“Negawatts” go to the heart of effective electricity pricing and energy efficiency efforts.

In essence, a negwatt of electricity is the shadow equivalent of a megawatt that goes unused. A megawatt is a unit of power equivalent to one million watts.

The idea of paying people NOT to use something can be confounding and difficult to write into regulation, but that doesn’t mean regulators aren’t going to try.

The Federal Energy Regulatory Commission is currently starting work on a major rule that would force electricity providers to pay users to cut back electricity use from prearranged levels that represent normal but not ideal usage. That would potentially allow for better overall management of the transmission grid (utilities can pay users less than the cost of marginally producing power to cut back their demand, thereby sparing the system and the utility), but also creates the potential for mind-bending complexity in an industry already struggling to stay focused on reliability as it deals with floods of real-time data and the need to upgrade costly infrastructure.

The term first showed up at FERC in a 2007 report on demand response (PDF), and has become central to Chairman Wellinghoff’s efforts to transform the national approach to electricity usage since.

For a podcast dealing with negawatts and the economic arguments behind them, be sure to listen to Breaking Energy’s “Explaining The Negawatt.”