Energy
Dictionary
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Energy |
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A fee charged for the right to send or receive power over another party's distribution system. This fee, which is usually levied on a producer, supplier, or customer, serves as a type of rental or user fee charged for the use of the energy transmission infrastructure used to transmit energy to the customer.
In regulated markets, this charge may be bundled into charges for energy used by the customer. In deregulated markets it usually appears as a separate line item on energy invoices. Wires charges are usually billed at a cents-per-kilowatt-hour rate which is typically set by regional legislatures. This situation is likely to change as the energy transmission infrastructure becomes more heavily privatized.
The fees collected from this charge are used to defray costs for infrastructure (power lines, distribution stations, maintenance, etc.) as well as less obvious costs such as stranded costs, securitized debt, taxes, franchise fees, development costs for renewable energy and environmental programs, public benefits programs (e.g. education/public relations, support for low-income consumers) and a range of others.
See also:
power, stranded costs, securitization, franchise fee, renewable energy, volumetric wires charge, public benefits charge