Fixed Series Capacitors 54
Florida Reliability Coordinating
Council (FRCC) 58, 59
Flow of Electricity 23
Fluorescent Lighting 39
F o o t - P o ~ d s274
Force Majeure 93, 100, 138, 153
For-Profit Utilities 16, 181 Intrastate 15
Fuel Costs 92, 97 Distribution Line Losses 92, 98
Fuel Oil 66 Investor-Owned Companies 16,
Futures Price 77 181

-G- -F
Gas-fired Air Conditioning 39 Joule 243, 275
Generation 52, 80 Jurisdictional 244
Generator 239
Gigawatt (GW) 239
Kilovolt (kV) 244
Gilberts 274
l l o w a t t (kW) 244,276
Glossary (Appendix D) 219
Kilowatt-hour (kwh) 66
Gram-Calories 274
Kirchoff’s Laws 48
Gram-Centimeters 274
Grid 240 -L-
Letter of Understanding 136
Lighting Controls 39
Harmonic Levels 61 Line Capacity 49
Heat Pumps 39 Line Losses 51, 74
Hedging Contracts 240 Line Loss Fees 79, 92, 98
Hertz 61,120 Loop Flow 48
High Intensity Discharge Lamping Low-Income Home Energy Assis-
39 tance Program (LIHEAP) 245
High Voltage DC (HVDC) 53, 80 Lumens 277
Horsepower 275

Map of the North American Elec-

Independent System Operators tric Reliability Council Regions
12 59
Insurance 90,95,105,119 Marketers 78, 84
Interconnection 53 Market Service 16
International Boundary and Water MegaVARS (MVARS) 50
Commission 21 Megawatts 246
Interruptible Distribution 16 Meter Point 74
Interruptible Service 16, 70, Meter Point Pricing 149
Interstate 7 Metering Problems 51
Interstate Transmission Charges Mid American Interpool Network
79, 92, 97 (MAIN) 58, 59
Intervenor Groups 17 Mid
Atlantic
Area
Council

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 Wheeling

(MAAC) 59 -P-
Mid Continent Area Power Pool Parallel Path 48
58, 59 Passive Filters 54
Minimum Guaranteed Discount Peak Power Demand 39
111 Peak Shaving 121
Miscellaneous fees 81 PerformanceSpecifications 106,
Municipalities 19 112
Municipal Utilities 15 Periodic Reports 17
Permits 119
-N- Point-of-Usage 143
Natural Gas 115, 121 Potential Provider Partners (ES-
Negotiable Rate COS) 167
Negotiated Incremental Rates 71 Poundals 277
Newton 277 Power Factor, Correction Factors
Nominations 144 40
Non-Firm (Interruptible) Delivery Power Pools 58, 59
77, 133 Power Quality 61
North American Reliability Coun- Pre-Bid Meeting 94
cil Regions (NERC) 57, 59 Pricing Criteria 15
NortheastPowercoordinating Producers 78, 84
Council 59 Pro Forma Tariff 12
Not-for-Profit 19 Propane 66
Notice of Proposed Rules (NOPR) ProposalSpecifications 107, 113,
122
Proprietary Information Clauses
89,95,104,118
OASIS 11 Provider’s Gross Margin 92, 98
Occupancy Sensors 39 Public Service Commissions 17
Off-peak Generation Service 77 Public Utility Commissions 17
Off-Tariff Schedules 27,34
Ohm 277
On-Peak and Off-peak Schedules Quadrants 278
77, 133 Qualification Process 117
Open Access 12 Quality Specifications 106, 120
Open Book Arrangements 114 Quasi-Cooperative 84
Options 14
Origination Points 5
Out-of-Merit Dispatch 49 Radians 278
Overview of Electricity 3 Railroad Commission of Texas 17

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Rate Schedule 26
Reactive Power 50
Real Time Pricing 28
Receipt/Meter Point 74
Reflectors 39
Regulation 8
Interstate
Intrastate 14
Regulatory Agencies 171
Federal
State 172
Request for Proposal (RFP) 37,85,
86,87,102,115, 116
Response Specification 106
Retail Wheeling 45
Basics
Categories
Contract Process 83
Electricity Sale Agreement 128
Processes 65
Rooftop Air Conditioning 39
Rural Electric Cooperative Utilities
20
Rule #S88 9
Sample: Utility Data Request Form Thyristor Converters 53
Letter 40
Seconds (Angle) 278
Self-Regulated 20
Services 116
Serving Utility 143
Shared Savings 107, 108
Shunt Compensation 54
Southeastern Electric Reliability
Council (SERC) 58
Southeastern Power Administra-
tion 21
Southwest Power Pool (SPP) 58
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Southwestern Power Administra-
tion 21
Spot Market Pricing 146
State Fees 92, 99
State Intervenor Groups 17
State Regulatory Agencies 172
Miscellaneous Information (Ap-
pendix C) 211
Static VAR Compensation (SVCs)
54
Static VAR Controls 54
Stranded Costs 14
Stranded Investments 81
Recovery Costs 81, 99
Substitutions, (Contract) 106, 120
Subsynchronous Oscillations 54
Suppliers 102,116
Surcharges 137
Tariff15,26
Temperature 279
Tennessee Valley Authority (TVA)
21
Thermal Insulation 40
Thermal Storage 40
Time Tracker 163
Title 84, 138, 153
Traders 84
Transformation Costs 80
Transmission Agreements 138, 152
Transmission Grid 73
Transmission/Local Distribution
13
Transmission Planning 52
Turbine Generators 54
True Energy Cost Basis 66, 68
Truing Up 62
-U-
Unbundled 13
US Army Corps. of Engineers 21
US Bureau of Indian Affairs-
Coolidge, AZ 22
US Bureau of Indian Affairs-
Polson, MT22
US Bureau of Reclamation 22
Unregulated Marketing Affiliate
Programs 27
Usage 143
Use-Point, Meter Cost 92, 99
Utility Audits 39
Utility Charges 80
Utility Services 111
Water/Sewer 115, 121
Watts (\V) 50,269
Watt-hours (Wh) 279
Web Sites 65,66
Western Area Power Administra-
tion 22
Western Systems Coordinating
Council (WSCC) 58, 59
Wheeling 74,269
Window Air Conditioning 39
Window Film 40
Workman's Compensation 105,119
-X-
XY Recorder 270

Variable Energy Services Cost Con-

tracts 123 Yards 280
VARS 50 Yield27
Vertical Service 268
Voltage 50 -Z-
Voltage Levels 80 Zinc Oxide Arresters/Disks 54
Voltampere (VA)268 Zone Heat 270
Volts120,279

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