Utility purchased power is electricity, capacity, or related supply obtained from third parties rather than produced entirely by the utility's owned generating fleet.
It is a third-party supply measure, not a synonym for fuel cost or owned generation.
Utilities can buy energy, capacity, or both
Purchased power can come from:
- long-term power-purchase agreements;
- wholesale bilateral contracts;
- regional market purchases;
- jointly dispatched resources;
- renewable contracts; and
- short-term transactions used to balance system needs.
The accounting and operational treatment depends on the contract and market structure.
Purchased power can complement owned capacity
A utility may buy power because customer demand exceeds available owned generation, because a purchased resource is cheaper, because an owned plant is unavailable, or because regulators approved contracted resources instead of utility-owned construction.
That makes purchased power part of the bridge between Utility System Peak Demand and Utility Generation Capacity.
Cost recovery matters
For regulated utilities, purchased-power costs may be recovered through fuel or purchased-power clauses, base rates, riders, or other mechanisms.
That means higher purchased-power expense does not automatically translate into lower earnings dollar for dollar.
Fuel Adjustment Clause and regulatory timing remain important.
Primary-source examples
Utility purchased power is most useful as a third-party electricity-supply measure. Analyze it with owned capacity, peak demand, contract terms, market exposure, and regulatory recovery rather than treating it as a stand-alone cost-quality metric.
Part of the Regulated Utility Operating Model
See It in Company Research
These companies are examples of how the concept is reported or discussed in public filings. Definitions can differ by issuer; these links open company research rather than a normalized metric comparison.
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