Electricity Terms

Aggregator: Any marketer, broker, public agency, city, county, or special district that combines the loads of multiple end-use customers in facilitating the sale and purchase of electric energy, transmission, and other services on behalf of these customers.

Ampere: The unit of measurement of electrical current produced in a circuit by 1 volt acting through a resistance of 1 ohm. Ancillary Services: Necessary services that must be provided in the generation and delivery of electricity. As defined by the Federal Energy Regulatory Commission, they include: coordination and scheduling services (load following, energy imbalance service, control of transmission congestion); automatic generation control (load frequency control and the economic dispatch of plants); contractual agreements (loss compensation service); and support of system integrity and security (reactive power, or spinning and operating reserves).

Apparent Power: The product of the voltage (in volts) and the current (in amperes). It comprises both active and reactive power. It is measured in "volt-amperes" and often expressed in "kilovolt-amperes" (kVA) or "megavolt-amperes" (MVA). Broker: An entity that arranges the sale and purchase of electric energy, transmission, and other services between buyers and sellers, but does not take title to any of the power sold.

Assignment: The ease with which a customer may assign their existing energy contract to a third party in the event of a sale of that property

Bandwidth: The latitude ( as %) given to a customer under contract to diverge upwards and downwards from projected monthly usage. Also known as "Swing Tolerance"

Btu (British Thermal Unit): A standard unit for measuring the quantity of heat energy equal to the quantity of heat required to raise the temperature of 1 pound of water by 1 degree Fahrenheit. Bundled Utility Service: All generation, transmission, and distribution services provided by one entity for a single charge. This would include ancillary services and retail services.

Capacity: The amount of electric power delivered or required for which a generator, turbine, transformer, transmission circuit, station, or system is rated by the manufacturer.

Capacity (Purchased): The amount of energy and capacity available for purchase from outside the system. Capacity

Charge: An element in a two-part pricing method used in capacity transactions (energy charge is the other element). The capacity charge, sometimes called Demand Charge, is assessed on the amount of capacity being purchased.

Co-generator: A generating facility that produces electricity and another form of useful thermal energy (such as heat or steam), used for industrial, commercial, heating, or cooling purposes. To receive status as a qualifying facility (QF) under the Public Utility Regulatory Policies Act (PURPA), the facility must produce electric energy and "another form of useful thermal energy through the sequential use of energy," and meet certain ownership, operating, and efficiency criteria established by the Federal Energy Regulatory Commission (FERC). (See the Code of Federal Regulations, Title 18, Part 292.)

Commencement Date: The date the contract actually begins, not when it was signed. Some Providers have flexibility in their commencement date; some do not.

Commercial: The commercial sector is generally defined as nonmanufacturing business establishments, including hotels, motels, restaurants, wholesale businesses, retail stores, and health, social, and educational institutions. The utility may classify commercial service as all consumers whose demand or annual use exceeds some specified limit. The limit may be set by the utility based on the rate schedule of the utility.

Congestion: A condition that occurs when insufficient transfer capacity is available to implement all of the preferred schedules for electricity transmission simultaneously.

Consumption (Fuel): The amount of fuel used for gross generation, providing standby service, start-up and/or flame stabilization.

Contract Price: Price of fuels marketed on a contract basis covering a period of 1 or more years. Contract prices reflect market conditions at the time the contract was negotiated and therefore remain constant throughout the life of the contract or are adjusted through escalation clauses. Generally, contract prices do not fluctuate widely.

Cooperative Electric Utility: An electric utility legally established to be owned by and operated for the benefit of those using its service. The utility company will generate, transmit, and/or distribute supplies of electric energy to a specified area not being serviced by another utility. Such ventures are generally exempt from Federal income tax laws. Most electric cooperatives have been initially financed by the Rural Electrification Administration, U.S. Department of Agriculture.

Cost: The amount paid to acquire resources, such as plant and equipment, fuel, or labor services.

Cost-of-Service Regulation: Traditional electric utility regulation under which a utility is allowed to set rates based on the cost of providing service to customers and the right to earn a limited profit.

CTC: Competitive Transition Charge (stranded cost - typically a mandated charge for a specific number of years)

Current (Electric): A flow of electrons in an electrical conductor. The strength or rate of movement of the electricity is measured in amperes.

Customer Choice: Allowing all customers to purchase kilowatt hours of electricity from any of a number of companies that compete with each other.

Customer Service: The quality of the supplier's billing, telephone and email response to questions

Day-Ahead Market: The forward market for energy and ancillary services to be supplied during the settlement period of a particular trading day that is conducted by the Independent System Operator, the power exchange, and other Scheduling Coordinators. This market closes with the Independent System Operator's acceptance of the final day-ahead schedule.

Day-Ahead Schedule: A schedule prepared by a Scheduling Coordinator or the Independent System Operator before the beginning of a trading day. This schedule indicates the levels of generation and demand scheduled for each settlement period that trading day.

Delivery Only Providers: Owners and/or operators of transmission and distribution system equipment who provide billing and related energy services for the transmission and delivery of electricity.

Demand: The rate at which energy is delivered to loads and scheduling points by generation, transmission, and distribution facilities.

Demand (Electric): The rate at which electric energy is delivered to or by a system, part of a system, or piece of equipment, at a given instant or averaged over any designated period of time.

Demand Bid: A bid into the power exchange indicating a quantity of energy or an ancillary service that an eligible customer is willing to purchase and, if relevant, the maximum price that the customer is willing to pay.

Demand-Side Management: The planning, implementation, and monitoring of utility activities designed to encourage consumers to modify patterns of electricity usage, including the timing and level of electricity demand. It refers only to energy and load-shape modifying activities that are undertaken in response to utility-administered programs. It does not refer to energy and load-shape changes arising from the normal operation of the marketplace or from government-mandated energy-efficiency standards. Demand-Side Management (DSM) covers the complete range of load-shape objectives, including strategic conservation and load management, as well as strategic load growth.

Deregulation: The elimination of regulation from a previously regulated industry or sector of an industry.

Direct Access: The ability of a retail customer to purchase commodity electricity directly from the wholesale market rather than through a local distribution utility.

Distribution: The delivery of electricity to retail customers (including homes, businesses, etc.).

Distribution System: The portion of an electric system that is dedicated to delivering electric energy to an end user.

EDC: Electric (or Energy) Distribution Company. The company that owns the electric (or natural gas) lines and other equipment needed to deliver energy to the consumer.

Electric Cooperative (COOP): Customer-owned electric utility that distributes electricity to its members.

Electricity Facts Label: A standardized format sheet of information required by the PUC that provides customers with disclosure information on a Retail Electric Provider's prices, contracts, sources of power generation and emissions. This information will give you a better comparison of electricity offers from competing Texas Electric Providers.

Electric Plant (Physical): A facility containing prime movers, electric generators, and auxiliary equipment for converting mechanical, chemical, and/or fission energy into electric energy.

Electric Rate Schedule: A statement of the electric rate and the terms and conditions governing its application, including attendant contract terms and conditions that have been accepted by a regulatory body with appropriate oversite authority.

Electric Reliability Council of Texas (ERCOT): The corporation comprised and governed by a board of directors from investor and municipally owned electric utilities, generators, independent members and consumers to maintain and ensure the reliability of the power grid that operates in the State of Texas. They make sure you get electricity into your home or business.

ESID (Electric Service Identifier): A unique number in the ERCOT market given to an electricity delivery point by the TDSP. You can find this number on your electricity bill.

Electric Service Provider: An entity that provides electric service to a retail or end-use customer.

Electric Utility: A corporation, person, agency, authority, or other legal entity or instrumentality that owns and/or operates facilities within the United States, its territories, or Puerto Rico for the generation, transmission, distribution, or sale of electric energy primarily for use by the public and files forms listed in the Code of Federal Regulations, Title 18, Part 141. Facilities that qualify as co-generators or small power producers under the Public Utility Regulatory Policies Act (PURPA) are not considered electric utilities.

End User: Whether the supplier serves residential customers, making it more likely that they will not fail

Energy: The capacity for doing work as measured by the capability of doing work (potential energy) or the conversion of this capability to motion (kinetic energy). Energy has several forms, some of which are easily convertible and can be changed to another form useful for work. Most of the world's convertible energy comes from fossil fuels that are burned to produce heat that is then used as a transfer medium to mechanical or other means in order to accomplish tasks. Electrical energy is usually measured in kilowatt hours, while heat energy is usually measured in British thermal units.

Energy Charge: That portion of the charge for electric service based upon the electric energy (kWh) consumed or billed.

Energy Deliveries: Energy generated by one electric utility system and delivered to another system through one or more transmission lines.

Energy Efficiency: Refers to programs that are aimed at reducing the energy used by specific end-use devices and systems, typically without affecting the services provided. These programs reduce overall electricity consumption (reported in megawatt hours), often without explicit consideration for the timing of program-induced savings. Such savings are generally achieved by substituting technically more advanced equipment to produce the same level of end-use services (e.g. lighting, heating, motor drive) with less electricity. Examples include high-efficiency appliances, efficient lighting programs, high-efficiency heating, ventilating and air conditioning (HVAC) systems or control modifications, efficient building design, advanced electric motor drives, and heat recovery systems.

Energy Only Providers: Power marketers or other electricity vendors who provide an unbundled service and bill for only the energy component of the electricity consumed by the end-use customer.

Energy Receipts: Energy generated by one electric utility system and received by another system through one or more transmission lines.

Energy Source: The primary source that provides the power that is converted to electricity through chemical, mechanical, or other means. Energy sources include coal, petroleum and petroleum products, gas, water, uranium, wind, sunlight, geothermal, and other sources.

Exchange: An entity that ensures the integrity of commodity transactions for all parties involved.

Exempt Wholesale Generator: Created under the 1992 Energy Policy Act, these wholesale generators are exempt from certain financial and legal restrictions stipulated in the Public Utilities Holding Company Act of 1935.

Facility: An existing or planned location or site at which prime movers, electric generators, and/or equipment for converting mechanical, chemical, and/or nuclear energy into electric energy are situated, or will be situated. A facility may contain more than one generator of either the same or different prime mover type. For a co-generator, the facility includes the industrial or commercial process.

Federal Energy Regulatory Commission (FERC): A quasi-independent regulatory agency within the Department of Energy having jurisdiction over interstate electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, oil pipeline rates, and gas pipeline certification.

Federal Power Act: Enacted in 1920, and amended in 1935, the Act consists of three parts. The first part incorporated the Federal Water Power Act administered by the former Federal Power Commission, whose activities were confined almost entirely to licensing non-Federal hydroelectric projects. Parts II and III were added with the passage of the Public Utility Act. These parts extended the Act's jurisdiction to include regulating the interstate transmission of electrical energy and rates for its sale as wholesale in interstate commerce. The Federal Energy Regulatory Commission is now charged with the administration of this law.

Federal Power Commission: The predecessor agency of the Federal Energy Regulatory Commission. The Federal Power Commission (FPC) was created by an Act of Congress under the Federal Water Power Act on June 10, 1920. It was charged originally with regulating the electric power and natural gas industries. The FPC was abolished on September 20, 1977, when the Department of Energy was created. The functions of the FPC were divided between the Department of Energy and the Federal Energy Regulatory Commission.

FERC: The Federal Energy Regulatory Commission.

Financial Strength: Supplier's financial viability

Firm Gas: Gas sold on a continuous and generally long-term contract.

Firm Power: Power or power-producing capacity intended to be available at all times during the period covered by a guaranteed commitment to deliver, even under adverse conditions.

Fixed Price: A price for energy that remains the same usually over a set amount of time.

Forced Outage: The shutdown of a generating unit, transmission line or other facility, for emergency reasons or a condition in which the generating equipment is unavailable for load due to unanticipated breakdown.

Fossil Fuel: Any naturally occurring organic fuel, such as petroleum, coal, and natural gas.

Fossil-Fuel Plant: A plant using coal, petroleum, or gas as its source of energy.

Fuel: Any substance that can be burned to produce heat; also, materials that can be fissioned in a chain reaction to produce heat.

Fuel Expenses: These costs include the fuel used in the production of steam or driving another prime mover for the generation of electricity. Other associated expenses include unloading the shipped fuel and all handling of the fuel up to the point where it enters the first bunker, hopper, bucket, tank, or holder in the boiler-house structure.

Full-Forced Outage: The net capability of main generating units that is unavailable for load for emergency reasons.

Full Service Providers: Utilities, municipalities, cooperatives and others who provide both electricity and the transmission services necessary to deliver it to end use customers.

Futures Market: Arrangement through a contract for the delivery of a commodity at a future time and at a price specified at the time of purchase. The price is based on an auction or market basis. This is a standardized, exchange-traded, and government regulated hedging mechanism.

Gas: A fuel burned under boilers and by internal combustion engines for electric generation. These include natural, manufactured and waste gas.

Gas Turbine Plant: A plant in which the prime mover is a gas turbine. A gas turbine consists typically of an axial-flow air compressor, one or more combustion chambers, where liquid or gaseous fuel is burned and the hot gases are passed to the turbine and where the hot gases expand to drive the generator and are then used to run the compressor.

Generating Unit: Any combination of physically connected generator(s), reactor(s), boiler(s), combustion turbine(s), or other prime mover(s) operated together to produce electric power.

Generation (Electricity): The process of producing electric energy by transforming other forms of energy; also, the amount of electric energy produced, expressed in watt-hours (Wh).

Generation Company: A regulated or non-regulated entity (depending upon the industry structure) that operates and maintains existing generating plants. The generation company may own the generation plants or interact with the short-term market on behalf of plant owners. In the context of restructuring the market for electricity, the generation company is sometimes used to describe a specialized "marketer" for the generating plants formerly owned by a vertically-integrated utility.

Generator: A machine that converts mechanical energy into electrical energy.

Geothermal Plant: A plant in which the prime mover is a steam turbine. The turbine is driven either by steam produced from hot water or by natural steam that derives its energy from heat found in rocks or fluids at various depths beneath the surface of the earth. The energy is extracted by drilling and/or pumping.

Gigawatt (GW): One billion watts.

Gigawatt-hour (GWh): One billion watt-hours.

Greenhouse Effect: The increasing mean global surface temperature of the earth caused by gases in the atmosphere (including carbon dioxide, methane, nitrous oxide, ozone, and chlorofluorocarbon). The greenhouse effect allows solar radiation to penetrate but absorbs the infrared radiation returning to space.

Grid: The layout of an electrical distribution system.

Heat Rate: A product whereby the ancilliary costs are locked in a contract, allowing natural gas to float until the position is locked in. 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.

Hedging Contracts: Contracts which establish future prices and quantities of electricity independent of the short-term market. Derivatives may be used for this purpose.

Hydroelectric Plant: A plant in which the turbine generators are driven by falling water. Independent Power Producers: Entities that are also considered nonutility power producers in the United States. These facilities are wholesale electricity producers that operate within the franchised service territories of host utilities and are usually authorized to sell at market-based rates. Unlike traditional electric utilities, Independent Power Producers do not possess transmission facilities or sell electricity in the retail market.

Independent System Operators (ISO): An independent, Federally-regulated entity that coordinates regional transmission in a non-discriminatory manner and ensures the safety and reliability of the electric system.

Index: Performance of selected commodities in order to evaluate and predict economic trends.

Industrial: The industrial sector is generally defined as manufacturing, construction, mining agriculture, fishing and forestry establishments Standard Industrial Classification (SIC) codes 01-39. The utility may classify industrial service using the SIC codes, or based on demand or annual usage exceeding some specified limit. The limit may be set by the utility based on the rate schedule of the utility.

Intermediate Load (Electric System): The range from base load to a point between base load and peak. This point may be the midpoint, a percent of the peak-load, or the load over a specified time period.

Internal Combustion Plant: A plant in which the prime mover is an internal combustion engine. An internal combustion engine has one or more cylinders in which the process of combustion takes place, converting energy released from the rapid burning of a fuel-air mixture into mechanical energy. Diesel or gas-fired engines are the principal types used in electric plants. The plant is usually operated during periods of high demand for electricity.

Interruptible Gas: Gas sold to customers with a provision that permits curtailment or cessation of service at the discretion of the distributing company under certain circumstances, as specified in the service contract.

Interruptible Load: Refers to program activities that, in accordance with contractual arrangements, can interrupt consumer load at times of seasonal peak load by direct control of the utility system operator or by action of the consumer at the direct request of the system operator. It usually involves commercial and industrial consumers. In some instances the load reduction may be affected by direct action of the system operator (remote tripping) after notice to the consumer in accordance with contractual provisions. For example, loads that can be interrupted to fulfill planning or operation reserve requirements should be reported as Interruptible Load. Interruptible Load as defined here excludes Direct Load Control and Other Load Management. (Interruptible Load, as reported here, is synonymous with Interruptible Demand reported to the North American Electric Reliability Council on the voluntary Form EIA-411, "Coordinated Regional Bulk Power Supply Program Report," with the exception that annual peak-load effects are reported on the Form EIA-861 and seasonal (i.e., summer and winter) peak-load effects are reported on the EIA-411).

Investor-Owned Utility: A class of utility whose stock is publicly traded and which is organized as a tax-paying business, usually financed by the sale of securities in the capital market. It is regulated and authorized to achieve an allowed rate of return.

ISO: Independent System Operator

Kilowatt (kW): One thousand watts.

Kilowatt hour (kWh): One thousand watt-hours. Lignite: The lowest rank of coal, often referred to as brown coal, used almost exclusively as fuel for steam-electric power generation. It is brownish-black and has a high inherent moisture content, sometimes as high as 45 percent. The heat content of lignite ranges from 9 to 17 million Btu per ton on a moist, mineral-matter-free basis. The heat content of lignite consumed in the United States averages 13 million Btu per ton, on the as-received basis (i.e., containing both inherent moisture and mineral matter).

Load (Electric): The amount of electric power delivered or required at any specific point or points on a system. The requirement originates at the energy-consuming equipment of the consumers.

Load Factor: The ratio of kilowatt-hours (kWh) per KW demand

Load Profile: An hour by hour measurement of a customer's energy use showing how much and when the power is used. Typically used for scheduling and pricing.

Market-Based Pricing: Electric service prices determined in an open market system of supply and demand under which the price is set solely by agreement as to what a buyer will pay and a seller will accept. Such prices could recover less or more than full costs, depending upon what the buyer and seller see as their relevant opportunities and risks.

Market Clearing Price: The price at which supply equals demand for the Day Ahead and/or Hour Ahead Markets.

Maximum Demand: The greatest of all demands of the load that has occurred within a specified period of time.

Mcf: One thousand cubic feet.

MCPE: A variable electricity price for commercial and industrial businesses in Texas. ERCOT is the Electric Reliability Council of Texas and manages the Texas electricity grid. Texas businesses cannot purchase this MCPE price directly from the ERCOT grid but instead must use a licensed market participant such as a Texas retail electricity provider. The market participant will add on what is known as an adder. This adder usually increases the price by 1 - 2 cents per kWh. The MCPE price does not include TDSP charges.

Megawatt (MW): One million watts.

Megawatt-hour (MWh): One million watt-hours.

MMcf: One million cubic feet. Monopoly: One seller of electricity with control over market sales.

Municipally or City Owned Utility: A non-profit electricity provider that is owned and operated by the municipality it serves. Texas city-owned utilities may decide whether or not their customers will have a choice of REPs. Customers should contact their electric cooperative or city utility for more information.

Natural Gas: A naturally occurring mixture of hydrocarbon and nonhydrocarbon gases found in porous geological formations beneath the earth's surface, often in association with petroleum. The principal constituent is methane.

Non-Firm Power: Power or power-producing capacity supplied or available under a commitment having limited or no assured availability.

Non-utility Power Producer: A corporation, person, agency, authority, or other legal entity or instrumentality that owns electric generating capacity and is not an electric utility. Nonutility power producers include qualifying co-generators, qualifying small power producers, and other non-utility generators (including independent power producers) without a designated franchised service area, and which do not file forms listed in the Code of Federal Regulations, Title 18, Part 141.

Nuclear Fuel: Fissionable materials that have been enriched to such a composition that, when placed in a nuclear reactor, will support a self-sustaining fission chain reaction, producing heat in a controlled manner for process use.

Nuclear Power Plant: A facility in which heat produced in a reactor by the fissioning of nuclear fuel is used to drive a steam turbine.

NYMEX: The New York Merchantile Exchange; The world's largest physical commodity futures exchange, located in New York City.

Off-Peak Gas: Gas that is to be delivered and taken on demand when demand is not at its peak.

One mW (legal): Whether state law requires a provider to certify that customer uses > 1 megawatt (one million killowatts or "kWh" of electric power in a year

Open Access: A regulatory mandate to allow others to use a utility's transmission and distribution facilities to move bulk power from one point to another on a nondiscriminatory basis for a cost-based fee.

Outage: The period during which a generating unit, transmission line, or other facility is out of service.

Peak Demand: The maximum load during a specified period of time.

Peak Load Plant: A plant usually housing old, low-efficiency steam units; gas turbines; diesels; or pumped-storage hydroelectric equipment normally used during the peak-load periods.

Peaking Capacity: Capacity of generating equipment normally reserved for operation during the hours of highest daily, weekly, or seasonal loads. Some generating equipment may be operated at certain times as peaking capacity and at other times to serve loads on an around-the-clock basis.

Power: The rate at which energy is transferred. Electrical energy is usually measured in watts. Also, used for a measurement of capacity

Power Exchange: The entity that will establish a competitive spot market for electric power through day- and/or hour-ahead auction of generation and demand bids.

Power Exchange Generation: Generation being scheduled by the power exchange.

Power Exchange Load: Load that has been scheduled by the power exchange and which is received through the use of transmission or distribution facilities owned by participating transmission owners.

Power Marketers: Business entities engaged in buying, selling, and marketing electricity. Power marketers do not usually own generating or transmission facilities. Power marketers, as opposed to brokers, take ownership of the electricity and are involved in interstate trade. These entities file with the Federal Energy Regulatory Commission for status as a power marketer.

Power Pool: An association of two or more interconnected electric systems having an agreement to coordinate operations and planning for improved reliability and efficiencies.

Providers of Bundled Retail Energy: Similar to full service providers, except for their operation in deregulated markets, as in Texas (Retail Electricity Providers).

Provider of Last Resort: The Provider of Last Resort becomes your provider when a Retail Electric Provider exits the market for any reason. If this happens, customers may switch back to the Affiliate Retail Electric Provider or establish service with a new Retail Electric Provider.

Public Utility Commission (PUC): The state agency that is responsible for the regulation and oversight of electric services. The Public Utility Commission regulates the delivery of electricity to ensure the safety and reliability of your service. The mission of the Public Utility Commission is to protect customers, foster competition, and promote high quality infrastructure.

Public Authority Service to Public Authorities: Public authority service includes electricity supplied and services rendered to municipalities or divisions or agencies of State or Federal governments, under special contracts or agreements or service classifications applicable only to public authorities.

Purchased Power Adjustment: A clause in a rate schedule that provides for adjustments to the bill when energy from another electric system is acquired and it varies from a specified unit base amount.

Qualifying Facility (QF): A cogeneration or small power production facility that meets certain ownership, operating, and efficiency criteria established by the Federal Energy Regulatory Commission (FERC) pursuant to the Public Utility Regulatory Policies Act (PURPA).

Ratchet: The highest demand (KW) of the year used for monthly billing, regardless of use.

Real-time Pricing: A rate that reflects the actual moment by moment cost of energy.

Retail Adder: The amount that the REP adds to a contract. In addition to their profit, it may include such items such as ISO fees, ancillary services costs, losses, and shaping costs. The Retail Adder quoted to you by the REP may vary, contingent on the Heat Rate that you choose. A Higher Heat Rate would typically result in lower retail adder. A market implied Heat Rate refers to the forward power price divided by the forward gas price.

Spot Market: Purchases of energy in the short term, usually from supply available for a short time.

Strip price: An average price per unit usually based on 12 consecutive months of futures contracts.

Supplier: An entity that sells energy to customers using the transmission and distribution facilities of an EDC.

Supply-side: Strategies that can affect cost per unit, such as purchasing lower priced energy

Variable Price: A price that can change almost anytime - by the hour, day, month, etc.

Swing Tolerance: The latitude ( as %) given to a customer under contract to diverge upwards and downwards from projected monthly usage. Also known as "Bandwidth"

Termination Penalties: The severity of penalty for early termination of an energy contract by customer

WAHA: Delivery point (hub) in West Texas for natural gas. Can be used as an index for natural gas contracts by measuring the differential between natural gas prices at the Henry Hub in Louisiana and the WAHA in Texas.

Natural Gas Terms

BASE LOAD: The lowest daily amount of gas taken or consumed over a given period of time.

Bcf: One billion cubic feet.
Equivalent to 1,000,000 Mcf or 1,000 MMcf.
1,000 Mcf = 1 MMcf = .001 Bcf
1,000,000 Mcf = 1,000 MMcf = 1 Bcf

BTU: British Thermal Unit. The amount of heat required to raise the temperature of one pound of water one degree Fahrenheit.

BURNER TIP: Refers to the ultimate usage of gas. Originally referred to residential or commercial usage where special flame dispersing heads were attached to the gas burning appliance to make the flame suitable for lighting, cooking or industrial uses. Today the term is more generic and refers to any final usage of gas by an end user.

COMMODITY CHARGE: The dollars that a buyer pays for a service that are directly linked to utilization of the service. Buyer pays the commodity charges only when service is used. Commodity charges are usually paid on a per unit basis ($/MMBtu).

CURTAILMENT: A curtailment is issued by an LDC to protect the operational integrity of the system and ensure delivery to their firm transportation holders. The curtailment will restrict service to customers that have Interruptible Transportation (IT) contracts only. Residential customers, small general service rate customers and other end users holding firm transportation contracts will not be curtailed. Interruptible customers will be curtailed in order of priority to ensure firm deliveries are met first.

DEGREE DAY: A measure of weather coldness experienced, based on extent to which daily mean temperature (average of high and low readings) falls below a reference temperature of 65 degrees fahrenheit.

50°F + 30°F = 40°F

65°F - 40°F = 25 degree days

DEMAND CHARGE: The dollars that a buyer pays for a service that are directly linked to the right to use the service. These costs will be incurred whether the service is used or not. Charges are generally based on $/Dth of MDQ or TQ.

DEKATHERM (Dth): Equivalent to an MMBtu. Literally, it means 10 therms. A therm is defined as 100,000 BTUs.

END USER: The ultimate consumer of natural gas, such as a home, industrial plant, electric generating plant, office building, university, etc.

EQUIVALENT VALUES: Energy Conversion:
1 CCF = 100 CF = 1 Therm
1 CF (Cubic Feet) = 1,000 BTU's
1 Therm = 100 CF = 0.1 MCF
10 Therms = 1 MCF = 1 DT = 1 MMBTU
1 MCF = 1.000 CF = 10 CCF

  • Order 636 (April 8, 1992), required pipelines to "un-bundle" their services and to offer and price these services separately. Order 636 ended the pipelines' traditional middleman role as a buyer and a seller. It converted them to transportation companies. This enabled all natural gas producers to compete directly for buyers on an equal footing.
  • Pipelines were instructed to implement a capacity release program for use by the FT customers
  • Intended evolution of full competition in the natural gas industry -- allowing all natural gas suppliers, including the pipeline as merchant, to compete for gas purchasers on equal footing.
  • Promotion of competition among gas suppliers seen as benefit to all gas consumers and the nation by ensuring adequate and reliable supply at the lowest reasonable price

  • Service (sales/transportation/storage) offered on a guaranteed basis. Seller warrants service will be available every day of the contract unless prevented by Force Majeure.
  • Buyer will generally pay a demand fee (or reservation charge) and a commodity charge for firm service. The total charge is generally higher than for interruptible services.
  • Firm services have higher priority than interruptible services. Firm service contracts generally have a minimum one year term. Many firm service contracts are for as long as 15 years.

FORCE MAJEURE: A contractual clause that allows for suspension of a party's obligation to perform under contractual terms if certain acts of God, natural disasters, or certain acts of man prohibit normal performance of the service. Examples include: freeze-offs, strikes, hurricanes, earthquakes, blow outs, etc.

FUEL/SHRINKAGE: The mechanical compression of natural gas along the interstate pipeline results in a volume loss called shrinkage or fuel cost. Each pipeline has a defined rate regulated by FERC that determines the specific shrinkage percentage between delivery points along their pipeline. Fuel cost is calculated as a percentage of the commodity cost.

  • Volumetric calculation
           Example: 1000 Dths @ wellhead
                  X .9655 Transco Z 3-5 fuel percentage
                  965.5 Dths @ city gate
  • Monetary calculation
           Example: $6.00 per Dth price @ wellhead
              /   .9655 Transco A 3-5 fuel percentage
                  $ 6.2144 per Dth price @ city gate
                  $ 0.2144 per Dth is the actual fuel cost

  • Service (sales/transportation/storage) that is not guaranteed. Seller can generally cease service performance with short or no notice. Seller will interrupt if the service is required to serve a higher priority customer.
  • Buyer will generally pay only a commodity charge when service is utilized. The total cost is usually less than firm service. Interruptible service is less reliable by definition.
  • Interruptible services have lower priority than firm services. Interruptible service contracts can have a term as short as several days to one month.

LDC: Local Distribution Company. A company engaged in the sale and distribution of natural gas for ultimate consumption. The LDC generally serves residential, commercial and industrial markets through a network of distribution pipelines.

LOAD FACTOR: Average capacity utilization by a customer relative to total or maximum available capacity (peak utilization). Expressed as a percentage of average to maximum. Customers with a 100% load factor use their maximum capacity every day. A customer with a 50% load factor uses their capacity only half of the time.

MARKETER: A company or individual that sells gas, transportation, storage services, or any combination of these services. Generally, the term is used to identify a company that sells gas to an end user or LDC. Marketing companies affiliated with regulated companies, such as pipelines, are called Marketing Affiliates or Affiliated Marketers.

MCF: The volume of natural gas which occupies 1,000 cubic feet when such gas is at a temperature of 60 degrees Fahrenheit and at a standard pressure of approximately 15 pounds per square inch.

MDQ: Maximum Daily Quantity- The maximum quantity of gas a customer can take/request under a contract on any one day. MDQ's may vary by month or season. It is not unusual for the MDQ to be higher during the winter (as compared to summer).

MMBTU: A measurement of gas based on a standard heat value or stored energy. A million British Thermal Units, where a BTU is the amount of heat necessary to raise one pound of water one degree Fahrenheit.

OPERATIONAL FLOW ORDER: Orders which are issued by a pipeline to protect the operational integrity of the system. The orders may either restrict service or require actions by shippers to correct the problem.

PEAK DAY: The day on which the maximum load is consumed or produced in a stated period of time.

STORAGE FIELD: A place to store natural gas supplies for use at a later time. Can be an old gas field, developed salt dome or liquefied natural gas tank. Advantages including having gas closer to end-use markets, ability to offset supply disruptions during cold weather, and avoidance of pipeline bottlenecks during peak usage.

SWING LOAD: The daily volume of gas taken or consumed above the base load quantity of gas.