Glossary Terms

Public Utility Regulatory Policy Act (PURPA)

A federal law passed in 1978 that requires electric utilities to purchase electricity produced from certain efficient power producers (frequently using renewable or natural gas resources). Utilities purchase power at a rate equal to the costs they avoid by not needing to generate the power themselves. State regulatory agencies establish the rate based on local conditions, utility balance sheet, and resource reporting.

Pro rata

In proportion to, as determined by a specific factor. Example: tax credits are allocated to project owners in direct proportion to the percentage of the project they own.

Production Tax Credit (PTC)

Provides the owner of a qualifying facility with an annual tax credit based on the amount of electricity that is generated. By focusing on the energy produced instead of capital invested, this type of tax incentive encourages projects that perform adequately. In 2007, the rate for the PTC is 1.9¢/kWh. The PTC increases from year to year based on the consumer price index.

Power Curve

The instantaneous power output of a specific turbine design at various wind speeds. Used with wind resource data to determine the potential for electricity generation at a project site.

Peak Demand

The greatest demand placed on an electric system; measured in kilowatts or megawatts; also, the time of day or season of the year when that demand occurs.

Payments-In-Lieu-of-Taxes (PILOT)

Negotiated payments between the local taxing authority and a wind project. These payments compensate for excessive use of infrastructure in the area while developing the project and allow the local community to benefit from wind energy development. Property taxes and PILOTs contribute a great deal to the tax revenue of many windy rural areas and aid in the development of new schools, community centers, and other local programs. Project developers opt to enter into PILOT contracts in order to be good neighbors to the community, while other areas may require these payments before local authorities grant permission to build.


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