These two terms are interchangeable, and refer to a producer of electrical energy which is not a public utility but which makes electric energy available for sale to utilities or the general public. NUGs may be privately-held facilities, cooperatives such as rural solar or wind energy producers, and non-energy industrial concerns capable of feeding excess energy into the system.

Prior to the US Public Utility Regulatory Policies Act of 1978, NUGs were rare, and the few that existed were seldom able to provide energy to utilities and other public customers even at no cost to the utility. Section 210 of PURPA now requires utilities to purchase energy from NUGs which qualify (qualifying facilities) at the utility's avoided cost. This allows NUGs to receive a reasonable to excellent price for the energy they produce and insures that energy generated by small producers won't be wasted.

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