Glossary of Energy Terms
Affiliated Marketer: A marketer that is owned either by a distribution or transmission company, or by a corporation that also owns a distribution or transmission company.
Agent: A legal representative of a buyer of natural gas who has the authority to negotiate contractual agreements.
Alternate Fuel Capability: The ability to use an alternate fuel.
Alternate Fuels: Other fuels that can be substituted for the fuel in use. In the case of natural gas, the most common alternative fuels are distillate fuel oils, residual fuel oils, coal and wood.
Backhaul: A transaction that results in the transportation of gas in a direction opposite of the aggregate physical flow of gas in the pipeline. This is typically achieved when the transporting pipeline redelivers gas at a point(s) upstream from the point(s) of receipt.
Balancing: The process of equalizing a shipper’s receipt of gas into a pipeline with withdrawals out of a pipeline system. This can be done daily, monthly or seasonally.
Balancing Penalty: A daily or monthly penalty assessed on the difference between volumes tendered and volumes received by the shipper. The purpose of balancing penalties is to prevent a shipper from tying up storage and line pack with excess deliveries of transportation gas, or from depleting storage and line pack by taking more gas off the system than it delivers, both of which disrupt other sales and transportation services.
Base Load: A given consumption of gas remaining fairly constant over a period of time, usually not temperature-sensitive.
Basis Differential: The difference in the market value of natural gas at two separate physical locations at the same point in time.
Best Efforts: An agreement by a contracting party to do its best to complete some specified result.
BTU (British Thermal Unit): The quantity of heat required to raise one pound of water, one degree Fahrenheit.
Broker: An individual or company that buys or sells stocks, commodities, or services for others for a fee. A broker provides the function of bringing a buyer and seller together.
Bundled Sales Service: Natural gas sold on an as-needed basis, without prior scheduling, by the local distribution company at commission approved rates.
Burnertip: A term that refers to the ultimate point of consumption for natural gas.
Buy at Market Order: A buy order at the current market offer price for a specific volume and month. Buy at market orders are immediately executed at the best current market offer available.
Cap: To close off a gas or oil well.
Capacity Release: A mechanism by which holders of firm interstate transportation capacity can relinquish their rights to utilize the firm capacity to other parties that are interested in obtaining the right to use that capacity for a specific price, for a given period of time and under a specifically identified set of conditions. The firm transportation rights may include transmission capacity and/or storage capacity.
Cashout: When a pipeline or LDC takes the difference between receipts and deliveries, and then “cashes out” the volume, typically with the pipeline/ LDC purchasing excess receipts at below-market prices and selling receipt shortages at above-market prices
CCF: 100 cubic feet.
CGA (Cost of Gas Adjustment): The mechanism by which a utility periodically adjusts its prices in order to compensate for changes in the gas acquisition costs.
City Gate: Point at where gas is delivered by a pipeline to a local distribution company.
Cogeneration: The sequential production of electricity and useful thermal energy from the same fuel source.
Compressed Natural Gas (CNG): Natural gas in high-pressure surface containers that is highly compressed (though not to the point of liquefaction). CNG may be used as a transportation fuel for automobiles, trucks and buses.
Compressor Stations: Locations along the interstate pipeline at which natural gas-powered engines increase the pressure of the market natural gas stream flowing through the station by compression.
Cubic Feet: The most common unit of measure of gas volume. It is the amount of gas required to fill a volume of one cubic foot under stated conditions of temperature, pressure, and water vapor. One cubic foot roughly equals 1,000 Btu’s.
Curtailment: Curtailment of gas service is a method to balance a utility’s natural gas requirements with its natural gas supply. Usually there is a hierarchy of customers for the curtailment plan. A customer may be required to partially cut back or totally eliminate his take of gas depending on the severity of the shortfall between gas supply and demand and the customer’s position in the hierarchy.
Customer Charge: A fixed amount to be paid periodically by the customer without regard to demand or energy consumption.
Dekatherm: A unit of heating value equal to10 therms or 1 million Btu’s. Approximately: 1 mcf = 1 MMBtu = 1 Dth.
Degree Day, Cooling: A measure of the need for air conditioning (cooling) based on temperature and humidity.
Degree Day, Heating: A measure of the coldness of the weather experienced, based on the extent to which the daily average temperature falls below a reference temperature, usually 65 degrees Fahrenheit.
Design Day: A 24-hour period of demand which is used as a basis for planning gas capacity requirements.
Distribution: Local pipeline delivery of natural gas.
Dual-Fuel: The ability of a facility or piece of equipment to use more than one kind of fuel.
End-User: An entity which is the ultimate consumer for natural gas. An end-user purchases the gas for consumption but not for resale purposes.
Energy Information Administration (EIA): The statistical information collection and analysis branch of the Department of Energy.
Evergreen Clause: A provision in a contract that provides for the automatic extension of the contract for specified periods beyond the primary term unless either party specifically elects to terminate the contract by giving the required notice prior to the anniversary date.
FERC: Federal Energy Regulatory Commission, an agency of the U.S. government created by the Department of Energy Organization Act, in 1977. This Act transferred to the FERC most of the former Federal Power Commission’s interstate regulatory functions over the electric power and natural gas industries.
Firm Service: The highest quality sales or service offered to customers – no planned or anticipated interruption
Force Majeure: An “act of God” or unexpected and disruptive event, which may serve to relieve a party from an obligation.
Gas Day: A period of twenty-four (24) consecutive hours starting at 10:00 AM EST on a given calendar day and ending at the same time on the next succeeding calendar day.
Hedging: Any method of minimizing the risk of price change.
Henry Hub: A pipeline interchange, located in Louisiana, which serves as the delivery point of natural gas futures contracts.
Index Pricing: Tying the commodity price in a contract to a published price, such as Platt’s Gas Daily or Inside Ferc.
Interruptible Service: Low priority gas service that is subject to curtailment at the option of the pipeline or LDC in favor of higher priority users.
Interstate Pipeline: A federally regulated company engaged in the business of transporting natural gas across state lines from producing regions to end use markets.
Kilowatt (KW): A unit of electrical work equivalent to 1,000 watts, 1.3414 horsepower, or .9478 Btu/sec.
Landfill Gas: Gas produced by aerobic and anaerobic decomposition of a landfill generally composed of approximately 55% methane and 45% carbon dioxide.
Lateral: A pipe in a gas distribution or transmission system which branches away from the central and primary part of the system.
LDC: Local Distribution Company
Line Loss: A percentage of gas received by a pipeline or LDC that is retained to compensate for lost and unaccounted for gas.
Liquefied Natural Gas (LNG): Natural gas which has been liquefied by reducing its temperature to minus 260 degrees Fahrenheit. Typically done for storage and transportation purposes.
Load: The amount of gas delivered or required at a specified point on a system; load originates primarily at the gas consuming equipment of the customers.
Load Factor: The ratio of the average requirement of gas a customer to the peak requirement of gas a customer in a given time period.
Looping: A paralleling of an existing pipeline by another line over the whole length or any part of it to increase capacity.
Main: A distribution line that serves as a common source of supply for more than one service line.
Main Extension: The addition of pipe to an existing main to serve new customers.
Marketer: Entity which sells natural gas it has purchased from a producer or other seller.
Maximum Daily Quantity (MDQ): The maximum quantity of gas consumed by a customer in a 24-hour period. An LDC may set delivery obligations or delivery limits based on a customer’s MDQ.
Mcf: The quantity of natural gas occupying a volume of one thousand cubic feet at a temperature of sixty degrees Fahrenheit and at a pressure of fourteen and seventy-three hundredths pounds per square inch absolute.
Meter: An instrument for measuring and indicating or recording the volume of gas that has passed through it.
MMBtu: A thermal unit of energy equal to 1,000,000 Btus, that is, the equivalent of 1,000 cubic feet of gas having a heating content of 1,000 Btus per cubic foot, as provided by contract measurement terms.
Monthly Customer Charge: A fixed amount charged by the LDC without regard to demand or energy consumption.
Nominations: A precise listing of the quantities of gas to be transported during any specified time period. A nomination includes all custody transfer entities, locations, fuel loss and other volumetric assessments, and the precise routing of gas through the pipeline network.
NYMEX: New York Mercantile Exchange: The commodity exchanges based in New York where natural gas futures contracts and other energy futures are traded.
Off-Peak: Period of day, week, month, or year when load is not near maximum demand levels.
On-Peak: Period of day, week, month, or year when maximum demand for fuel occurs.
Open Access: The non-discriminatory access to interstate pipeline transportation services.
Overrun: The quantity of gas taken over and above the contract demand.
Peak Load: The maximum load consumed in a stated period of time.
Peak Shaving: The use of fuels and equipment to generate or manufacture gas to supplement the normal supply of pipeline gas during periods of extremely high demand. This method prevents the expensive alternative of expanding pipeline facilities.
Pig: A device used to clean the internal surface of a pipeline. Pigs are usually barrel shaped, made of metal, and covered with metal brushes. They may also have rubber or plastic cups and be made entirely of plastic. They are inserted into the pipeline by means of a device called a pig-trap and pushed through the line by pressure of the flowing gas. The forward movement of the pig, together with its rotation, cleans the rust, liquids, and other undesired substances from the pipeline.
Pipeline Capacity: A service provided by a pipeline for a fixed monthly reservation charge which gives a shipper the right to move up to a maximum daily quantity of gas between defined points on the pipeline’s system.
Postage Stamp Rates: Flat rates charged for transportation service without regard to distance, as opposed to zone or mileage-based rates.
Pooling Point: A common market point, generally located at the terminus of a pipeline’s production area. Under a Pooling Point transportation arrangement, the shipper is responsible for ensuring that the total nominations of gas received at the pooling point are in balance with the amounts received into the main stream. Volumes are then transported downstream under corresponding transportation arrangements. Such arrangements are designed to increase the receipt point flexibility of the shipper.
Primary Firm Delivery: Natural gas supply that is delivered to the primary delivery point listed on the firm pipeline transportation contract.
Producer: Any party owning, controlling, managing, or leasing any gas well and/or party who produces in any manner natural gas by taking it from the earth or waters.
Public Utility: A business performing a service relating to or affecting all of the people within a specified area, usually under provisions of a franchise, charter or “certificate”, and subject to special governmental regulations.
Purchased Gas Adjustment (PGA): A provision approved by the regulatory agency allowing a company to make filings to change its rates, without the usual suspension period, for the purpose of recovering changes to its cost of purchased gas. The PGA may be a positive or negative adjustment.
Rate Case: A hearing before a regulatory commission involving the rates to be charged for a public utility service.
Rate Class: Type of billing classification or class of service.
Receipt Point: Point at which transportation starts on a transportation contract.
Secondary Firm Delivery: Pipeline transportation contract which is primary firm to another delivery point, and based on pipeline allowances may work for delivery to additional points. The hierarchy for secondary firm is below primary firm delivery but above interruptible delivery.
Spot Gas: Best efforts gas for specified volumes on a limited, typically monthly or daily, basis.
Standby Service: Firm natural gas supply service typically subscribed to by a customer from their LDC, that provides natural gas supply up to a contracted amount on a day of interruption or curtailment.
Stop Loss Order: An above market buy order for a specific price, volume, and month. Stop loss orders can protect a customer from upside price risk in a rising market. If the NYMEX trades above the stop loss level during regular trading hours by at least 1/10 cent, execution is guaranteed. Stop loss orders may be filled higher in the event of an overnight “gap higher” through the stop loss level.
Storage, Underground: The utilization of subsurface facilities for storing gas for the primary purposes of load balancing. The facilities are usually natural geological reservoirs such as depleted oil or gas fields or water-bearing sands sealed on the top by an impermeable cap rock. The facilities may be man-made or natural caverns.
Storage, Working Gas: Gas in an underground storage field that is available for market utilization.
Submetering: The practice of remetering purchased energy beyond the customer’s utility meter, generally for distribution to building tenants through privately owned or rented meters.
Tariff: A gas company schedule detailing the terms, conditions and rate information applicable to various types of natural gas service.
Telemetering: A form of remote metering – often electronic. Typically requires a phone line to be run to the meter.
Therm: Unit of measure of heat content, equivalent to 100,000 Btu’s.
Transportation: The process of moving gas from a designated receipt point to a designated delivery point pursuant to the terms of a contract between the transporter and the shipper.
Transportation Gas: Third party owned gas delivered on the pipeline system to a LDC on behalf of a customer.
Trigger Order: A below market buy order for a specified price, volume, and month.
Unbundling: The separation of the various components of gas sales, storage, transmission, delivery, etc
Unconventional Gas: Refers to natural gas resources that cannot be developed or produced by conventional processes that use the natural pressure of the wells and pumping or compression operations.
Upstream: Any point located nearer the origin of flow prior to the point in reference.
WACOG: Weighted Average Cost of Gas.
Wellhead Price: The cost of gas as it comes from the well.