Purchased Power Expense
This is the total cost of power purchased through long term contracts with other electricity vendors.
Long Term Contract Generation is different from Owned Generation, where the company owns the generators producing the electrical capacity. Companies often enter into such long term contracts in order to promote cost savings or to maximize revenue. For example, when the market wholesale price of electricity is cheaper than the company's cost of producing electricity, the company will act upon its contract and purchase electricity at wholesale to sell to its customers. Furthermore, when a company has excess energy, it will sell the electricity through similar long term contracts with other companies.