Glossary of Terms

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Abandonment: Regulatory authorization for a utility to cease provision of a particular service and/or to shut down a particular facility.
Access Charge: In 1996, the Federal Energy Regulatory Commission (FERC) published rules to establish open access to electric transmission lines as a major step toward electricity deregulation. A provision of those rules established open-access tariffs that would permit companies to recover part of the “stranded” costs represented by investments in their transmission lines and supporting equipment. At the same time, the rules were designed to assure that companies could not exercise an unfair competitive advantage by charging competing generators or resellers exorbitant rates for access to their lines.
Actual Cost: In rate base determination. See ORIGINAL COST, HISTORICAL COST, WEIGHTED COST.
Actuals: The actual commodities or physical cash commodities, as opposed to futures contracts or derivatives. Also called spot commodities or cash commodities. Utilities trade these commodities daily as a way to make sure the right amount of power gets to the right place at the right time.
Ad Valorem Tax Surcharge (AVTS): The state of Kansas assesses values annually for each of the 42 Kansas counties served by Black Hills Energy. The county then bills Black Hills Energy the property taxes and Black Hills Energy pays the county directly. The initial proposed AVTS rate is $0.00031 per therm for all customer classes. Note: The AVTS will apply to all Kansas customers, except those on wholesale gas, irrigation or discounted transportation rates.
Advances for Construction: A deferred credit account representing cash advances paid to the utility by customers requiring the construction of facilities in their behalf. These advances are refundable -- the time or extent of refund is dependent on the contract provisions of the advance (usually dependent on whether or not during a specified period the revenue from the installation warrants the refund). The unrefunded balance, if any, must be transferred to the appropriate plant account. Compare CONTRIBUTIONS IN AID OF CONSTRUCTION.
Allocation-Capacity: A process by which capacity available in a pipeline is distributed to parties in the event requests for volume (i.e., nominations) are in excess of the available space. Typically the allocation is based on service type, contract type and a company’s tariff provisions. Also called NOMINATION ALLOCATION.
Allocation-Measurement: The assignment of a total measured quantity of gas at a point to the various contracts active at that point during a specific period of time.
Allocation-Supplies: The process by which supply is assigned to purchasers in accordance with a given priority during periods when total sales requests exceed the seller’s total supply.
Allocation-Supplies to End-Use Customers: The amount of gas supply available to the customer in accordance with a given priority during periods of curtailment. See COST OF SERVICE, DESIGN DAY AVAILABILITY.
Allowance for Funds Used During Construction (AFUDC): AFUDC is a component of construction costs representing net cost of borrowed funds and a reasonable rate of return on other funds used during the period of construction. AFUDC is capitalized until the project is placed in operation by concurrent credits to the income statement and charges to utility plant, based generally on the amount expended to date on the particular project. Effective January 1, 1977, FERC amended the Uniform System of Accounts establishing formulas for maximum allowable AFUDC rates.
Allowed Rate of Return: The rate of return that a regulatory commission allows on a rate base in establishing just and reasonable rates for a utility. It is usually based on the composite cost of financing rate base from debt, preferred stock, and common equity. See RATE OF RETURN.
Alternate Fuel Capability: The ability to use an alternate fuel whether or not the facilities for such use have actually been installed.
Alternate Fuels: Other fuels that can be substituted for the fuel in use. In the case of natural gas, the most common alternative fuels are distillate fuel oils, residual fuel oils, coal and wood.
Alternating Current (AC): Electric current that reverses direction at regularly recurring intervals of time (such as 50 cycles per second), known as the frequency. AC can easily be converted to higher or lower voltages. (See also Direct Current.) In the United States the standard is 60 cycles.
American Gas Association (AGA): Trade group representing natural gas distributors and pipelines.
Amortization: The gradual extinguishment (or accumulated provision or reserve therefore of an amount in an account by pro-rating such amount over a predetermined period.
Ampere (amp): A unit of measure that tells how much electricity flows through a conductor. Amps = watts divided by volts. On a 120-volt system, a dozen 100-watt bulbs draw 10 amps of electric current.
Ancillary Services: Also known as Interconnected Operations Services, these are the services necessary for the transfer of electricity between purchasing and selling parties. The FERC requires a transmission provider to include these services (balancing, for example) as part of its open access transmission tariff.
Annual Fuel Utilization Efficiency (AFUE): AFUE measures average annual seasonal efficiency of a gas furnace or boiler and may be expressed as total heating output divided by total energy (fuel) input. AFUE’s for furnaces can range from 55% to 97%.
Anode, Sacrificial: In corrosion protection, a formed metal-usually zinc, aluminum, or magnesium-buried near and connected to a structure of lesser galvanic potential such that the metal corrodes in favor of the structure.
Anodic Inhibitor: A chemical substance or combination of substances that prevents or reduces the rate of the anodic or oxidation reaction by a physical, physio-chemical or chemical action.
Anodic Polarization: (1) Polarization of anode, that is, the decrease in the initial anode potential resulting from current flow effects at or near the anode surface. The potential becomes more noble (more positive) because of anodic polarization. (2) That portion of the cell polarization occurring at the anode.
Anodic Protection: (1) A technique to reduce corrosion of a metal surface under some conditions by passing sufficient anodic current to it to cause the electrode potential of the surface to enter and remain in the passive region. (2) An appreciable reduction in corrosion by making a metal an anode and maintaining this highly polarized condition with very little current flow.
APR (Accelerated Pipeline Replacement Rider): A small surcharge approved by the Kansas Corporation Commission for replacing natural gas pipes to maintain safe, reliable service. This monthly surcharge will end July 2008.
APR (Accelerated Pipeline Replacement Rider): A small surcharge approved by the Kansas Corporation Commission for replacing natural gas pipes to maintain safe, reliable service. This monthly surcharge will end July 2008.
As-Billed: A method by which a pipeline includes in its rates, and charges its customers, the costs of gas or transportation services in the same manner as it is billed by its pipeline suppliers or transporter.
Automatic Meter Reading (AMR): “Real time” monitoring of natural gas quantities and characteristics as it passes through a specific location.
Available Margin: The difference between the demand for electricity and the electricity a utility has available. Expressed as a percent, it’s the capacity available to cover demand in the face of random events, such as forced outages, demand forecast errors, weather extremes and slippage in capacity service schedules. Also known as Capacity Margin.
Available Transfer Capability (ATC): A measure of physical transmission network available for further commercial activity.
Avoided Cost: The incremental cost that a utility would incur to purchase or produce an amount of gas or power equivalent to that saved by a DSM measure. Components may include energy, capacity, storage, transmission and distribution. Avoided costs are generally used to represent the benefits of utility-sponsored DSM programs.