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NEBRASKA POWER REVIEW BOARD ORIENTATION MANUAL

TABLE OF CONTENTS

Chapter 1: BOARD ROLES AND RESPONSIBILITIES
Chapter 2: HISTORICAL PERSPECTIVE
Chapter 3: THE ELECTRIC INDUSTRY IN NEBRASKA
Chapter 4: HOW THE BOARD OPERATES
Chapter 5: PRB PLANNING AND REPORTS
Chapter 6: PRB POLICIES
GLOSSARY

GLOSSARY

~A~

Access Charge: A fee imposed on a seller to gain access to a utility’s transmission or distribution lines necessary to deliver power to a point of exchange or use.

Alternating Current (A.C.): Electrical current that periodically (regularly) changes direct. A.C. is much more efficient than D.C. for transmission purposes.

Alternator: An A.C. generator. An A.C. generator has a magnet that rotates within a stationary structure containing wires in which alternating voltage is induced.

American Public Power Association (APPA): A national service organization representing over 2,000 municipal and other state or local publicly-owned electric utilities throughout the United States. The Power Review Board is an Associate Member of the APPA.

Ancillary Services: Interconnected operations services for operating reserve, voltage control, regulation and frequency response, scheduling and system control and dispatch, and other power supply necessary to affect a reliable transfer of electrical energy at specified contract terms between a buyer and seller.

Availability: A measure of time that a generating unit, transmission line or other facility is capable of providing service, whether or not it is actually in service. Typically this measure is expressed as a percent available for the period under consideration.

Avoided Cost: The cost the utility would incur but for the existence of an independent generator or other energy service option. Avoided cost rates have been used as the power purchase price utilities offer independent suppliers.

~B~

Baseload: The minimum amount of power delivered or demanded over a given period at a constant rate. Baseload generators are those that are relied upon to run continuously (except for maintenance) to provide a constant power source for the customers of retail electric utilities.

Bilateral Contract: A direct contract between a power producer and end user outside a centralized power pool.

Black-Out: Refers to a condition when all electrical power is disrupted to a certain area.

Bottleneck Facility: A point on a system, such as a transmission line, through which all electricity must pass to get to its intended buyers. 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 additional facilities to relieve the constraint.

BPA: The Bonneville Power Authority. The BPA is one of five federal power marketing administrations that sell electric power produced by federal hydroelectric dams.

Broker: An agent that arranges power transactions. The agent may aggregate customers and arrange for transmission, firming and other ancillary services as needed. The broker does not take title to the power supply.

Broker System: An electronic marketplace in which electric generation is priced and purchased.

Bulk Power Supply: This term is often used interchangeably with wholesale power supply. In broader terms, it refers to the aggregate of electric generating plants, transmission lines and related equipment, and can also refer to one utility or a group of interconnected utilities.

~C~

Capacity: The continuous load carrying ability, expressed in megawatts [MW] or mega volt-amperes [MVA] of generation, transmission, or other electrical equipment.

Capacity Factor: The ratio of total energy generated by a plant for a specified period of time to the maximum possible energy it could have produced if operated at the maximum capacity rating for the same period, expressed as a percent.

Captive Customer: A customer who does not have realistic alternatives to buying power from the local utility, even if that customer had the legal right to buy from competitors.

Cogeneration (Cogen): Generating electricity using a waste heat fuel source (such as steam) which comes from another industrial process.

Competitive Power Supplier: A supplier of retail energy and capacity and ancillary services, other than the incumbent supplier, that may own generation, buy and resell, and who has title to the electricity.

Competitive Transition Charges: A charge that allows utilities to recover historic costs related to electric generating facilities and power purchase contracts.

Conductor: Any substance, usually metallic, that will readily conduct an electrical current. When used in the context of a transmission line, conductor refers to the line that will actually transmit the current.

Contracts for Differences (CfD): A type of bilateral contract where the electric generator-seller is paid a fixed amount over time which is a combination of the short-term market price and an adjustment with the purchaser for the difference. For example, a generator may sell a distribution company power for ten years at 6 cents/kWh. That power is bid into a PoolCo at a low cent/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 cents/kWh (or vice versa if the pool price should go above the contract price).

Contract Path: The most direct physical transmission tie between two interconnected entities. When utility systems interchange power, the transfer is presumed to occur over the contract path, not withstanding the fact that power flow in the network will distribute in accordance with network flow conditions.

Control Area: An electric system or systems, bounded by interconnection metering and telemetry, capable of controlling generation to maintain its interchange schedule with other control areas and contributing to frequency regulation of the interconnection.

Control Area Operator: The operator of a Control Area in which transmission facilities used for transmission services are located.

Cooperative Electric Utility (Co-op): An electric utility owned by its customers and operated for the benefit of those using its service.

Cost Based Pricing: Electric service prices determined by adding the costs associated with serving an individual customer (or the average cost of serving a group of similar customers) to an allowed return on investment.

Cost Allocation Working Group (CAWG): A working group that was formed by the Southwest Power Pool’s Regional State Committee (RSC) to research and provide recommendations on issues assigned to it by the RSC. The CAWG’s voting membership consists of one representative from each state regulatory agency with a representative on the RSC. The PRB has a consultant that is designated as the PRB’s CAWG member.

Cost Based Electricity: A term used by consumer-owned electricity meaning that only the costs of generation, transmission and distribution are included in the cost, and that there is no “margin” or “profit” included.

Cost of Service Study: An analysis of all of a utility’s costs at a very detailed level for purposes of assigning these costs to the various customer classes.

Customer Classes: A term used in ratemaking to segregate customers by types such as residential, commercial and industrial. The main segregation occurs due to the amount and way customers use electricity.

Curtailability: The right of a transmission provider to interrupt all or part of a transmission service due to constraints that reduce the capability of the transmission network to provide that transmission service.

~D~

Decoupling: A regulatory process for determining the total revenue needed to cover the costs of a utility in which the actual or projected level of sales is disassociated (“decoupled”) from the revenues derived. Conservationists often advocate such a process to discourage utilities from selling more energy to maintain adequate profit levels.

Default Provider: In the case where an electric consumer does not choose a new supplier once competition begins, a supplier is automatically assigned. This supplier is known as a ‘default supplier’.

Demand: The rate at which electric energy is delivered to or by a system at a given instant or averaged over any designated interval of time, generally expressed in kilowatts or megawatts.

Demand Side Management (DSM): 1) Refers to measures taken by a utility to encourage conservation of electric usage or to reschedule electric usage for more uniform usage throughout the day or year. Such efforts are intended to minimize the size and number of new generating facilities or to design strategic load growth. 2) Planning, implementation, and evaluation of utility-sponsored programs to change the timing or reduce the amount of a customer’s energy consumption.

Deregulation: The elimination of regulation from a previously regulated industry or sector.

Direct Access: The ability of a retail customer to purchase electricity as a commodity directly from the wholesale market rather than through a local distribution company.

Direct Current (D.C.): An electric current which flows in one direction only. Examples of direct current would be a dry cell, battery, or rectifier.

Disaggregation: The functional separation of the vertically integrated utility into smaller, individually owned business units (i.e., generation, dispatch/control, transmission, distribution). The terms “deintegration”, “disintegration” and “delamination” are sometimes used to mean the same thing. See also Divestiture.

Distributed Generation: A distributed generation system involves small amounts of generation located at numerous locations on a 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 distribution lines. Distributed generation can reduce the risks associated with having too much generation in one location or reliant on one or two transmission lines.

Distribution: The process of delivering electric power at lower voltages from central substations to the point of end use.

Distribution Charges: Charges for the use of local wires, transformers, substations and other equipment used to deliver electricity to homes and businesses.

Distribution system: The poles, wires and apparatus used in distributing electricity to end-use customers. Electricity is transmitted to a distribution system over transmission lines.

Distribution Utility (Disco): The regulated electric utility entity that constructs and maintains the distribution wires connecting the transmission grid to the final end-use customer. The distribution utility can also perform other services such as aggregating customers, purchasing power supply and transmission services for customers, billing customers and reimbursing suppliers, and offering other regulated or non-regulated energy services to retail customers. The “wires” and separate entities are used to supply these two types of distribution services.

Divestiture: 1) Refers to the sale of a utility’s generation or transmission assets. 2) The stripping off of one utility function from the others by selling (spinning-off) or in some other way changing the ownership of the asset 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. See also Disaggregation.

~E~

ECAR: East Central Area Reliability Coordination Agreement.

Economic Dispatch: The allocation of demand to individual generating units on-line to effect the most economical production of electricity.

Economic Efficiency: 1) A measure of the amount of output obtained for a given set of economic inputs. The most desirable economic efficiency is that which produces a given level of output using the fewest economic inputs. 2) A 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. Economic efficiency gains can be achieved through cost reduction, but it is better to think of the concept as actions that promote an increase in overall net value (which includes, but is not limited to, cost reductions).

Economic Long-Run: The time period over which the value of a given set of economic inputs is recovered, which is often a function of both the physical life of the asset and its economic usefulness.

Economic Short-Run: Any period less than the economic long-run. During the economic short-run, economists argue that price levels should cover all variable costs and make some or no contribution to fixed costs, but that full costs may not be recovered.

Economies of Scale: The efficiencies and reduced costs achieved due to the larger size of a project, which eliminates duplication of some efforts and costs. Economies of scale exist where the industry exhibits decreasing average long-run costs with size.

EEI: Edison Electric Institute. An association of investor-owned electric companies formed in 1933. EEI provides advocacy, analysis, and information to its members and government agencies. EEI also provides a forum for its member companies to discuss issues related to the electric industry.

ELCON: Electricity Consumers Resources Council. An association formed in 1976 of large industrial consumers of electricity. ELCON works cooperatively for the development of coordinated and consistent policies affecting electric energy supply and pricing at the federal, state and local levels.

Electron: A negatively charge atomic particle which orbits the atomic nucleus. It electrically balances the uncharged neutron(s) and the positively charge proton(s), which make up the nucleus.

Embedded Costs Exceeding Market Prices (ECEMP): Embedded costs of utility investment exceeding market prices are: 1) costs incurred pursuant to a 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 restored through the asset’s sale. Regulatory questions involve whether such costs should be recovered by utility shareholders and if so, how they should be recovered.

Energy: The capacity for doing work. Electric energy is measured commercially in kilowatt hours.

Environmental Externalities: Environmental costs associated with the provision of a good or service which may or may not be incorporated in the internal cost measurements of the provider. Such costs are sometimes imputed theoretically to represent unmeasured costs to society associated with the use of the good or service. In the electric industry, the term “externalities” is sometimes used to refer to medical or clean-up costs associated with air or water pollution associated with generation facilities.

EPAct: The Energy Policy Act of 1992. EPAct addresses a wide range of energy issues. The legislation created a new class of power generators and grants the authority to FERC to order and condition access by eligible parties to the interconnected transmission grid.

ERCOT: The Electric Reliability Council of Texas.

ESCO: An Efficiency Service Company. A company that offers to reduce a client’s electricity consumption with the cost savings being split with the company.

~F~

FERC: The Federal Energy Regulatory Commission. FERC regulates the price, terms, and conditions of power sold at wholesale in interstate commerce and regulates the price, terms and conditions of all transmission services. FERC is the federal counterpart to state utility regulatory commissions, which regulate the retail operations of electric utilities.

FERC Order 888: FERC Order 888 promotes wholesale competition through open access and non- discriminatory transmission service by investor-owned utilities. Requirements of FERC 888 include the identification of stranded costs by public utilities and transmitting utilities for recovery, unbundling of costs, and separating marketing functions from transmission operations.

FERC Order 889: Requirements of FERC Order 889 include the creation of a nation-wide information sharing system. Open Access Same-Time Information System (OASIS) is a computer information system on the internet, created to allow utilities and power marketers to make reservations on transmission systems across the nation.

Firm Power: Power that is guaranteed by the supplier to be available at all times during a period covered by a contractual commitment.

Forwards: A forward is a commodity bought and sold for delivery at some specific time in the future. It is differentiated from futures by the fact that a forward contract is a customized, non-exchange traded, and a non-regulated hedging mechanism.

Franchise: A franchise is a grant of right or privilege to occupy or use public streets, ways and facilities to deliver service to customers. Local governments typically grant franchises.

Franchise Fee: A payment to a city or other local government for the exclusive right to sell a product or service in a specified area.

Frequency of A.C.: The rate at which alternating current changes direction, measured in cycles per second.

FRCC: Florida Reliability Coordinating Council.

Futures Market: Arrangement through a contract for the delivery of a commodity at a future time and at a price specified at the time of purchase. The price is based on an auction or market basis. Futures market is a standardized, exchange-traded, and government regulated hedging mechanism.

FTR: Future Transmission Right

~G~

Generation: The process of producing electricity from other forms of energy.

Generation Charges: The charge for generating or creating the electricity used. This charge includes the cost of fuel and power plant costs, but not the cost of delivering the electricity to the customer.

Generation Dispatch and Control: Aggregating and dispatching generation from various generating facilities, and providing backup and reliability services.

Generator: A machine that converts mechanical power into electrical power.

Grid: A system of interconnected power lines and generators that is managed so that the generators are dispatched as needed to meet the electrical demands.

Gross Revenue Tax: A tax that is applied to the gross revenue of a utility. Often referred to as payment-in-lieu-of taxes).

~H~

Hedging Contacts: Contracts which establish future prices and quantities of electricity independent of the short-term market. Derivatives may be used for the purpose. See also Contract for differences, forwards, futures and options.

Horsepower (HP): A unit of mechanical power. One horsepower equals about three-quarters of a kilowatt.

Hydro: A generation plant using flowing water to turn turbines for generation.

~I~

Independent Power Producer (IPP): An entity which owns facilities to generate electric power for sale to utilities and end users. IPP’s have no assured retail customer base, but rather make profits from selling power into the market. See also Non-Utility Generators.

Independent System Operator (ISO): Independent system operator. An ISO is an independent third party who takes over ownership and/or control of a region’s transmission system for the purpose of providing open access to retail and wholesale markets for supply.

Integrated Resource Planning (IRP): A process to control electric power planning through both demand-side management (to reduce the need or demand for electricity) and supply side management (to redistribute the types of needed electric generation among fuel types, location, etc.) to accomplish specified social and environmental goals.

IPP: See Independent Power Producer.

~J~


~K~

Kilovolt (kV): One kilovolt is 1000 Volts.

Kilowatt (KW): A watt is a unit of power in the International System of Units (SI) that is required to do work at the rate of 1 joule per second. Kilo is a metric system term meaning 1000. Therefore, a kilowatt is equal to 1000 watts.

Kilowatt-hour (KWh): A Kilowatt-hour is the total number of kilowatts used in one hour, or 3,600,000 joules.

KVA: Kilovolt Ampere refers to the unit used to express apparent power. This unit of measurement for power consumption is used for equipment that is not resistive such as motors, computers, and most non-incandescent lighting.

~L~

LB 901: Legislative Bill 901 (2000 session). The Nebraska State Legislature passed Legislative Bill 901 on April 11, 2000. LB 901 requires the Board to prepare an annual report examining the conditions in the electric industry that indicate whether retail competition in the electric industry would benefit Nebraska’s ratepayers. The bill incorporated the elements of the “condition certain” approach to electric deregulation in Nebraska that resulted from the prior LR 455 studies.

LR 455: Legislative Resolution 455. LRB 455 was a three- year comprehensive review of the electric industry in Nebraska, commissioned by the Nebraska State Legislature in1997. The final report recommended and formed the basic premise of the “Conditions Certain” approach to electric deregulation in Nebraska. Under the “Conditions Certain” approach, retail competition would be considered in Nebraska when the conditions indicated it would benefit Nebraska’s ratepayers, as opposed to a “date certain” approach where an arbitrary date is chosen when retail competition will be implemented.

LES: Lincoln Electric System. LES is the municipal electric utility for the City of Lincoln, Nebraska.

LMP: Locational Marginal Price. LMP is the wholesale electric price at a particular location on the transmission system that reflects the cost to meet the next unit of demand at that location.

Load: The amount of power delivered at any instant. It may be applied to a generating plant, a transmission or distribution system, a whole power system, or a customer’s requirements.

Load Factor: A measure of the degree of uniformity of demand over a period of time, usually one year, and equivalent to the ratio of the average demand expressed as a percentage.

Load Following: 1) The obligation of the wheeling utility to provide from its own generating sources any difference between the amount of power bring wheeled and the instantaneous requirement of the customer receiving, or the supplier delivering the wheeled power. 2) Load Following falls into two categories: (a) dedicating sufficient generating capacity to the automatic generator control (AGC) mode to allow them to follow load, and (b) monitoring mismatches between intended and actual interchanges between control areas, and transmitting control signals to AGC generators to minimize this mismatch. Both require a system to record mismatches (over-runs and under-runs).

Load following is important because it helps maintain system frequency. Otherwise, if demand exceeded supply, generators would slow down; conversely, if supply exceeded demand, generators would speed up. Both situations could result in an unstable situation which could lead to a widespread outage.

Local Distribution Company: The regulated electric utility company that constructs and maintains the distribution system that connects the transmission grid to the end use customer.

~M~

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 Pricing: Electric service prices determined in an open market of supply and demand under which the price is set solely by agreement as to what a buyer will pay and a seller will accept. Such prices could recover less or more than the full cost, depending upon what the buyer and seller see as their relevant opportunities and risks.

Marketer: An agent for generation projects who markets power on behalf of the generator. The marketer may also arrange transmission, firming or other ancillary services as needed. Though a marketer may perform many of the same functions as a broker, the difference is that a marketer represents the generator while a broker acts as a neutral middleman. See also Power Marketers.

MAAC: Mid-Atlantic Area Council.

MAIN: Mid-America Interconnected Network, Inc. The first regional electric reliability council under the North American Electric Reliability Council (NERC). MAIN, ECAR and MAAC were replaced by the Reliability First Corporation, which began operations January 1, 2006. MAIN members joined either Reliability First, the Midwest Reliability Organization (MRO), or the Southeastern Electric Reliability Council, Inc. (SERC).

MAPP: See Mid-Continent Area Power Pool.

MAPP Restated Agreement: The original MAPP organizational contract among members was renegotiated to comply with federal requirements and provided for new classes of members including independent power producers and non-transmission owning utilities. The restated agreement was unbundled to facilitate membership in ISOs and other organizations by parties to the restated agreement.

Megawatt (MW): One million watts.

Metering: The process and methods of utilizing devices to measure the amount and direction of electrical energy flow.

Meter Reading Charges: The supplier’s costs of providing customers with metering and/or meter reading services.

Mid-Continent Area Power Pool (MAPP): One of the nation’s nine electricity reliability councils under the North American Electric Reliability Council (NERC). MAPP covers a geographic area including the eastern two-thirds of Nebraska, South Dakota, North Dakota, Montana, Minnesota, western Wisconsin, Iowa, and parts of Saskatchewan and Manitoba, Canada.

Midwest ISO (MISO): Midwest Independent System Operator. The non-profit Midwest ISO is an Independent Transmission System Operator that serves the electrical transmission needs of all or parts of Illinois, Indiana, Iowa, Kentucky, the Province of Manitoba, Michigan, Minnesota, Missouri, Montana, Nebraska, North Dakota, Ohio, Pennsylvania, South Dakota and Wisconsin.

MRO: Midwest Reliability Organization. A voluntary association of over 40 organizations formed in 2003. The MRO adopts implements and enforces NERC and regional reliability standards. It is governed by a balanced stakeholders’ board of directors. The MRO region covers nine states and two Canadian provinces.

MTEP-3: Midwest Transmission Expansion Plan

Municipal Utility (Muni): A provider of utility services owned and operated by a municipal government.

Municipalization: The process by which a municipal entity assumes responsibility for supplying utility service to its customers. In supplying electricity, the municipality may generate and distribute the power or purchase wholesale power from other generators and distribute it.

~N~

NARUC: The National Association for Regulatory Utility Commissioners. NARUC is a non-profit organization whose members consist of governmental agencies engaged in the regulation of utilities and carriers in all fifty States, the District of Columbia, Puerto Rico and the Virgin Islands. NARUC's members regulate the telecommunications, energy, and water utilities industries.

NASUCA: The National Association of Utility Consumer Advocates. NASUCA is an association of 44 consumer advocates in 42 states and the District of Columbia. Its members are representing the interests of utility consumers before state and federal regulators and in the courts.

Non-Utility Generators (NUGs): Facilities for generating electricity that are not owned exclusively by an electric utility (less than 50%) and which operate connected to an electric utility system. Included are qualifying cogeneration and independent power productions facilities under the Public Utility Regulatory Policies Act of 1978 (PURPA) (referred to as “qualifying facilities” or QF’s), facilities installed under the competitive bidding process, and other independent power producers (IPPs) that operate connected to the electric utility system. See also Independent Power Producers.

NAERO: North American Electricity Reliability Organization. See North American Reliability Council.

NERC: See North American Reliability Council.

NPCC: Northeast Power Coordinating Council. NPCC is a regional reliability coordinating council consisting of the New England Power Pool, the New York Power Pool and the utilities of eastern Canada.

NOPR: Notice of Proposed rulemaking. A designation used by the FERC for some of its dockets.

North American Reliability Council: Effective January 1, 2007, the North American Electric Reliability Council and the North American Electric Reliability Corporation merged, forming the NERC Corporation. The Federal Energy Regulatory Commission certified the NERC Corporation as the “electric reliability organization” in July 2006. NERC improves the reliability and security of the bulk power system in North America by developing and enforcing reliability standards; monitoring the bulk power system; auditing owners, operators, and users for preparedness; and educating and training electric industry personnel.

North American Electric Reliability Organization (NERC): See North American Reliability Council.

NRTA: Northwest Regional Transmission Association. A sub-regional transmission group within the Western Regional Transmission Association.

NPPD: Nebraska Public Power District.

Nuclear Decommissioning: Mandated charges to pay for dismantling nuclear power plants after they are retired from service.

~O~

Obligation to Serve: The concept embodied in the statutes of many States governing the retail or end-use provision of electric service in which a utility is required to serve all customers who request service at non-discriminatory prices. This obligation is rendered in return for the granting of exclusive rights to serve a geographic area at retail.

Off-Peak: Generally refers to designated periods of relatively low system demand. NERC has defined these periods as 10 p.m. until 6 a.m., Monday through Saturday, and all day Sunday.

Off-Peak Rate: Generally refers to the cost for power used during Off-Peak periods.

OMS: See Organization of MISO States.

OPPD: Omaha Public Power District.

Open Access Same Time Information System (OASIS): An electronic information posting system for transmission access data that allows all transmission customers to view the data simultaneously.

Options: An option is a contractual agreement that gives the holder the right to buy (call option) or sell (put option) a fixed quantity of a security or commodity (for example, a commodity or commodity futures contract), at a fixed price, within a specified period of time. May either be standardized, exchange-traded and government regulated or over-the-counter, customized and non-regulated.

Organization of MISO States (OMS): An organization of governmental regulatory agencies from 14 U.S. states and one Canadian province. OMS provides advice and counsel to the Midwest Independent System Operator and the Federal Energy Regulatory Commission. The Power Review Board is a member of the OMS.

~P~

Pancaking: Refers to multiple transmission tariffs that are applied when electricity is transferred across multiple utility systems.

Parallel Path Flows: The flow of electricity on an electric system’s transmission facilities resulting from scheduled electric power transfers between two electric systems. Electric power flows on all interconnected parallel paths in amounts inversely proportional to each path’s resistance.

Payments in Lieu of Taxes: Payments made to local governments in lieu of property and other taxes.

Peak Load or Peak Demand: The electric load that corresponds to a maximum level of electric demand in a specified time period.

Performance-Based Rate Making: A process by which a utility’s rates are set in such a way as to encourage certain behaviors considered to be in the public interest, as opposed to setting rates based on cost plus an allowed return on investment.

PoolCo: 1) An entity in which the generating assets of all members are “pooled” and the participants obtain pooled average prices for power to meet their system needs. 2) PoolCo refers to a specialized, centrally dispatched spot market power pool that functions as a short-term market. It establishes the short-term market clearing price and provides a system of long-term transmission compensation contracts. It is regulated to provide open access, comparable service and cost recovery.

Power Exchange: An entity that would provide a centrally dispatched spot market power pool.

Power Marketers: Sales agents for electric power, typically not a part of a utility. Such entities contract with sellers and buyers as the middleman. Unlike brokers, power marketers take title to all power they transact. See also Marketer.

Pricing Parity: Under regulated pricing, the process of setting the price to collect revenues from a given group or category of customers to equal the cost to serve the customer, including an allowed return on investment. By contrast, and absence of parity would indicate that the prices for one class of customers were less than the full cost and prices for another class of customers were more that the full cost, even though total prices for all classes together may equal the total cost for all classes.

Pricing Transparency and Liquidity: In a fully functioning competitive market, price transparency would reflect an indifference to the identity of buyer and seller because the price would be entirely available to all buyers and sellers.

Public Power: Consumer-owned electric utilities. The term includes all political subdivisions of the state such as public power districts and municipal systems, as well as cooperatives owned by their members.

Public Purpose Funds: State mandated programs, such as low-income discounts and energy efficiency programs.

PUHCA: The Public Utility Holding Company Act of 1935. PUHCA prohibits acquisition of any wholesale or retail electric business through a holding company unless that business forms part of an integrated public utility system when combined with the utility’s other electric business. The legislation also restricts ownership of an electric business by non-utility corporations.

PURPA: The Public Utility Regulatory Policies Act of 1978. This federal statute requires the local retail electric utility to purchase the output from cogenerators and small power producers who have renewable generation facilities and meet certain criteria. The utilities are only required to pay the avoided cost for the electricity purchased under this statute. See also Avoided Cost.

~Q~

Qualifying Facility (QF): Under PURPA, QFs are allowed to sell their electric output to the local utility at avoided cost rates. To become a QF, the independent power supplier must produce electricity with a specified fuel type (cogeneration or renewables), and meet certain size and efficiency criteria established by the Federal Energy Regulatory Commission.

~R~

Regional Transmission Group (RTG): Regional Transmission Group is a voluntary organization of transmission owners, users and other entities interested in coordinating transmission planning, expansion, operation and use on a regional and inter-regional basis.

Regional Transmission Organization (RTO): An organization which coordinates, controls and monitors the operation of the electrical grid system of a particular region. See also Independent System Operator.

Reliability: The degree to which electric power is made available to those who need it in sufficient quantity and quality to be dependable and safe. The degree of reliability may be measured by the frequency, duration, and magnitude of adverse effects on consumers’ services.

Reserve Margin: The amount of installed generation which exceeds the operating generation capacity needed to meet the expected peak load of a given utility with a defined statistical probability. Standards vary from utility to utility, but most utility planners consider a 15 to 20 percent reserve margin essential for good reliability.

Restructuring: The reconfiguration of the vertically integrated electric utilities. Restructuring refers to the separation of various utility functions into individually operated and owned entities that control each of the various functions.

Retail Competition: A market system under which more than one provider can sell to retail customers and retail customers can buy from more than one supplier.

Retail Market: A market in which electricity and other energy services are sold directly to the end-use customer.

Retail Sales: Sales of electric energy to residential, commercial and industrial end-use customers.

RTO: See Regional Transmission Organization.

Rural: A public power district engaged in distributing power to rural consumers.

Rural Electric Cooperative Utility: An electric utility set up under the Rural Electrification Act of 1934 and owned by the customers of the utility itself. The original purpose of the Act was to provide electric power availability to rural customers who may not have received service because they were more costly to serve than the concentrated urban customers. See also Cooperative Electric Utility.

Regional State Committee (RSC): A Southwest Power Pool committee with a representative commissioner or board member from each state regulatory agency with utilities with members in the SPP. The PRB has one seat on the RSC.

Rural Utility Service (RUS): A program under the U. S. Department of Agriculture that provides direct loans and loan guarantees to electric utilities to serve customers in rural areas.

~S~

Seams Operating Agreement (SOA): An agreement to coordinate the granting of transmission service between adjoining regions so that neither region oversells transmission service that would overload transmission facilities in the adjoining region.

Service Area Exclusivity: The concept embodied in the statutes of many States under which a utility is granted the right to be the exclusive provider of electric service in a given geographic area in return for the utility’s obligation to serve all customers in that area with reliable service at fair and non-discriminatory rates.

SERC: Southeastern Electricity Reliability Council.

Service Schedule F: MAPP’s open access transmission tariff.

SMA: Supply Market Assessment. (FERC Concept).

SMD: Standard Market Design. (FERC Concept).

Southwest Power Pool: A regional transmission organization with members in Arkansas, Kansas, Louisiana, Missouri, Nebraska, New Mexico, Oklahoma and Texas. As of April 2011 the Lincoln Electric System, Nebraska Public Power District, and Omaha Public Power District are all members of the SPP.

Spinning Reserves: 1) The differences between the capability and actual output of generating units which are operating and connected to the electrical network. 2) Generating and power quality assurance service provided by a supplier to customers who rely on service or equipment which may not be as available or reliable as needs dictate. Typically, standby or backup service is sold by a utility to another utility or generator, such as an industrial cogenerator, to assure continuation of service during maintenance and emergency outages.

Spot Market: A market in which commodities are bought and sold for cash and delivered immediately.

SPP: Southwest Power Pool.

Standby (Backup) Service: 1) Service through a permanent connection not normally used but available in lieu of, or as a supplement to, the usual source of supply. 2) Generating and power quality assurance services provided by a supplier to customers who rely on service or equipment which may not be as available or reliable as needs dictate. Typically, standby or backup service is sold by a utility to another utility or generator, such as an industrial cogenerator, to assure continuation of service during maintenance and emergency outage.

Substation: A group of transformers with switching and other necessary equipment for increasing or decreasing the voltage and for providing facilities for outgoing lines.

Stranded Benefits: Benefits associated with regulated retail electric service which may be at risk under open market retail competition. Examples are conservation programs, fuel diversity, reliability of supply, and tax revenues based on utility reserves.

Stranded Costs/Stranded Assets: Costs incurred by a utility which may not be recoverable under market-based retail competition. Examples are undepreciated generating facilities, deferred costs, and long-term contract costs.

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 of the meter.

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Tariff: A document, approved by the responsible regulatory agency, listing the terms and conditions, including schedule of prices, under which utility services will be provided.

Time-of-Use (TOU) Rates: The pricing of electricity based on the estimated cost of electricity during a particular time block. Time-of-Use rates are usually divided into three or four time blocks per twenty-four hour period (on-peak, mid-peak, off-peak and, sometimes, super 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 (as opposed to forecasted) prices which fluctuate many times a day and are weather-sensitive, rather than varying with a fixed schedule.

Transformer: A stationary device which converts alternating current of one voltage into alternating current of another voltage. It increases or decreases the voltage of a supply of electricity. Commonly a transformer is composed of two or more coils of wire wound on a common iron core.

TLR: Transmission loading relief procedures.

Transition Costs (Charges): These include existing costs that are stranded, and incremental costs of the new market system for both start-up and on-going expenses ranging from consumer protection to power exchange and access fees.

TRANSLink: Organization of transmission owning utilities in upper Midwest attempting to form an organization for independent transmission operation.

Transmission Charges: Charges associated with transporting electricity over long distances, such as from generating stations to substations in the consumer’s neighborhood.

Transmission system: The transmission lines and substations for transferring electric energy at high voltage.

Turbine: A machine that converts energy of steam, water, hot gases or air to mechanical energy without the use of reciprocating parts. It turns the rotor in a generator.

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Unbundling: The separation of utility bills into the individual price components for which an electric supplier charges its retail customers, including, but not limited to, the separate charges for generation, transmission, and distribution of electricity.

Uniform Business Practices: A consensus-driven set of uniform business practices for competitive electricity markets.

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Vertically Integrated Utilities: Utilities that own the generating plants, transmission system, and distribution lines to provide all aspects of electric service to their customers.

Voltage: The electrical force that is caused by electrical current in a circuit. In other words, voltage is the amount of electrical force required to force one ampere of current to flow through one ohm of resistance.

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Watt (W): The unit in which most electrical power is measured. 746 watts is equal to one horsepower, which is the amount of energy required to lift 550 pounds one foot in one second.

WAPA: Western Area Power Administration. WAPA markets and transmits reliable, low-cost electric power, and provides related services to a service area covering 1.3 million square miles in the western United States. WAPA’s wholesale power customers provide service to consumers in 15 western states, including Arizona, California, Colorado, Iowa, Kansas, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Texas, Utah and Wyoming. Many Nebraska municipalities receive an allocation of WAPA power.

Wheeling: The use of one utility’s transmission line by another utility that needs to move electricity to another utility or location. The transmission of electricity by an entity that does not own or directly use the power it is transmitting, but rather is moving the power across its lines. Wholesale wheeling is used to indicate bulk transactions in the wholesale market. Retail wheeling allows power producers direct access to retail customers, even when the utility providing the power to the customer does not own the distribution lines necessary to connect to the customer.

Wholesale Competition: Rivalry between utilities and other electricity generators striving for the same market of bulk power for resale.

Wholesale Wheeling: The process of moving bulk power from a generator to a retail utility across one or more utility-owned transmission systems.

Western Interconnection Regional Advisory Body (WIRAB): An organization formed by the Western Governor’s Association pursuant to section 215 of the Federal Power Act. WIRAB provides advice to the Western Electricity Coordinating Council, the Electric Reliability Organization and the Federal Energy Regulatory Commission on whether proposed reliability standards and the governance and budgets of the WECC and ERO are in the public interest. Pursuant to the PRB’s designation, the PRB’s executive director serves as a director on WIRAB’s board.

WSSCC: The former Western States’ System Coordinating Council. WSSCC was a voluntary industry association created to enhance reliability among western utilities. It is now part of the Western Electricity Coordinating Council.

WSPP: Western Systems Power Pool. A FERC-approved industry institution formed in 1991. It provides a forum for short-term trades in electric energy, capacity, exchanges and transmission services. The pool consists of more than 300 members and operates in 22 states and one Canadian province.

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Nebraska Power Review Board
301 Centennial Mall South
P.O. Box 94713
Lincoln, NE 68509-4713
PH: (402) 471-2301
Fax: (402) 471-3715

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