Week 3 - Chapter 4

Question 1

What is direct current (DC)?

Answer 1

A type of electrical current that flows in one direction only.

Used in batteries and electronic devices.

Question 2

What is alternating current (AC)?

Answer 2

A type of electrical current that reverses direction periodically.

Commonly used in households and industries.

Question 3

What is the purpose of transformers?

Answer 3

To change the voltage level of alternating current in power systems.

Essential for efficient transmission of electricity over long distances.

Question 4

What is a busbar?

Answer 4

A conductive material that connects multiple circuits in electrical systems.

Used for distributing power within substations.

Question 5

What is the difference between transmission and distribution?

Answer 5

Transmission refers to moving electricity over long distances, while distribution involves delivering electricity to end users.

Transmission systems operate at high voltages, distribution systems at lower voltages.

Question 6

What is a load in electrical terms?

Answer 6

The amount of electrical power consumed by devices or systems.

Measured in watts (W).

Question 7

What does frequency refer to in electrical systems?

Answer 7

The number of cycles per second of alternating current, measured in hertz (Hz).

Standard frequency is often 60 Hz in the Americas and 50 Hz in Europe.

Question 8

What is voltage?

Answer 8

The electric potential difference between two points.

Measured in volts (V).

Question 9

What does locational marginal price (LMP) represent?

Answer 9

The price of electricity at a specific location, considering supply and demand.

Influences market trading and pricing strategies.

Question 10

What is base load?

Answer 10

The minimum level of demand on an electrical grid over a period of time.

Typically met by power plants that run continuously.

Question 11

What is peak load?

Answer 11

The maximum level of demand on an electrical grid during a specific time.

Often requires additional generation capacity to meet demand.

Question 12

What is a load duration curve?

Answer 12

A graphical representation of the load versus time over a specific period.

Helps in planning and managing power supply.

Question 13

What is capacity factor?

Answer 13

The ratio of actual output of a power plant to its potential output over a period.

Indicates the efficiency of the plant.

Question 14

What are spinning reserves?

Answer 14

Backup power resources that can be activated quickly to meet sudden demand.

Essential for grid reliability.

Question 15

What are ancillary services?

Answer 15

Support services necessary for maintaining grid reliability and stability.

Includes frequency control and voltage support.

Question 16

What does the Public Utility Holding Company Act (PUHCA) regulate?

Answer 16

The organization and operations of public utility holding companies.

Aimed at reducing monopolistic practices.

Question 17

What are investor-owned utilities (IOUs)?

Answer 17

Privately owned companies that provide electric service to customers.

Operate for profit and are regulated by state commissions.

Question 18

What are publicly owned utilities (POUs)?

Answer 18

Utilities owned by local or state governments.

Operate at cost and serve local communities.

Question 19

What is cost-of-service recovery (COSR)?

Answer 19

The method by which utilities recover the costs of providing service to customers.

Ensures financial stability for utility operations.

Question 20

What is a rate base?

Answer 20

The value of property or assets used by a utility to provide service.

Used to determine allowable revenue for utilities.

Question 21

What are stranded costs?

Answer 21

Costs incurred by utilities that cannot be recovered due to market changes.

Often arise during deregulation.

Question 22

What is weighted average cost of capital (WACC)?

Answer 22

The average rate of return a company is expected to pay to its security holders.

Used in investment decisions and financial modeling.

Question 23

What do public utilities commissions (PUCs) do?

Answer 23

Regulate the rates and services of public utilities.

Ensure fair pricing and service quality.

Question 24

What is decoupling in utility regulation?

Answer 24

A mechanism that separates a utility’s profits from the amount of energy sold.

Encourages energy conservation.

Question 25

What is interconnection in energy systems?

Answer 25

The linking of different power systems for electricity exchange.

Enhances reliability and efficiency.

Question 26

What is reserve margin?

Answer 26

The difference between available capacity and peak demand.

Ensures reliability during peak periods.

Question 27

What does intermittency refer to?

Answer 27

The variability of power generation sources like wind and solar.

Challenges grid stability and reliability.

Question 28

What is debt service coverage ratio (DSCR)?

Answer 28

A measure of a company’s ability to pay its debt obligations.

Calculated as net operating income divided by total debt service.

Question 29

What are confidence scenarios?

Answer 29

Predictions used in risk management to assess potential future outcomes.

Important for strategic planning.

Question 30

What is a hurdle rate?

Answer 30

The minimum rate of return required on an investment.

Used in capital budgeting decisions.

Question 31

What is net present value (NPV)?

Answer 31

The difference between the present value of cash inflows and outflows.

Used to assess profitability of an investment.

Question 32

What does internal rate of return (IRR) measure?

Answer 32

The discount rate that makes the net present value of an investment zero.

Helps compare the profitability of investments.