Electricity Terms Glossary: 50+ Definitions Explained 2026

Start with the basics. Kilowatt-hour (kWh) is what you're billed on - it measures how much electricity you use over time. One kWh means running something that draws 1,000 watts for one hour. Your toaster, microwave, or hairdryer for an hour? About 1 kWh each.

kW (kilowatt) is power at any moment - think of it as speed. kWh is energy consumed over time - think of it as distance traveled. Voltage is electrical pressure (120V for regular outlets, 240V for your dryer and oven). Amperes (amps) measure how much current flows.

Most homes use 800-1,200 kWh per month, depending on size, climate, and how efficient your stuff is.

The math is simple: rate (cents per kWh) × monthly usage = what you pay for supply.

Electricity deregulation separates who makes the power from who delivers it. You pick the supplier; your utility still runs the wires.

Energy choice (also called retail choice or customer choice) is your ability to pick a competitive supplier. In Ohio, these suppliers are called CRES providers (Competitive Retail Electric Service). If you don't pick anyone, you get default service - also called SSO (Standard Service Offer) in Ohio or Basic Service in Massachusetts.

Aggregation is when your city or county negotiates rates for everyone at once. Opt-out aggregation means you're automatically enrolled unless you say no. Opt-in means you have to sign up.

Retail markets are where suppliers compete for you. Wholesale markets are where generators sell to suppliers - you never touch this directly.

Price to Compare (PTC) is the benchmark rate your utility charges. Use it to evaluate whether a competitive supplier offer saves you money.

Fixed-rate plans lock your price for the contract term—protection from increases, but you're stuck if prices drop. Variable-rate plans adjust monthly based on market conditions. Flexibility, but volatility risk. Indexed rates tie to a market index plus a margin. Introductory rates offer discounted prices for an initial period, then jump to regular pricing.

Time-of-use (TOU) pricing charges different rates based on when you use electricity—cheap overnight, expensive at 5 PM. Tiered rates change based on consumption levels (use more, pay more per kWh). Generation rate covers electricity production costs, separate from delivery charges.

Your electricity bill contains multiple charge types. Here's what they mean.

Supply charges cover generating and purchasing electricity—this is what you shop for when switching suppliers. Distribution charges pay for local utility infrastructure: the wires, transformers, and maintenance. Transmission charges cover moving electricity from power plants to local systems. Customer charge is a fixed monthly fee just for having service connected.

Riders and surcharges fund things like energy efficiency programs, renewables, and infrastructure upgrades. Demand charges hit commercial customers based on their peak power draw.

Base rate is the standard supply rate before any fees. Total rate combines everything for your complete per-kWh cost. That's the number you pay.

Competitive suppliers sell electricity in deregulated markets. Different states call them different things.

CRES (Competitive Retail Electric Service) is Ohio's term. EGS (Electric Generation Supplier) is Pennsylvania's. Enrollment means signing up with a new supplier. Switching means changing from one to another.

ETF (Early Termination Fee) is the penalty for canceling before your term ends. Rescission period gives you 3 days to cancel without penalty after signing. Auto-renewal means your contract extends automatically unless you opt out—watch for this. Contract term is the duration, commonly 6, 12, 24, or 36 months.

You'll get a disclosure statement summarizing terms, a welcome letter confirming enrollment, and a confirmation number for tracking. Keep all of these.

Smart meters digitally record electricity usage in near real-time. They enable time-of-use rates and detailed tracking that old meters couldn't do. AMI (Advanced Metering Infrastructure) is the network of smart meters and communication systems. Estimated billing uses historical averages when actual readings aren't available—you'll see a true-up later.

Net metering credits solar owners for excess electricity sent back to the grid. Demand response programs pay customers to reduce usage during peak periods—the utility texts you, you turn off the AC for an hour, you get a bill credit. Load profile is your typical usage pattern over time. Peak demand is your highest instantaneous power draw. Baseline usage captures your typical patterns before you made efficiency changes—useful for measuring savings.

Renewable Energy Certificates (RECs) represent the environmental attributes of renewable electricity generation. They're purchased separately from physical power to track where renewables go.

Green energy plans either source from renewables directly or purchase RECs to claim the green benefits. Carbon offset credits fund environmental projects to compensate for emissions. Carbon neutral plans offset all their carbon emissions through these mechanisms.

Community solar lets you subscribe to a shared installation and receive bill credits—useful if your roof won't work for panels. Solar buyback rate is what you get paid for excess solar sent back to the grid.

AEPS (Alternative Energy Portfolio Standard) requires utilities to source a certain percentage from renewables. Green-e certification provides independent verification of renewable claims—if a plan has this, the green claims are legit.

Several programs exist to help qualifying households manage electricity costs. Knowing these terms helps you find help when you need it.

LIHEAP (Low Income Home Energy Assistance Program) provides federal funds for heating and cooling bills. PIPP in Ohio caps bills at a percentage of household income—if you qualify, you pay based on what you earn, not what you use. CAP in Pennsylvania offers reduced rates for income-eligible customers.

Budget billing spreads your annual costs into equal monthly payments based on estimated usage. No more $300 summer bills followed by $80 winter bills. Payment arrangements set up structured installment plans when you've fallen behind. Arrearage forgiveness programs eliminate past-due balances if you maintain regular payments for a set period—don't let pride keep you from asking.

Weatherization assistance provides free insulation, air sealing, and equipment upgrades for qualifying homes. The universal service fund appears as a small surcharge on everyone's bill, funding these low-income assistance programs.

Your Electric Distribution Company (EDC) owns and operates all the infrastructure delivering electricity to your home—poles, wires, transformers, the works. You can't choose your EDC. They're assigned based on your service territory, the geographic area where that utility operates.

Your rate class determines which pricing structure applies—residential, commercial, or industrial. Most readers here are residential, but small business owners sometimes get stuck in commercial rate classes that don't fit their usage.

When switching suppliers, you'll need your account number (unique ID for billing and enrollment), your premise address (the physical location receiving service), and sometimes your meter number (the specific device measuring your consumption). These appear on your bill.

The service drop is the connection from utility lines to your building. The transformer steps down high-voltage transmission power to the 120/240 volts your home uses. An outage is any service interruption, whether planned maintenance or storm damage.