Energy Terms Explained

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Usource is an independent energy advisory firm that works with commercial, industrial, and institutional clients to develop and deliver comprehensive and customized energy strategies. Our integrated energy management approach empowers clients to optimize energy savings, mitigate budget risk and meet business and sustainability goals.

As a member of the NextEra Energy family of companies, the world’s largest producer of wind and solar energy, we have the expertise, insight and resources required to help clients reduce carbon emissions, integrate renewables and transition to a forward-looking, sustainable energy strategy.

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The energy market and its terminology are continually changing

Understanding these energy terms can help you make better-informed decisions.


Ancillary services: Services necessary to support the transmission of energy.

Base load: The minimum energy level an electric plant must provide you on a constant basis.

Bcf: The abbreviation for 1 billion cubic feet.

Block and Index: With a traditional block and index energy strategy, you can capture a fixed price, or “block”, during the contract term and any energy used above the block is billed at the index market rate. You can execute a block when you secure your initial energy supply contract or you can be initially billed 100% index and execute blocks in the future. These contracts are best for organizations with a predictable, steady base load.

Capacity charge: The capacity charge is assessed on the amount of capacity being purchased and expressed in $/kW-month or $/MW-day.

Capacity: The amount of electric power delivered or required.

Community Solar: Subscribers or members of a community solar project may sign up to use a portion of the electricity generated from community solar panels. Businesses and residents alike can buy this solar energy to offset the electricity they are using at their facility or home. The utility will then recognize each subscriber as participating in the program and will issue energy credits on the subscriber’s utility bill.

Decarbonization: Decarbonizing the energy system means replacing the fossil fuel energy sources currently being used (such as coal, oil/petroleum, and natural gas) with energy sources that emit far less carbon dioxide (such as wind, solar, and nuclear energy).

Decatherm: 10 therms or 1 million Btu. One decatherm is equal to approximately 1,000 cubic feet (Mcf).

Deregulation: Energy deregulation is the introduction of competition into the electricity industry. In deregulated markets, consumers can choose where they purchase their electrical power from. Having choices creates competition in the market, which helps lower prices. Deregulation is set at the state level. To find out if your state is deregulated, contact us.

Electricity transmission: Interconnecting electric lines that move high voltage electricity from a generation facility to the distribution lines.

Emissions-Free Energy Certificate (EFEC):

ESG: Environmental, Social and Governance

Federal Energy Regulatory Commission (FERC): FERC is the federal agency with regulatory jurisdiction over interstate electricity and natural gas industries.

Fixed Price: You pay fixed-price energy rates for a defined period of time. This energy procurement strategy works best for businesses that require price certainty and budgetary control. 100% of the supply cost risk is on the supplier.

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.

Independent System Operator (ISO): An independent management team set up to run transmission systems owned by two or more entities. The ISO plans and schedules transmission outages, handles transmission system planning, collects transmission charges and makes payments to the actual providers. The ISO is an independent entity that controls a power grid to coordinate the generation and transmission of electricity and ensure a reliable power supply.

Kilowatt (kW): One thousand watts; measure of demand for power.

Kilowatt-hour (kWh): The standard unit of measure for electricity that is expended in one hour by one kilowatt of power.

Liquefied natural gas (LNG): Natural gas that has been liquefied by lowering its temperature to negative 260 degrees Fahrenheit.

Load-Following Block and Index: Load-Following Block and Index allows you to hedge a certain percentage of your energy usage despite volumes that fluctuate over time. Best for an organization that does not use a steady baseload of energy year-round. Although you may pay a price premium over a traditional block strategy, you will still be able to fix a portion of your usage while leaving yourself open to market buying opportunities.

Managed Energy: For the greatest flexibility to react to market events, you can choose an active, managed hedging approach. With this plan, you can establish price and time-based triggers to execute hedges. Managed hedging allows you to lock in varying blocks of energy at different times over the course of multiple years. This is a forward-looking approach, allowing you to build into a fixed price with a more certain budget.

Megawatt (MW): One thousand kilowatts. A unit of power equal to 1 million watts.

Megawatt-hour (mWh): 1 million watts used for one hour.

Natural gas transmission: Transportation of large volumes of natural gas, primarily through pipelines, to local distribution companies, electric power plants, or directly to large end-users.

Net Zero: reducing carbon emissions and acquiring traditional offsets or credits.

Off-peak/On-peak: Block of time when energy demand and price are low (off-peak) or high (on-peak).

Peak demand: The maximum electricity load during a specified period of time.

Purchase Power Agreement (PPA): PPAs provide electricity at a lower cost than current electricity rates, as well as future price certainty for up to 20 years. The PPA allows the solar equipment to be installed at no cost to you, and you are not responsible for installation and maintenance. There are many ways to structure solar PPAs and much care should be taken to ensure all risks and benefits have been weighed.

Real Zero: completely eliminating carbon emissions from operations. Learn more.

Renewable Energy Credit (REC): Each REC embodies the environmental benefits of one megawatt-hour (MWh, equal to 1,000 kilowatt-hours) of renewable electricity that is generated by renewable facilities.

Spot price: The price of a commodity at a specific time and location, for immediate delivery.

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Why choose Usource?

Energy Expertise

Crafting customized commercial and industrial energy strategies for over 20 years.

Renewables Expertise

NextEra Energy is the world’s largest producer of wind and solar energy

Strong Financial Backing

Part of NextEra Energy family of companies, a Fortune 500 company.

Regulatory Intelligence

Continuous monitoring at the national, state and ISO/RTO level

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Explore More Energy Options

Reducing your company’s carbon footprint and energy use can be overwhelming and complex. Usource offers a variety of energy solutions to  achieve your goals. 

No longer regarded as merely a financial investment term, ESG has come into focus for organizations of all sizes. Let us help you develop ESG strategies that produce results.

Let us help you find suppliers and vendors, vet costs and contraction terms and assist in implementation for offsite and community solar, RECs and nuclear power.