Glossary

One of the elements present in varying quantities in coal and fuel oil (residual oil) which contributes to environmental degradation when coal or oil is burned. In terms of sulfur content by weight, coal is generally classified as low (less than or equal to 1 percent), medium (greater than 1 percent and less than or equal to 3 percent), and high (greater than 3.per.cent). Sulfur content is measured as a percent by weight of coal on an "as received" or a "dry" (moisture-free, usually part of a laboratory analysis) basis.

The depression that occurs in the summer months in the daily load of a natural gas distribution system or pipeline.

In economics, a sunk cost is a cost that has already been incurred, and therefore cannot be avoided by any strategy going forward.

The flow of electric current without resistance in certain metals and alloys at temperatures near absolute zero. Perpetual motion on an atomic scale; the conduction of electricity without the slightest power loss perfect conductivity.

A material that becomes a perfect conductor of electricity when chilled to cold temperatures. Developments beginning in 1986 have raised the threshold temperature to levels which, in the near future, may provide wires capable of conducting large electric currents without line loss. Almost all substances have some resistance to electrical currents and this causes the loss of some of the electrical power generated. Only a superconducting wire could prevent such line losses because a current that is started in a superconductor can flow forever.

A system of remote control and telemetry used to monitor and control the transmission system.

A method of providing regulation service in which the control area providing the regulation service receives a -signal representing all or a portion of the other control area's ACE.

Activities conducted on the utility's side of the customer meter. Activities designed to supply electric power to customers, rather than meeting load though energy efficiency measures or on site generation on the customer side of the meter.

Also known as a "strip mine," this refers to a mine where the coal seam lies sufficiently close to the surface to extract the coal by removing the overburden to uncover the seam, sweeping the seam clean of sand and other adulterating materials, and excavating the coal for shipment to utility, industrial and metallurgical facilities.

The right, but not the obligation to buy the underlying assets at an agreed upon price (strike or exercise price) during the option term. It gives the holder or buyer of the option the right to buy the underlying instrument at an agreed strike price in the future when prices may be higher than the strike price. Selling a call option obligates the seller to sell the underlying instrument at an agreed strike price in the future when prices may be higher than the strike price. A call is the opposite of a put.

A sharp transient increase of current, voltage or power flow in an electric circuit or across an electric system.

Energy generating capability that is beyond the immediate needs of the producing system. This energy may be sold on an interruptible basis or as firm power.

The authority of the FERC under the Natural Gas Act to accept a rate filing, to go into effect as early as one month (absent waiver) or as late as five months, subject to refund.

A condition in which a growing and stable market is identified by orders that are placed on a reliable schedule. The orders increase in magnitude as previous deliveries and engineering and field experience lead to further reductions in costs. The reliability of these orders can be projected many years into the future, on the basis of long term contracts, to minimize market risks and investor exposure.

A portfolio of forward contracts. A swap is almost identical to a sequence of forward contracts (commitment to buy (long) or sell (short) an underlying asset at a prespecified price and time}, and its close relative the future, at different maturity dates. One of the advantages of swaps is that a market maker can tailor a swap to fit the needs of a particular counterparty, whereas standardization is the key to the success of exchange-traded instruments.

An option that has embedded in it the ability of a counterparty to terminate the swap according to some prespecified terms, generally with no penalty for the counterparty. An option to enter into a swap contract. A receiver's swaption is the right to be a fixed rate receiver and a payer's swaption is the right to be a fixed rate payer.

A supply of natural gas that is the last to be taken and the first to be curtailed by the customer. Swing supply serves the variation in the customer's demand.

A service in which the supply being offered will be the last to be purchased by the customer if there is additional demand and the first to be curtailed by the customer if there is any reduction in demand.

Facility equipment used to tie together two or more electric circuits through switches. The switches are selectively arranged to permit a circuit to be disconnected, or to change the electric connection between the circuits.

Southwestern Power Administration. A power marketing and .electric transmission agency of the United States government with headquarters in Tulsa, Oklahoma.

Process of connecting two previously separated alternating current Apparatuses after matching frequency, voltage, phase angles, etc.

A piece of rotating equipment whose electrical output is at the same frequency and time relationship as the power grid.

A combination of generation transmission and distribution components comprising an electric utility or group of utilities.

Physically connected generation, transmission, and distribution facilities operated as an integrated unit under one central management, or operating supervision.

The successful integration of a new technology into the electric utility system by analyzing the technology's system effects and resolving any negative impacts that might result from its broader use.

The marginal, variable production cost of electricity at a given level of system output.

A person authorized to operate or supervise the operation of the bulk electric system.

Those people who have the capability to affect system operations and who must abide by the authority vested in the System Operator. May include power plant operators, system maintenance personnel, power schedulers, power marketers, etc.

Natural gas supplies purchased, owned and sold by the supplier. System supply gas of interstate pipelines is subject to FERC regulation.

A contract provision obligating the buyer to pay for a certain minimum quantity of product, whether or not the buyer actually takes that quantity during the stated period.

Under a take-or-pay clause, the minimum amount of product that the buyer is obligated to pay for whether or not the buyer actually takes that amount of product, usually stated in terms of an absolute quantity, or a percentage of total contract quantity, over a specific period of time, usually a year.

A surcharge to an interstate pipeline's sales and transportation rates permitted by FERC, designed to recover the pipeline's costs of settling its historic take-or-pay liabilities.

A document filed by a regulated entity with either a federal or state commission. It lists the rates the regulated entity will charge to provide service to its customers as well as the terms and conditions that it will follow in providing service.

Process by which measurable electrical quantities from substations and generating stations are transmitted through telecommunication to a remote location.

The maturity of a swap transaction.

1 x 109 kilowatt hours; one thousand Gigawatt hours.

Swaps often involve longer maturities than can generally be found on futures or option contracts traded on organized exchanges. Term swap usually involves maturities greater than three years.

Enhanced methods for the recovery 'Of oil and natural gas that require a means for displacing the oil or natural gas from the reservoir rock, modifying the properties of the fluids in the reservoir, and/or the reservoir rock to cause movement of the oil or natural gas in an efficient manner and providing the energy and drive mechanism to force its flow to a production well.

A unit of heating value equivalent to 100,000 British thermal units (Btu) (0.1 MMBtu).

The production of electricity from plants that convert heat energy into electrical energy. The heat in thermal plants can be produced from a number of sources such as coal, oil, gas or nuclear fuel.

Circuit which connects two or more control areas or systems of a power system.

A rate design which divides customer use into different tiers, or blocks, with different prices charged for each.

A group of utilities who dedicate their generating and transmission resources for joint economic dispatch. Usually costs and revenues are divided after the fact and no individual pool member is responsible for the procurement of individual power supplies.

The integral of frequency error. Generally utilized as a measure of regulating performance for frequency regulation. Time error can be measured as the error between a clock synchronized to the electrical system and the astronomical time kept by the National Bureau of Standards.

An offset to the interconnection's frequency to correct for the time error that accumulates on electric clocks.

Rates or Pricing A rate design imposing higher charges during periods of the day when relatively higher peak demands are experienced.

The dollar amount by which the premium of an option exceeds the intrinsic value of an option.

A surface processing structure for cleaning and sizing coal and automatically loading it onto railcars or trucks for movement to market.

The Tolerable Zone covers a band of voltage values above and below the Preferred Zone. In the Tolerable Zone, the customer's equipment may be expected to operate satisfactorily although the performance may perhaps be less than warranted by the manufacturer. (See Voltage Chart.)

An arrangement whereby a party moves fuel to a power generator and receives kilowatt hours {kWh) in return for a pre-established fee.

A fee paid for use of -electric generation assets used to convert fuel to power.

The term for that portion of a functionally disaggregated electric utility's business that involves the bulk transmission of power that is operated separately from any other power functions the utility might own or operate.

An electrical device for changing the voltage of alternating current.

Costs associated with the change of an industry from a regulated, bundled service to a competitive open-access service, including "Stranded Costs."

The network of high voltage lines, transformers and switches used to move electrical power from generators to the distribution system. Also utilized to interconnect different utility systems and independent power producers together into a synchronized network: Transmission is considered to end when the energy is transformed for distribution to the consumer.

Company which obtains the major portion of its natural gas operating revenues from the operation of a natural gas transmission system and/or from mainline sales to industrial customers.

A utility that relies on its neighboring utilities to transmit to it the power it buys from its suppliers. A utility without its own generation sources, dependent on another utility's transmission system to get its purchased power supplies.

An interconnected system of electric transmission lines and associated equipment for the transfer of electric energy in bulk between points of supply and points of demand.

The power lost in transmission between one point and another. It is measured as the difference between the net power passing the first point and the net power passing the second point.

An interconnected group of electric transmission lines and associated equipment for moving or transferring electric energy in bulk between points of supply and points at which it is transformed for delivery over the distribution system lines to ,consumers, or is delivered to other electric systems.

Pipeline transporting natural gas from principal supply areas to distribution centers, large volume customers or other transmission lines. Transmission lines generally have a linear configuration, may be quite large in diameter, operate at relatively high pressure, and traverse long distances.

Voltage levels utilized for bulk transmission systems generally 69 KV - 750 KV AC or DC.

A contract setting forth the terms and .conditions applicable togas or electric transportation service.

The pipeline company that transports natural gas for a shipper.

Facility that treats raw natural gas to remove undesirable impurities such as carbon dioxide, hydrogen sulfide, and water vapor. Treating plants may be owned by producers, independent treaters, or transmission pipeline companies.

See PIPELINE SYSTEM.

The part of a generating unit usually consisting of a series of curved vanes or blades on a central spindle, which is spun by the force of water, steam or hot gas to drive an electric generator. Turbines convert the kinetic energy of such fluids to mechanical energy through the principles of impulse and reaction, or a measure of the two.

A charge for energy consisting of a demand component and an energy or commodity component.

A customer that purchases energy for consumption and not for resale.

State in which a unit is not capable of operation because of the failure of a component, external restriction, testing, work being performed, or some adverse condition.

The selling and pricing of energy services separately as opposed to offering services "bundled" into packages with a single price for the whole package. With unbundling, separate fees are charged for each service, based upon only the costs of providing that service. (i.e., transportation, storage, generation, production, etc.).

The utilization of subsurface facilities for storing natural gas that has been transferred from its original location for the primary purposes of conservation, fuller utilization of pipeline facilities, and more effective and economic delivery to markets.

The security, commodity, or financial instrument that the option conveys the right to buy (in the case of a call) or to sell (in the case of a put).

A subjective standard for determining illegal rates or service under the Natural Gas Act and the Federal Power Act, which is applied on a case by case basis.

Prescribed financial rules and regulations established by the Federal Energy Regulatory Commission for utilities subject to its jurisdiction under the authority granted by the Federal Power Act.

A combination of coal cars, typically open top hopper cars, of 100 or more, which are kept together as a unit, moving coal from one mine to one customer, often being dedicated to the movement of coal from one mine to one power plant.

Electric service sufficient for basic needs (an evolving bundle of basic services) available to virtually all members of the population regardless of income.

The pipeline delivering natural gas to another pipeline at an interconnection point where the second pipeline is closer to the consumer.

A component of a utility's rate structure charged on a per unit of energy basis.

The traditional test for whether a utility asset may be included in rate base, self-defined and "Subjective.

The thermal energy made available for use in any industrial or commercial process, or used in any heating or cooling application; i.e., total thermal energy made available for processes and applications other than electrical generation.

A regulated entity which exhibits the characteristics of a natural monopoly. For the purposes of electric industry restructuring, "utility" refers to the regulated, vertically integrated electric company. "Transmission utility" refers to the regulated owner/operator of the transmission system only. "Distribution utility" refers to the regulated owner/operator of the distribution system which serves retail customers.

A ratio of the maximum demand of a system or part of a system to its rated capacity.

Demand-side management programs that seek to increase off-peak electricity consumption without necessarily reducing on-peak demands.

The gaseous state of a substance.

Voltage-Ampere-Reactive. A measure of reactive power.

The total costs incurred to produce energy, exc1uding fixed costs which are incurred regardless of whether the resource is operating. Variable costs usually include fuel, increased maintenance and additional labor.

Funds available to invest in new or unproven business enterprises.

An arrangement whereby the same company owns all the different aspects of making, selling, and delivering a product or service. In the electric industry, it refers to the historically common arrangement whereby a utility would own its own generating plants, transmission system, and distribution lines to provide all aspects of electric service.

A spread that involves options with different strike prices, but identical expiration dates.

A form of partial deregulation of the electric industry whereby the utility remains the sole retail supplier to customers on a pool basis but the Customers have the right to enter into bilateral contracts for differences from the pool prices.

A measurement of the price fluctuation of an underlying instrument that takes place over a certain period of time.

The unit of measurement of electromotive force. It is equivalent to the force required to produce a current of one ampere through a resistance of one ohm. The unit of measure for electrical potential. Generally measured in kilovolts or kV. Typical transmission level voltages are 115 kV, 230 kV and 500 kV. (See Voltage Chart.)

The control of transmission voltage adjustments in generator reactive output and transformer taps, and by switching capacitors and inductors on the transmission and distribution systems.

Any intentional reduction of system voltage by 3 percent or greater for reasons of maintaining the continuity of service of the bulk electric power supply system.

A small remote generator located on a transmission system to provide voltage within tolerance limits to the 'Customer. If the voltage delivered is outside of the tolerance levels, appliances will not run efficiently. (See Voltage Chart.)

See RATE, VOLUMETRIC.

The ratio of water to gas in a WAG process.

Western Area Power Administration. A power marketing and electric transmission agency of the United States government with headquarters in Golden, Colorado.

Natural gas supplies committed to warranty natural gas contracts. Generally, the producer does not dedicate specific reserves underlying any specific acreage, lease, or fields to a warranty agreement.