A charge added to a customer's electrical bill which is intended to help an electric utility pay down stranded costs incurred as a result of transition from a regulated market to a deregulated one. This charge is intended to be a temporary levy which will be discontinued once a regulating authority determines that the affected utility has recovered enough of its stranded costs.

Transition charges are typically based on actual energy use rather than applied as a flat rate to all customers, and will be charged by all energy suppliers in a competitive marketplace as a means of insuring that new competitors who do not have stranded costs to recover do not gain an unfair advantage in the marketplace.

See also: