-- A --

Access: Refers to access to the transmission/distribution facilities that are usually owned or controlled by the current electric provider.

Access Charges: Fees charged by the owner of a transmission or distribution network to producers that want to gain access to the grid.

Advance Refunding: Congressional effort to allow flexibility in the tax code to give public power systems more than one opportunity to refinance their debt to take advantage of favorable interest rates and pass that savings along to their customers. This would provide more stable rates for customers, including in weak economic times the ability to absorb unanticipated costs such as security enhancements and the flexibility to respond to changing market conditions.

Aggregator: An entity that organizes retail consumers into a purchasing group in order to receive better rates in a retail competition market. The aggregation function is currently performed by whichever local utility provides distribution service. Under retail competition, aggregation could be provided by the utility providing distribution services, distant utilities, for-profit corporations, non-profit entities, local governments, or neighborhood associations.

Ancillary Services: The power support services provided by a utility in conjunction with transmission service to ensure system reliability and power delivery.

Avoided Cost: The amount it would cost a utility to produce that same amount of electricity; rates are set either by states' Public Utility Commissions or through a bidding process. Avoided cost is the pricing system established under PURPA.

-- B --

Base Load Capacity: The electric generating capacity that operates during most hours of the day to meet the steady demand for power.

Bilateral Contracts: Direct contracts between producers and buyers of electric power to deliver a given amount of electricity at a given time according to pre-established specifications.

Bonneville Power Administration (BPA): BPA is a federal agency, known as a power marketing administration, which markets wholesale electricity and transmission to the Pacific Northwest's public (Co-ops, PUDs and Munis) and private utilities (IOUs) as well as to some large industries (DSIs). BPA provides about half the electricity used in the Northwest and operates over three-fourths of the region's high-voltage transmission.

** While BPA is part of the Department of Energy, it is not tax-supported through government appropriations. Instead, BPA recovers all of its costs through sales of electricity and transmission and repays the U.S. Treasury in full with interest for any money it borrows.

BPA Borrowing Authority: When BPA became self-financing in 1974 it was granted permanent borrowing authority with a statutory cap of $1.25 billion. Since the original authority was granted in 1974, BPA has periodically sought to increase its borrowing authority cap. Efforts to increase this cap continue as BPA is seeking additional financing capability to fund infrastructure investments to maintain the reliability of the Northwest's electric transmission and energy supply.

Bulk Power Market: Wholesale power transactions among utilities, or from a generator to a utility, power marketer or broker or other wholesale entity for resale to customers.

Bundled Service: A delivered package of electricity services. For retail service, a bundled product would include electricity supply, transmission, and retail distribution. In the wholesale market, bundled transmission service includes quantity of electricity with associated "ancillary services" that address such issues as maintenance of voltage and frequency and variation in seasonal, daily or hourly consumption. Bundled "requirements service" includes power supply and transmission and ancillary services.

-- C --

Cogeneration: The production of heat and electricity from a common fuel source.

Consumer-Owned Utility (aka Co-ops, PUDs, and Munis): A utility owned by its customers, either directly or through a unit of government. Both public power systems and rural electric cooperatives are referred to as consumer-owned utilities. These utilities operate on a non-profit basis and their rates and policies are set by local governing boards.

Cooperative (Co-op): A private non-profit utility owned by its members and essentially self-regulated by an elected board of directors.

Cost-Based Rates: Electric rates (either wholesale or retail) set on the basis of a utility's actual cost of service. A regulatory body reviews the various cost inputs, and sets rates to recover the legitimate costs.

-- D --

Demand-Side Management (DSM): Strategies for reducing consumption by influencing when and how customers use electricity. Demand-side management includes such things as conservation programs and incentives for switching electricity use from mid-day to evening.

Direct Service Industrial Customers (DSIs): Industries that buy power directly from BPA rather than through retail utilities. The number of these customers is limited by law to those industries that were direct service customers on the date the Northwest Power Act was passed.

Distribution Facilities: Facilities that are equipped to deliver electric power at lower voltages from the transmission system to the final user.

Divestiture: The process of selling or spinning off aspects of business lines. Utilities may divest generation assets voluntarily to refocus their business efforts or in response to regulatory or legislative directives as part of a stranded cost determination or market power mitigation plan.

-- E --

85/15 Rule: The term used to describe limitations on rural electric cooperatives seeking to finance projects with tax-exempt bonds. The rule allows co-ops an exemption from federal income tax as long as 85 percent of their income comes directly from their members. Modifications are being sought in Congress to amend the tax code to exclude from the definition of income certain revenues that have resulted from restructuring changes made in the energy industry. Elimination of the "85/15 rule" would allow electric cooperatives to function openly and fairly in a restructured marketplace.

Energy Policy Act of 1992 (EPAct): The federal law that allowed the FERC to introduce greater competition in electric generation by ordering transmission owners to provide access to third parties and encouraged independent power producers.

Exempt Wholesale Generators (EWGs): are generators that were created by the Energy Power Act of 1992. These generators aren't subject to the requirements of the Public Utility Holding Company Act and can compete, based on price, with rate regulated power plants.

-- F --

Federal Base System (FBS): The system defined by the Northwest Power Act to be: 1) the Federal Columbia River Power System (FCRPS) hydroelectric projects; 2) resources acquired by BPA under long-term contracts in force on the date of the Act; and 3) resources acquired by BPA to replace reductions in capability of FCRPS resources and contracted resources.

Federal Columbia River Power System (FCRPS): the FCRPS is made up of: 1) the hydroelectric generating projects constructed by the U.S. Army Corps of Engineers and the Bureau of Reclamation in the Northwest; 2) the power BPA has acquired through net billing and exchanges; and 3) the electric transmission system constructed and operated by BPA.

Federal Energy Regulatory Commission (FERC): A federal agency responsible for regulating key activities of the nation's natural gas utilities, electric utilities, natural gas pipeline transportation utilities and hydroelectric power producers.

Federal Power Act (FPA): Federal law passed in 1935, which created the FERC's predecessor, the Federal Power Commission, and granted it the power to regulate the interstate electricity market as well as utility mergers and the licensing of hydropower projects.

-- G --

General Transfer Agreements (GTAs): Transmission arrangements by which BPA wheels federal power over the transmission grid of another (generally, investor-owned - though not exclusively) utility in order to provide power to public utilities which are not directly connected to the main BPA transmission grid.

Generation and Transmission (G&T) Cooperative: A non-profit corporation, owned and controlled by rural electric cooperatives, that supplies wholesale power and transmission services to its members.

Generation Facilities: Equipment and assets used to convert various forms of energy input into electrical power.

Grid: A system of high-voltage transmission lines between the electricity generator and the distribution company or the customer. Currently, use of the grid and pricing of transmission services are regulated by FERC. Distribution is regulated by state agencies.

-- H --

Hydropower Relicensing Reform: In an effort to shorten and reduce the expense of the current process of relicensing hydropower facilities, lawmakers are considering streamlining legislation. Hydropower projects can incur licensing costs as high as $40 million without any resources being spent on the environment, recreational opportunities, or making power production more efficient. Since many different agencies are allowed to impose requirements without any single agency ensuring workability, hydropower owners and operators face conflicting, duplicative and costly mandates. Lawmakers are considering legislation to reform the regulatory process to decreased hydroelectric capacity loss nationally.

-- I --

Independent System Operator (ISO): An entity intended to respond to concerns that transmission owners will manipulate control of the transmission network in order to advance their own generation sales. To form an ISO, transmission owners would transfer operation and control (but not ownership) to an independent third-party. The level of independence and control are core issues in reviewing ISOs.

Independent Power Producers: Also known as non-utility generators and exempt wholesale generators, these entities develop power generation projects on a merchant basis.

Investor-Owned Utility (IOU): A privately-owned utility organized under state law as a corporation for the purpose of providing electric power service and earning a profit for its stockholders. These for-profit corporations currently provide retail service to about 75 percent of the U.S. The majority of private utilities are vertically integrated (participating in the power generation, transmission and distribution markets).

-- J --

Joint Action Agency: A political subdivision that provides wholesale power and transmission services for its member distribution public power systems.

-- M --

Market Power: The ability of a market participant, as a result of its control of sufficient or essential facilities, to profitably set prices above or reduce supply below that which would occur in a fully competitive market.

Market-Based Rates: The ability to set rates through negotiation or bid rather than based on the actual cost of production.

Market-Based Price: A price set by the mutual decisions of many buyers and sellers in a competitive market. In a competitive market this price is expected to approximate the marginal cost.

Municipal Utility: A utility owned and operated by a city.

-- N --

Natural Monopoly: When it is economically or physically impractical (or undesirable) for more than one entity to perform a service in a given market, then the single provider is said to have a natural monopoly. Monopoly industries are regulated in order to protect consumers from collection of excessive profit.

North American Electric Reliability Council (NERC): A national not-for-profit corporation voluntary formed in 1965 in response to a major blackout in the Northeastern United States. NERC is responsible for overall reliability, planning, and coordination of the electricity supply in North America. The membership of NERC is comprised of owners from 10 Regional Councils.

-- O --

Open Access: Also known as direct access. This is the ability of a retail customer to purchase commodity electricity directly from the wholesale market rather than through a local distribution utility.

Order 888: A 1996 rulemaking by the FERC that directs all private utilities to provide nondiscriminatory transmission access to other eligible parties and provides minimum standards for such service. Such service must be provided on the same basis as that which a transmission owner provides to itself. Order 888 also authorizes recovery of legitimate, verifiable, non-mitigatable stranded investments.

Order 2000: A 1999 rulemaking by the FERC that requires private utility transmission owners to join Regional Transmission Organizations (RTOs) or inform FERC why they have chosen not to join an RTO. Order 2000 outlines specific functions and characteristics of "acceptable" RTOs.

-- P --

Private Use: The term used to describe restrictions on tax-exempt bonds, that hinder public power's ability to open transmission lines under FERC order 888, participate in Independent System Operators ("ISO's"), and negotiate tailored energy supply contracts with existing or replacement customers. Relief from "private use" restrictions are being sought by public power in Congress and the U.S. Department of Treasury.

Public Benefits Fund (PBF): An Administration plan to create a $3 billion Public Benefit Fund to provide matching funds to States for low-income assistance, energy efficiency programs, consumer education, and the development and demonstration of energy technologies, particularly renewables.

Public Power Systems: A political subdivision providing electric utility services. Municipal utilities, public utility districts, and joint action agencies are examples of public power systems. These utilities operate on a non-profit basis and are controlled by an elected or appointed governing board. As units of local government, public power utilities are able to issue tax-exempt bonds to finance their activities.

Public Utility Commissions (PUCs): Also known as public service commissions, these state regulatory bodies review and set utility retail rates and services. PUCs have jurisdiction over private utilities within their state, and have varying levels of oversight over public power systems and rural electric cooperatives.

Public/People's Utility District (PUD): A governmental corporation established by voters to supply electric or other utility service. Note: Oregon PUDs are referred to as People's Utility Districts.

Public Utility Holding Company Act of 1935 (PUHCA): Federal law passed in response to the shady business practices of huge utility holding companies during the 1920's and 30's. These holding companies controlled utilities in complicated pyramid structures, where a few investors at the top held controlling shares of many subsidiary companies. In the early 1930's, three holding companies controlled almost half the utility industry, with one owning 130 utilities. This Act sought to prevent utility holding companies from subsidizing unregulated business activities from profits obtained from their regulated business activities and captive customers. PUHCA requires that all side businesses be kept separate from the regulated business. PUHCA is administered by the Securities and Exchange Commission (SEC).

Public Utility Regulatory Policies Act of 1978 (PURPA): Federal law the requires utilities to purchase electricity from qualified independent power producers at a price that reflects what the utilities would have to pay for the construction of new generating resources (see avoided cost). Portions of the act were designed to encourage the development of small-scale cogeneration and renewable resources.

Power Marketing Administration (PMA): Congress established five federal power marketing administrations (PMAs) to sell hydroelectric power generated by federal dams and power plants. Four are in existence now and BPA is the oldest - others include Western, Southwestern, and Southeastern Power Administrations.

-- Q --

Qualifying Facility (QF): A power generation facility eligible for sales under the PURPA section 210 mandatory purchase requirements. QFs are usually small plants, generally under 50 MW or less, which usually rely on renewable energy sources or cogeneration.

-- R --

Rural Utilities Service (RUS): Formerly known as the Rural Electrification Administration (REA), the RUS was created in 1936 to electrify underdeveloped rural areas by providing subsidized loans and grants to rural electric cooperatives.

Regional Transmission Organization (RTO): A term used by the Federal Energy Commission (FERC) to describe possible types of transmissions organizations, e.g. ISO, Transco). RTOs, encouraged under FERC Order 2000, are intended to remove operation of the transmission infrastructure from the competitive generation and marketing of wholesale electricity.

RTO Filing Utilities -- In additional to the Bonneville Power Administration, the eight utilities include Avista, Idaho Power Company, Montana Power Company, Nevada Power Company, PacifiCorp, Portland General Electric Company, Puget Sound Energy, Inc and Sierra Pacific Power Company. The RTO Filing Utilities formed RTO West to fund and develop an RTO proposal for submission to FERC.

RTO West -- A Washington State non-profit corporation formed by eight utilities and the Bonneville Power Administration known as the RTO Filing Utilities to fund and develop an RTO proposal for submission to Federal Energy Regulatory Commission. Over time, with amended articles, this entity may become the RTO for the Northwest region.

Reliability: The ability of the power system to provide customers uninterrupted electric service at their point of service.

Registered Holding Company: A utility holding company subject to the full requirements of PUHCA.

Renewable Energy Production Incentive (REPI): This federal program is part of an integrated strategy in the Energy Policy Act of 1992 to promote increases in the generation and utilization of electricity from renewable energy sources and to further the advances of renewable energy technologies. It provides financial incentive payments from Congressional appropriations for electricity produced and sold by new qualifying renewable energy generation facilities. Qualifying facilities must use solar, wind, geothermal (with certain restrictions as contained in the rulemaking), or biomass (except for municipal solid waste combustion) generation technologies.

Renewable Portfolio Standard: A requirement that certain market participants (either generators or distribution utilities) utilize renewable resources (e.g., solar, wind, or biomass energy production facilities) to meet a specified percentage of their total energy sales. A portfolio standard can be satisfied either through direct purchase of electricity generated by a renewable resource or through "credits" purchased from a party purchasing such than an amount greater than the portfolio.

Renewable Resource: A power source that is continuously or cyclically renewed by nature. In the Northwest Power Act, a resource that uses solar, wind, hydro, geothermal, biomass or similar sources of energy.

Residential Exchange: An accounting procedure, established in the Northwest Power Act, through which benefits of the Federal Columbia River Power System are passed on to all residential and small farm customers in the region.

Retail Electric Service: Providing energy to retail consumers. Retail electric service traditionally includes providing for the generation, transmission and distribution services needed to provide electricity to retail, end-use consumers.

Retail Wheeling: The ability of generating companies that do not own the relevant transmission facilities to sell the electricity they produce directly to residential, industrial, and commercial consumers. Currently wholesale wheeling is mandated under federal law.

-- S --

Stranded Cost: Under monopoly regulation, utilities recover the costs of their prudent investments. In a competitive market, prices are market determined and a participant might not recover all of its investment. In transitioning from a regulated monopoly industry to a competitive model, the net utility investment that is above market is said to have been "stranded" (e.g. unrecoverable from ratepayers in a market economy). Because the electric utility industry is highly capital intensive, recovery of these costs is a central issue. Assignment of costs (ratepayers versus shareholders), jurisdiction over costs (state versus federal), and recovery method are core concerns.

Stranded Investment or Stranded Asset: Generation facilities, owned by existing utility companies that produce electricity at above-market marginal prices.

-- T --

Tradable Tax Credits: A legislative proposal to allow a consumer-owned electric utility that builds a renewable energy facility to be authorized to receive a production tax credit of X cents per kWh of energy produced. The utility would be permitted to sell the credits at a discounted rate to any taxpayer, including its customers. The taxpayer would use the credit to offset tax liability. For a not-for-profit entity, neither the credits nor the proceeds derived from their disposition would result in federal taxable income.

Transco: Industry jargon for a company engaged exclusively in the provision of transmission service. To date, proposed Transcos have been criticized as insufficiently independent from the previous utility transmission owners.

Tax-Exempt Bonds: The interest from these bonds are exempt from federal taxation and allow communities to finance the furnishing of necessary local services, such as electricity, water, and waste treatment. Tax-exempt financing is considered to be the cornerstone of public infrastructure programs and an important resource for public power systems. Community-owned utilities (PUDs, Co-ops and Munis) regularly finance projects with tax-exempt bonds.

-- U --

Unbundled Rates: Separate line-item charges for generation, transmission, distribution and other services.

Unbundled Services: The selling and pricing of services separately, as opposed to offering services "bundled" into packages with a single price for the whole package.

-- W --

Wholesale Transaction: Sales of electricity from a utility, independent power producer, or power marketer to another utility are considered wholesale transaction. Wholesale transactions by jurisdictional entities are regulated by the FERC.