Heat Rate

Here the rate is tied to the efficiency of the power plant. Learn more about heat rates.

What is heat rate?

The term “heat rate” refers to a power plant’s efficiency in converting fuel to electricity. Heat Rate is expressed as the number of British thermal units (Btu) required to generate a kilowatt hour (kWh) of electricity. Lower Heat Rates are associated with more efficient power generating plants.

What is a Heat Rate price?

In retail electric markets, Heat Rate products offer consumers an opportunity to link their power price to the price of natural gas. Rather than opting for a fixed price contract, Customers on a Heat Rate pay a price for electricity that varies based on the level of a gas price index such as the NYMEX natural gas index or Houston Ship Channel Index. This is called Heat Price.