Glossary

Using less energy/electricity to perform the same function. Programs designed to use electricity more efficiently - doing the same with less. "Energy conservation" is a term, which has also been used but it has the connotation of doing without in order to save energy rather than using less energy to do the same thing and so is not used as much today. Many people use these terms interchangeably.

An energy emergency exists when a system or pool does not have an adequate fuel supply (including water for hydroelectric units) to provide its customers' expected energy requirements over a given period.

Corrects hourly imbalances between transmission customer's energy scheduled and actually received.

An energy merchant buys and sells energy as a commodity. A merchant plant is one that is built with the aim of marketing and selling its output on the open market. This differs from building a plant to meet customer needs and the obligation to serve that a regulated utility has.

The Energy Policy Act of 1992.

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

Raw materials that are 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.

The energy value chain links the sources, production, forms, marketing and delivery of energy. Value can be added by analyzing the energy value chain, learning where competitive advantage can be exploited within a firm's value chain and through interrelationships among the value chains that serve different segments, industries or geographic areas.

The introduction of an artificial drive and displacement mechanism, usually steam, into a reservoir to produce oil unrecoverable by primary and secondary recovery methods.

Increasing the heat content of natural gas by mixing it with a gas of higher Btu content (often propane).

A collection of software programs that tie together an enterprise's various functions, such as human resources, finance, marketing and sales. The software also enables an analysis of the data to plan production, forecast sales and analyze quality.

A working interest owner's share of production from a well. This amount may not be equal to actual sales due to contractual or market conditions.

The Environmental Protection Agency. A federal agency charged with protecting the environment.

The sum of capital from retained earnings and the issuance of stocks.

A clause in a purchase or sale contract that permits adjustment of the contract price under specified conditions.

Efficiency Service Company. A company that offers to reduce a client's electricity consumption with the cost savings being split with the client.

A doctrine developed in anti-trust law which defines certain facilities, found necessary for transporting a product to market, as a potential monopoly and requires such facilities to be made available on a non-discriminatory basis.

A hydrocarbon molecule consisting of two carbon atoms and six hydrogen atoms, used as petrochemical feedstock in production of chemicals and plastics, and as a solvent in enhanced oil recovery processes.

A hydrocarbon molecule consisting of two carbon atoms and four hydrogen atoms, used as petrochemical feedstock in production of chemicals and plastics, and as a solvent in enhanced oil recovery processes.

A contract clause that extends the contract beyond the initial term, perhaps on a month-to-month or year-to-year basis, until one of the parties gives a required notice of termination.

Transportation of natural gas by displacement over two pipelines, each of which takes and retains possession of gas contractually allocated to the other.

Natural gas that is received from, or delivered to, another party in exchange for natural gas delivered to, or received from that other party.

A futures contract provision by which the physical product is delivered from one market participant to another, with a simultaneous assumption of equal and opposite futures positions between the two participants.

Online trading community that links buyers and sellers.

A class of generators defined by the Energy Policy Act of 1992 that includes the owners and/or operators of facilities used to generate electricity exclusively for wholesale or that are leased to utilities.

The price at which an option may be exercised. A decrease in the exercise price has the same effect as an increase in the current price of the underlying asset.

The action taken by the owner of a call option if he/she wants to exercise the right to purchase the underlying instrument or to settle in cash, or by the holder of a put option if he/she wants to sell the underlying instrument contract or settle in cash.

A fee that is paid by a customer leaving the utility system intended to compensate the utility in whole or part for the loss of fixed cost -contribution from the exiting customer.

The reduction in volume of wet natural gas due to the removal of natural gas liquids, hydrogen sulfide, carbon dioxide, water vapor and other impurities from the natural gas stream. Also called SHRINKAGE.

A network that allows a company to share information with specific businesses and other stakeholders, while excluding others. Extranets, which are more private than external Web sites, transmit information over the Internet and require users to have a password to access data on internal company servers.

Area of a coal bed that exposed from which coal is extracted.

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 cogenerator, the facility includes the industrial or commercial process.

The operational limits of an electric system facility or element under a set of specified conditions. (See Normal Rating and Emergency Rating for more information.)

An interest in an oil or gas lease which is granted to a third party by the lease holder.

Financial Accounting Standards Board.

An exception to generally accepted accounting rules. In a regulated industry, if an asset that has been created by regulators and its associated costs have been established as recoverable from the ratepayers in the future, a company may record the asset on its books.

A short circuit can be either between two conductors (phase to phase) or between a conductor and a grounded surface (phase to ground).

A quasi-independent regulatory agency within the Department of Energy having jurisdiction over interstate electricity sales, wholesale electric rates, hydroelectric licensing, natural gas transmission and related services pricing, oil pipeline rates, and gas pipeline certification. With respect to the natural gas industry, the general regulatory principles of the FERC are defined in the Natural Gas Act (NGA) , the Natural Gas Policy Act (NGPA), and the Natural Gas Wellhead Decontrol 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 Regulatory Policies 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.

The predecessor agency to the Federal Energy Regulatory Commission, which 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.

Natural gas used as an essential -component of a process for the production of a product (e.g., fertilizer, glass and white brick). Natural gas may be required as a feedstock due to the chemical reaction involved, or because of the physical burning characteristics of natural gas compared with other fuels, such as temperature and by-products.

The Federal Energy Regulatory Commission.

A published statement filed by an interstate pipeline with the FERC that describes the rates, terms and conditions under which service will be provided. See also TARIFF.

A clause in a contract which allows the pipeline to adjust the rates and terms to reflect regulatory action.

A district or area from which natural gas is produced.

The Doctrine under the Natural Gas Act which requires rates to be on file with the Commission and which prevents increased rates from being imposed retroactively.

Financial Assets are the record or the claim that facilitates an exchange of funds and a shift of risk.

A financial market is the place or mechanism whereby financial assets are exchanged and prices of these assets are set.

A customer for whom contract demand is reserved and to whom the supplier is obligated to provide service.

The capacity that a supplier is required by contract to provide (except during extreme emergencies).

Energy sales which, although not subject to interruption for economic purposes, may be interrupted under force majeure conditions.

The amount of firm energy that can be produced from a hydroelectric power system based on that system's lowest recorded sequence of streamflows and the maximum amount of reservoir storage currently available to the system.

Gas sold on a continuous basis for a defined contract term (e.g., one year).

Electric 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, but subject to force majeure interruptions. Firm power consists of either firm energy, firm capacity, or both.

Firm capacity which is released subject to the releasing shipper's right to recall, in accordance with specified criteria, such as cold weather, force majeure, loss of market, loss of gas, etc.

Service offered to customers under schedules or contracts that anticipate no interruptions, regardless of class of service, except for force majeure.

A criteria for system operation that states that the system should be able to survive the loss of any single element (generator, line, transformer, switch, etc.) without any critical loss of function, overload or alarm condition.

A term adopted under the NGPA to describe certain sales of natural gas; Le., any sale of any volume of natural gas (i) to any interstate pipeline or intrastate pipeline; (ii) to any local distribution company; (iii) to any person for use by such person; (iv) which precedes any sale described in clauses (i), (ii), or (iii); and (v) any sale which precedes or follows any sale described in clauses (i), (ii), (iii), or (iv) and is defined by the FERC as a first sale in order to prevent circumvention of any maximum lawful price established under the NGPA. The NGPA excludes from the term "first sale" the sale of any volume of natural gas by any interstate or intrastate pipeline, local distribution company, or any affiliate thereof, unless such sale is attributable to volumes of natural gas produced by such affiliates thereof.

The charge calculated in rate design to recover all or a portion of the fixed costs of a utility plant, including the generation facility and transmission lines, meters, and some taxes.

Cost associated with capital investment such as equipment, overhead, property taxes; any cost included in the cost of service that does not tend to fluctuate with the amount of energy produced

Cost, other than that associated with capital investment, that does not vary with the operation, such as base maintenance and labor.

A contract in which a named, exact price is specified for commodities. A fixed price contract usually has variations to the fixed price such as escalators or redeterminations for increased costs or incentives for meeting various goals.

A standard energy charge that remains fixed for a specified period of time except for adjustments to reflect changes in fuel costs,

The act, illegal in the United States, of burning gas that could not be sold at the field site.

Monthly price adjustments in pipeline rates, within a minimum and maximum cap.

A rate option strategy that allows its holder to set a floor or minimum interest rate for his floating rate deposits over a period of time. A floor is analogous to a series of put options on interest rates protecting the buyer from interest rates falling below a specific level.

In the context of futures trading, an exchange member who executes trades on the floor of a commodities exchange.

An exchange member who executes trades for his own account.

The volume of water passing a given point per unit of time.

Equipment used to remove sulfur oxides from the combustion gases of a boiler plant before discharge to the atmosphere. Chemicals, such as lime, are used as the scrubbing media.

Equipment used to remove fly ash from the combustion gases of a boiler plant before discharge to the atmosphere. Particulate collectors include electrostatic precipitators, mechanical collectors (cyclones), fabric filters (baghouses), and wet scrubbers.

Process which removes sulfur from coal combustion, while limiting the formation of nitrogen oxides.

Finely divided particles of ash entrained in gases resulting from the combustion of fuel. Approx. 6 million tons of fly ash is used each year in the U.S. in major concrete projects, such as highway construction.

A common law concept borrowed from the French civil law. "Force majeure" means superior or irresistible force that excuses a failure to perform. It has been defined by the United States Supreme Court as a cause that is "beyond the control and without the fault or negligence" of the party excused. Force majeure events also must not have been reasonably foreseeable; e.g., a blizzard in Houston in January may be a force majeure event, but a blizzard in Montana will not qualify.

An unplanned component failure (immediate, delayed, postponed) or other condition that requires the load on the unit be reduced immediately or before the next weekend.

An unplanned component failure (immediate, delayed, postponed, startup failure) or other condition that requires the unit be removed from service immediately or before the next weekend.

The rate of 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 because of unanticipated breakdown.

An amount of peak generating capability planned to be available to serve peak loads during forced outages.

Prediction of demand for electricity.

Probable deviations from the expected forecast.

The process of estimating or calculating electricity load or resource production requirements at some point in the future.

Providing commodities (such as power) for future needs assuring that it will be on hand when needed and that there will be no disruption of service.

A commitment to buy (long) or sell (short) an underlying asset at a specified date at a price (known as the exercise or forward price) specified at the origination of the contract.

A Forward Curve is the sequence of future yields corresponding to the floating reference rates on a swap.

Forward Price is the future yield of an instrument that will determine the Forward Curve.

A transaction in which two counterparties agree to a single exchange of cash flows based on a fixed and a floating rate respectively. A Forward Rate Agreement can be viewed as a one-date interest rate swap.

Arrangement for a loan to begin at some point in the future with a promise today to receive a specific interest rate or interest rates prevailing today for future loans. The term structure of interest rates is the relation between the current long-term and short-term interest rates, but underlying this is a relationship between the current long-term rate and the rates on current and future short-term loans.

Swaps that begin more than one year in the future. The terms are fixed before the start date. Also known as a deferred-start swap.

A commodity bought and sold for delivery at some specific time in the future. It is differentiated from futures markets by the fact that a forward contract is customized, non exchange traded, and a non regulated hedging mechanism.

Fuel such as coal, crude oil or natural gas, formed from the fossil remains of organic material.

A plant using coal, liquid fuel (e.g., oil), or natural gas as its source of energy.

Federal Power Act.

Federal Power Commission.

The process of separating liquid hydrocarbons from natural gas into propane, butane, ethane, etc.

A special privilege conferred by a government on an individual or corporation to occupy and use the public ways and streets for benefit to the public at large. Local distribution companies typically have exclusive franchises for utility service granted by state or local governments.

An arrangement in which the seller provides a product at an agreed upon unit price. This arrangement will occur at a specified loading port within a specified period, with the buyer having responsibility to arrange for transportation and insurance.

The oscillatory rate in Hertz (cycles per second) of the alternating current electric service. Nominally 60 Hz (no lower than 59.5 or higher than 60.5) in the United States and 50 Hz in Europe.

A value, associated with a control area, that relates the difference between scheduled and actual frequency to the amount of generation required to correct the difference.

A value, in MW/O. 1 Hz, set into a control area's automatic generating control equipment to represent a control area's response to deviation from scheduled frequency.

Frequency changes in the system.