Appendix A. GLOSSARY OF TERMS Additionality: A term used to describe the test or metric by which a project or action is considered to be above and beyond what otherwise would have occurred under the normal course of business or in the absence of the project or action. Examples of a ‘project’ or ‘action’ might be a utility procurement of renewables, a company reducing its emissions, installment of more energy efficient equipment. When referring specifically to emissions reductions, additional means that the reduction is over and above what would have occurred without any government program or direct incentive for reductions. [1] This term is most commonly used in conjunction with greenhouse gas offsets. Allowances: In a cap-and-trade system, allowances are the amount of emissions, set by regulators, that a source is allowed to emit within regional or National Ambient Air Quality Standards. crs2. American Association of Issuing Bodies (AAIB): A membership-based North American alliance of tradable renewable certificate (TRC) Issuing Bodies that would be responsible for organizing all renewable certificate issuing and tracking bodies wishing to participate in a national and international certificate tracking network. The AAIB will lead the effort to develop common standards and minimum protocols for North American Issuing Bodies. Each Issuing Body will be required to incorporate these minimum standards and operating procedures into their own system in order to participate as a member of the AAIB. Attribute: Descriptive or performance characteristics of a particular generation resource. The characteristics of renewables and other generating types (both positive and negative) include environmental, economic, and social characteristics. A renewable attribute refers to the characteristics of renewable generation. § Environmental Attributes: Environmental attributes include the environmental benefits and costs associated with the construction and operation of specific types of power generation facilities. For renewable facilities, their environmental attributes might include the benefits of such things as emissions avoidance or offsets, as say from wind-generated electricity. Several air pollutants (e.g. CO2, NOx, and SOx) have separate markets today where the value of a pound of pollution is determined through sales and trade. Trading markets for other power plant pollutants, such as mercury and particulates do not exist today but may come into being soon. § Economic Attributes: Economic attributes might include such things as the development of local jobs and businesses, as well as reductions in the costs of having a secure domestic supply of electricity. § Social Attributes: Examples of social attributes include health and quality of life factors, the introduction of innovative technologies and technology applications, as well as social equity considerations related to the location and siting of power plants. Economic and social attributes are not generally quantified separately in today’s marketplace, though they are part of the whole bundle of attributes that are a part of a TRC and contribute to the reason some consumers are willing to pay more for renewable electricity or TRCs. Banking: See Certificate Banking. Baseline: In this handbook, baseline refers to the quantity of eligible renewable resources that were procured prior to a RPS or other obligation taking effect. State or federal regulatory programs determine the parameters of what is included in a baseline calculation. Basic Commitment: The American Association of Issuing Bodies (AAIB) Basic Commitment serves as the common agreement between all members of the AAIB. The Basic Commitment contains the minimum common set of definitions and criteria for the creation, issue, transfer and use as evidence of transfer of ownership and eventual removal from the market of tradable renewable certificates (TRCs). Bundled Electricity Product: A bundled transaction is one where the renewable certificates and electricity are sold together. On a wholesale level, a bundled product can be created by purchasing renewable electricity and TRCs from the same renewable generator, or by purchasing TRCs from a renewable generator and undifferentiated electricity (null electricity) from a spot market or regional system power pool. Cap-and-Trade: A system developed to meet specific regional and national air quality goals. The emissions cap is the total amount of pollution that sources can emit in a state or region. Regulators distribute allowances up to the cap amount in the region. Sources then have the flexibility to choose how to meet their limits, by reducing their own emissions or purchasing allowances from other sources. Sources measure and report emissions, and must have sufficient allowances to cover their emissions. Usually, significant automatic penalties apply for noncompliance. The cap ensures that the reductions are achieved and maintained over time even as new power plants are built. CO2: Carbon dioxide is a naturally occurring gas produced by living organisms, fermentation, and through the combustion of carbonaceous fuels. It is a normal component of the breath we exhale, it is hazardous in concentrated volumes, and is one of the primary greenhouse gases suspected of causing climate change. The symbol CO2e (CO2 equivalent) is often used as a proxy for the whole family of greenhouse gases. Carbon Offsets: A reduction in greenhouse gas pollutants counted toward an official greenhouse gas pollution target. See Offsets. Certificate Banking: Deposit of certificates for later application or trade. Certificate-Based Accounting System: Describes an electronic verification methodology whereby the generation data is automatically entered into an electronic system. Certificates are issued by the program administrator for each increment of electricity generated. Once issued, certificates are deposited into the certificate owner’s “account,” usually the first point of deposit is the generator. The certificates can be transferred easily between accounts (e.g. from the generator to the utility) and used as a mechanism to verify that a company has acquired enough renewable energy to fulfill their RPS obligation. Both the buyer and seller must confirm the transaction (e.g. quantity and whether bundled or unbundled with energy) before it is officially entered into the system. Certificate Borrowing: The use of a certificate that has not yet been generated, but for which there is a contract or intent to purchase, to meet a current obligation, e.g. using 2005 certificates to meet an obligation in 2004. Certificate borrowing usually occurs in conjunction with a regulatory program that has a multi-year compliance period. Certificate Retirement: Certificate retirement can be a voluntary or mandatory activity, usually the result of the, (1) delivery and consumption of a certificate to the end-use consumer; (2) application of the attribute value of a certificate the environmental impact of a consumer's use of electricity, or (3) the use of the certificate to comply with a statutory or regulatory requirement. Retirement of a certificate generally has the intent of removing the certificate from the market for subsequent sale, purchase, or use toward meeting a regulatory requirement or voluntary application. Certificate retirement may have a very specific legal meaning in the context of a regulatory program. Climate Neutral Footprint: Products, services, and enterprises that have reduced or offset their greenhouse gas emissions, usually measured in carbon of carbon equivalent, with which they are associated to achieve a net zero impact on the earth's climate. Companies or institutions that offset all of the gases resulting from the full spectrum of their internal operations can yield a climate neutral footprint. Compliance Period: See True-up Period. Contracts for Differences (CFD): A type of bilateral contract arrangement in which an energy producer or seller receives a fixed price for energy plus an adjustment value to cover any differences between the agreed-upon fixed price and the actual market price of the energy at the time it is delivered. CFD energy prices are usually set low to insure that the energy is bought, but both buyer and seller run risks of high or low spot prices at the time the energy is delivered. [2] Contract-Path Accounting System: Refers to an accounting methodology whereby individual contracts and financial settlement data are used to verify renewable purchases. Such a system usually involves some sort of manual review of contracts, though the information may be entered into database or otherwise put into an electronic format. Criteria Air Pollutant: The Clean Air Act directs the EPA to identify and set National Ambient Air Quality Standard (NAAQS) for the most common air pollutants known to be hazardous to human health. The six “criteria pollutants” used as indicators of air quality are: ozone, carbon monoxide, total suspended particulates, sulfur dioxide, lead, and nitrogen oxide. The term, "criteria pollutants" derives from the requirement that EPA must describe the characteristics and potential health and welfare effects of these pollutants. It is on the basis of these criteria that standards are set or revised. Delivered Electricity Product: An electricity product that contains both the energy and attributes of generation and guarantees the delivery of a specific mix of generation sources. Also known as a bundled electricity product. Disaggregation: Separation of one or more attributes from the unbundled TRC, usually to permit independent sale of such attributes (e.g. of CO2 as carbon offset). Disclosure (Label): A requirement under some state programs whereby utilities and other energy suppliers are required to provide information to consumers on the generation characteristics from which supplied electricity is derived. The information commonly disclosed includes, but is not limited to, resource mix, price and environmental performance, a description of the attributes connected to or eliminated from inclusion in a TRC-only sale. This information is typically provided to customers as part of their marketing information and contract with the supplier. Domain: The geographic territory (or other political or technological definition) of a single Issuing Body. Generators located within the boundaries of a domain are assigned to the corresponding Issuing Body for that domain. Double Counting: This term is used in the context of generation attributes to describe a number of different situations that may arise in TRC markets or accounting regimes. (See Section 5.3) § Double Sale: When the bundled attributes associated with a single MWh of generation are ultimately sold to or claimed by more than one consumer. § Partial Double Sale: The simultaneous sale of a TRC to represent renewable energy to one party, in addition to the sale of one or more unbundled benefits (secondary attributes such as CO2 offsets) associated with the same MWh of generation to another party. § Double Use: When a single TRC or renewable energy attribute are used for more than one purpose by a single owner, or when a single TRC or renewable energy attributes is used sequentially by two companies (i.e., used, sold, used again). Eligible Renewables: Sources of renewable electricity, such as solar electric, wind, geothermal, biomass and hydroelectric eligible to participate in a particular program. See Green-e Certification Program and Renewable Energy. Emissions Allowances: Under a cap-and-trade system, the amount of pollution a source is allowed to emit according to the regional or National Ambient Air Quality Standards. Emissions Offset: A permanent reduction in a source’s emission rate, created by an action taken above and beyond that required of the source by regulation. Offsets can be created by installing advanced technology controls beyond regulatory requirements or from the permanent shutdown of an air pollution source (the latter being the most common). [3] See Offset. Emissions Profile/Emissions Portfolio: An accounting of the total release of pollutants/emissions from a company or plant. Emissions Trading: Trading emissions offsets or emissions allowances to maintain compliance with regional or National Ambient Air Quality Standards. Green-e Certification Program: A voluntary certification program for renewable electricity products including renewable energy that is sold by monopoly utility programs and voluntary marketing programs. Either may include bundled electricity and renewable energy attributes or TRC-only offerings. The Green-e Program sets consumer protection and environmental standards for electricity products, and verifies that Green-e certified products meet these standards. Electricity products that meet the Green-e Standard for environmental excellence are denoted by the Green-e logo. Green Tags, Green Certificate: These are alternative terms used to describe TRCs. See Tradable Renewable Certificate (TRC). Greenhouse Gas (GHG): A gas, such as carbon dioxide or methane, which contributes to climate change. Carbon and CO2e are commonly used as a proxy for the whole family of greenhouse gases. Greenhouse Gas (GHG) Registries: In the US, a GHG registry is usually a state affiliated inventory, registry, and information system of greenhouse gas emissions from companies. GHG registries allow companies to record their emissions and emissions offsets voluntarily to establish a baseline that may be used in a future regulatory regime. Green Power: A generic term commonly defined as power from renewable generating facilities. Green Power Marketer: A company that sells some form of renewable electricity to its customers, usually in a restructured electricity market, or TRC-only products in both restructured and monopoly electricity markets. Green Pricing Program: The practice of a monopoly utility offering consumers an option to pay a special tariff for the purchase of clean energy, usually renewable-based electricity. Green Pricing Tariff: A price or schedule of prices for the differentiated purchases of renewable-based electricity, usually in a monopoly utility market where retail prices are determined by a regulatory body, usually a utility commission. Issuing Body: An entity that issues certificates based on the amount of electricity generated and the type of electric generation technology or fuel used within a geographic domain. Issuing Bodies also track wholesale certificate transactions, provide certificate banking and other services, retire certificates, maintain a database of information and perform such other services as may be required by law and appropriate to meet the needs of its clients. Issuing Bodies are often associated with independent transmission system operators. Load Serving Entity (LSE): An entity that has been granted the authority or has an obligation pursuant to state or local law, regulation or franchise to sell electrical energy to end-use customers located within a control area. NAAG Guidelines: National Association of Attorneys General recommendations for conducting green power (or green credit/tags) transactions to avoid committing consumer fraud. The guidelines as they pertain to TRCs may be summarized as: (1) clearly disclose all product information necessary to inform buyers; (2) ensure that buyers understand what the product is they are buying; (3) don't double sell (or double count) the product that is being sold. Net Metering: A program, often established legislatively, used to encourage customer investment in on-site renewable energy technologies. Net metering programs increase the value of the electricity produced by renewable generation by allowing customers to "bank" their energy and use it at a different time than it is produced, giving customers more flexibility and allowing them to maximize the value of their production. Net metering laws generally cap the amount of energy that can be banked at the customer’s total annual consumption. Utilities and their customers may also benefit from net metering programs because when customers are producing electricity during peak periods, the system load factor is improved. [4] Utilities and customers may also benefit from receiving any power generated by the customer in excess of the customer’s annual load free of charge. New Renewable Resource: A New Renewable Resource describes the date a renewable generating facility was placed into service as contrasted with existing renewable resources. States set their own dates for when a facility is considered “new” or “existing,” usually for the purpose of eligibility in a renewable energy programs. NOx: An oxide of nitrogen that in ambient air is a major component of photochemical smog. NOx is a product of combustion from transportation and stationary sources such as fossil fuel burning power plants. It is a major contributor to the formation of ozone in the troposphere and to acid deposition. NOx is also one of the greenhouse gases that are suspected of causing climate change. Null Electricity, Null MWhs, Null Electrons: A vernacular term used to describe the electrical energy associated with a MWh that has been stripped of its renewable attributes or TRCs, meaning that the TRCs have been unbundled from the underlying electricity and are sold or used independently of the electrical energy. Offsets: A method used in the 1990 Clean Air Act to give companies that own or operate large (major) pollution sources in non-attainment areas flexibility in meeting overall pollution reduction requirements when changing production processes. If the owner or operator of the source wishes to increase its release of a criteria air pollutant, an offset (reduction of a somewhat greater amount of the same pollutant) must be obtained either at the same plant or by purchasing offsets from another company. See also Emissions Offset. Off-System Power Sale: The sale by a utility of energy from its generating system to another entity outside its system. Particulate Matter (PM): Solid or liquid particles found in the air, which can be directly emitted or can be formed in the atmosphere when gaseous pollutants such as SOx and NOx react to form fine particles. Pollution Market: Refers to the trading of specific pollutants, emission offsets and emission allowances for either voluntary or mandatory reasons. Power Pool: Two or more interconnected utilities that plan and operate to supply electricity in a reliable, efficient, and economical way to meet their combined load. Such groups of utilities typically coordinate the planning and operation of their systems in accordance with contractual agreements that establish each utility’s responsibility to the pool. Public Benefit Fund (PBF): A fund containing monies collected through a System Benefits Charge. Usually the money is dispersed to assist projects with some public benefit related to electricity. Qualifying Facility (QF): A category of cogeneration or small power generating facility (using biomass fuel, geothermal, small hydro -- under 30 MW size, solar electric and wind technologies) that meets certain ownership, operating, and efficiency criteria established by the Federal Energy Regulatory Commission (FERC) pursuant to the Public Utility Regulatory Policies Act (PURPA) (See the Code of Federal Regulations [5] , Title 18, Part 292). PURPA created two types of QFs, Qualifying Small Power Producers and Qualifying Cogeneration Facilities. A qualifying facility is typically owned and/or operated by a cogenerator or small power producer that under federal law has the right to sell its excess power output to public utilities. Ratebase: The value of property upon which a utility is permitted to earn a specified rate of return as established by a regulatory authority. The ratebase generally represents the value of property used by the utility in providing service and may be calculated by any one or a combination of the following accounting methods: fair value, prudent investment, reproduction cost, or original cost. Depending on which method is used, the ratebase includes cash, working capital, materials and supplies, and deductions for accumulated provisions for depreciation, contributions in aid of construction, customer advances for construction, accumulated deferred income taxes, and accumulated deferred investment tax credits. Ratebased Facility: A power plant that has been permitted to receive a specific rate of return. See Ratebase. Regional Renewable Energy Registry: A database that is able to track the generation and its ownership from the point of generation through any number of wholesale transactions to the end retail supplier and end user. The information tracked in the database includes anything deemed necessary to serve the needs or interests of users of the system. Registration: The process by which a governmental or other accredited entity officially identifies and includes in a database information concerning the generation or other attribute characteristics of power plants. Such registration of renewable power plants allow TRC production claims and transactions to be recorded, as a basis for interested parties to verify claims and conduct further transactions. Renewable Certificate, Renewable Credit, REC: A term used synonymously with “TRC.” Renewable credits are often times used to define TRCs that can be used to meet a specific state or Federal renewable energy mandate. See TRC. Renewable Energy: Energy from solar, wind, geothermal, hydro, biomass and other diverse sources whose common characteristic is that they are non-depletable or naturally-replenishable, but flow-limited. Excluded are all fossil and nuclear fuels and electrical energy derived from these sources. In general, renewables have less negative environmental impacts than non-renewables. Renewable Portfolio Standards (RPS): A state or federal level policy, often initiated under restructuring, that requires that a minimum amount (usually a percentage) of supply provided in any retail or wholesale product by each supply company is to come from renewable energy. This can also be applied on a portfolio basis. This type of policy is also sometimes referred to as a renewable energy mandate, renewable obligation, or a renewable energy set-aside. Sink Pool: The power pool where a renewable certificate was transferred into or where it was retired. Transfer usually occurs as a result of a purchase by a retail customer located within the geographic confines of the power pool, or a wholesale customer operating within a regional power pool. Source Pool: The power pool from which a renewable certificate originated. SOx: An oxide of sulfur, produced when sulfur, or materials containing sulfur (e.g., coal, oil, etc.) are burned and the emissions are released into the air. Sulfur oxides can be a component of smog and are a regional pollutant that results in acid deposition (acid rain, acid fog, etc.) that causes severe environmental damage to plants and ecospheres. System Electricity: The mix of electricity fuel sources consumed in the utility territory, state, or region that are not disclosed or marketed as specific purchases or as defined by the relevant state agency. The production methods or fuels used to produce the electricity are indistinguishable once the electrons enter the system grid. System Benefits Charge (SBC): A state or national policy that imposes a volumetric fee on electricity usage (generally on a per kWh basis) to support energy efficiency, renewable energy and public benefit programs. Also known as a Public Goods Charge (PGC). Time of Delivery Requirement: Requirement that an amount of electricity be delivered within a specified time period for use to meet load or other contractual agreements. Unbundled attributes are free from the time of delivery requirements needed to supply electricity. Tradable Renewable Certificate (TRC): A generic term for a bundle of attributes that does not include the actual electrical energy associated with the generation of electricity at a renewable energy facility. Depending upon the facility, the TRC will embody various attributes with varying quantitative values. Values – such as avoided emissions – are quantified according to some baseline metric, engineering estimate, or a value deemed by private or government bodies. A renewable or green ‘tag’, green certificates, and renewable energy certificate (REC) are the equivalent of a TRC. TRC-Only Product: A product sold by green power marketers that includes only the attributes of renewable generation. Electricity associated with these attributes is fed into the system grid. True-up Period: The time period allowed by a program administrator for an electricity marketer to purchase supply to meet their obligation under the rules of that program. Also known as the compliance period. Unbundled TRC/Unbundling: An unbundled transaction is one where the renewable certificates may be sold separately from the associated commodity electricity. Verification: A process for establishing that the primary attributes of an eligible renewable power resource were produced from the designated resource during the designated time period. Verification may be by contract provision enforcement, by registration and audit, or by another standardized method. Vintage: Refers to the date (usually month and year) a TRC was created. Vintage is also sometimes used to describe the date a renewable generating facility was placed into service. [1] http://www.gert.org/guidance_documents/documents/word/chrisad1.doc [2] http://www.energyvortex.com/energydictionary/contracts_for_differences_(cfd).html [3] http://www.climatechangecentral.com/info_centre/discussion_papers/GHGoffsets.pdf [4] http://www.eere.energy.gov/greenpower/netmetering/index.shtml [5] http://www.access.gpo.gov/nara/cfr/