Terms Glossary

AGA: The American Gas Association. Major natural gas industry trade association. AGA conducts research and helps create standards for equipment and products involved in every facet of the Natural gas industry. AGA compiles statistics, which are considered industry standards.

AGGREGATION: The organization of small groups, businesses or residential customers into a large, more effective buying unit that strengthens their purchasing power.

AGGREGATOR: The entity that combines customers into a buying group for the purpose of increasing the groups' purchasing power.

ASSOCIATED GAS: Natural gas that is found in association with oil in nature that can be developed for commercial use.

BASIS: The differential that exists at any time between the cash price (or "spot price") of a given commodity and the price of the nearest futures contract for the same or a related commodity. Basis can reflect different time periods, product forms, product qualities, or locations. Cash minus futures equals basis.

BCF: Billion cubic feet.

BOILER: A device that utilizes energy to convert water to pressurized steam.

BRITISH THERMAL UNIT (BTU): The amount of heat required to increase the temperature of one pound of water one degree Fahrenheit. The standard unit for measuring and comparing heating values and pricing for different fuels.

CAPACITY CHARGE: A fee related to the amount of capacity being utilized on a pipeline.

CELSIUS: A measure of temperature based on the freezing point (0 degrees Celsius) and boiling point (100 degrees Celsius) of water.

CITY GATE: Generally refers to the location at which gas changes ownership or transportation responsibility from a pipeline to an LDC or a gas utility.

COMMODITY: An article of trade or commerce that can be resold.

COMMODITY COST: The cost of a commodity (natural gas, oil) and related expenses incurred to bring that commodity to market.

COMPETITIVE MARKET: A marketplace that encourages buying and selling between many different parties.

CONSERVATION: The preservation, management, or restoration of natural resources

CONSUMER EDUCATION: Information and skills provided to consumers to help foster informed decisions.

CONSUMPTION: Amount of fuel usage.

CONTRACT: 1) A term of reference describing a unit of trading for a commodity future of option. 2) An agreement to buy or sell a specified commodity, detailing the amount and grade of the product and the date on which the contract will mature and become deliverable.

CONVERSION FUEL FACTOR: A number stating units of one system in corresponding values of another system.

CUBIC FOOT: The most common measure of gas volume. It equals the amount of gas required to fill a volume of one cubic foot under pre-determined conditions of temperature, pressure and water vapor. One cubic ft. (CF) of natural gas contains, o average, 1,027 BTU's. 100 cubic feet = 1 CCF.

CUSTOMER OBLIGATION: The responsibilities that a customer has toward their supplier such as paying bills, maintaining safety of a natural gas hook up, and reporting theft of service.

DEGREE DAY: A measure of the coldness of the weather (known as a heating degree day) or its heat (known as a cooling degree day) based on the extent to which the temperature falls below or rises above 65 degrees Fahrenheit.

DEKATHERM: Ten therms, 1 million BTU's.

DELIVERABILITY: The maximum amount of natural gas that a well, pipeline or distribution system can deliver in a set period of time.

DEMAND: The volume of goods or services necessary to satisfy the marketplace.

DEREGULATION: To free from authoritative regulation. In the gas industry the hope is that this will lead to a competitive market.

DERIVATIVE: A financial instrument derived from a cash market commodity, futures contract or other financial instrument. Derivatives can be traded on regulated exchanges.

DRY HOLE: A gas or oil well that does not yield quantities or sustainable conditions to support ongoing production.

ESCO: Energy Service Company - Businesses registered and approved by the state to compete to provide your energy.

ESTIMATED READING: If the LDC is unable to read the meter, they estimate the usage (based on historical information) in order to facilitate billing.

FAHRENHEIT: A system of measuring temperature in which the boiling point of water is 212 degrees and its freezing point is 32 degrees.

FEDERAL ENERGY REGULATORY COMMISSION (FERC): An independent regulatory commission within the U.S. Department of Energy that has jurisdiction over energy producers that sell or transport fuels for resale in interstate commerce; the authority to set oil and gas pipeline transportation rates.

FIRM NATURAL GAS SERVICE: Type of service that does not allow flow of gas to a customer to be interrupted. This is the service most often used by residential and smaller commercial customers.

FIXED PRICE: A price option that gives customers a "locked in" price for a specified length of time. A fixed price protects the customer from any increases in the cost of a commodity during the length of the contract.

FORCE MAJEURE: A standard clause that indemnifies either or both parties to a transaction whenever events occur which are beyond their reasonable control.

FUEL: A substance that can be burned to product heat.

FUEL ADJUSTMENT: Adjustment of the bill as the fuel costs increase or decrease for the provider from a specified amount per unit. Amounts of adjustments are based on variance from pre-determined base costs of fuel. The fuel adjustment shows as a line item on customer billings.

GAS: See Natural Gas

HEATING LOAD: The rate at which heat must be added to a space in order to maintain the desired temperature within the space.

INJECTION PERIOD: The times of the year (usually April - October) where producers and providers will input gas into storage for seasonal winter withdrawal.

INTERRUPTIBLE GAS SERVICE: This service provides gas at a lower rate to large industrial and commercial customers who agree to have their supply curtailed in times of peak demand. Customers must be dual fuel customers to receive these rates.

INTERRUPTIBLE NATURAL GAS SERVICE: The type of delivery service whereby gas to a customer may be interrupted with notice by the utility. Most often interruptions occur because of supply or capacity limitations.

KBTU: One-thousand (1,000) BTUs.

LDC: Local Distribution Company (utility)

LINE LOSS: The reduction in the volume of natural gas in a pipeline as a result of leaks, theft, or fuel used by compressors to maintain pressure necessary for transportation.

LIQUID MARKET: A market characterized by the ability to buy and sell with ease.

LIQUIFIED NATURAL GAS (LNG): Natural gas cooled to the point of becoming a liquid.

MARKET-BASED-PRICE: A price set by the competitive nature of the market.

MARKETER: One that sells goods or services in or to a market, especially one that markets a specified commodity.

MCF: 1,000 cubic feet - a unit of measuring gas.

METER: A device for measuring the volume of a customer's gas use between meter reads.

MMBTU: One million British Thermal Units. Equal to one dekatherm. Approximately equal to one thousand cubic feet (MCF) of natural gas.

NATURAL GAS: A naturally occurring mixture of hydrocarbon and non- hydrocarbon gases found in porous rock formations. Its principle content is methane.

OFF-PEAK: Period of low system demand.

OPTIONS: A contractual agreement that gives the holder the right, but not the obligation, to purchase or sell the underlying futures contract at a specified price within a specified period of time in exchange for a fee.

PEAK: Periods of relatively high system demands.

PIPELINE: A line of pipe with pumping machinery and apparatus (including valves, compressor units, metering stations, regulator stations, etc.) for conveying oil or gas.

PIPELINE SYSTEM: A collection of pipeline facilities used to transport natural gas from the source of supply to the burner tip. A system may include gathering, transmission or distribution lines, treating or processing plants, compressor stations, and related facilities.

PRICE CAP: Contract where fuel is available at a price not to exceed a maximum agreed to price for the life of the contract.

PUBLIC UTILITY: A utility operated under governmental rules and regulations.

PUBLIC UTILITY COMMISSIONS: State regulatory agencies that assess and provide oversight, policy guidelines and direction to public utilities.

RATE CLASS: A group of customers of similar characteristics subject to a rate unique from the rates of other groups.

RECEIPT POINTS: Locations on the interstate pipeline system where gas can join the pipeline for delivery to the different city gates, and final distribution to customers.

REGULATION: Governmental oversight of certain industries for the purpose of providing guidance and rulemaking.

RESIDENTIAL BUILDING: This encompasses single and multi family homes or buildings.

SPOT MARKET: A cash market that offers immediate delivery contracts for set amounts of natural gas.

STORAGE: The injection of gas into underground caverns during the summer injection months, when demand is lower than production, to be withdrawn during the winter when gas demand is higher than production.

STORAGE SERVICE: A service in which natural gas is received by the seller of the service and held for the account of the customer for redelivery at a later time.

STRIP: The simultaneous purchase (or sale) of futures positions n consecutive months. A six-month strip, for example, consists of an equal number of futures contracts for six consecutive contract months.

STRIP PRICE: The average of the prices for the consecutive futures contracts bought (or sold).

SYSTEM PEAK DEMAND: The highest system demand occurring during a particular period.

TARIFF: A schedule of rates or charges permitted a common carrier or utility by the governing body. Pipeline tariffs are the charges made by pipelines for transporting crude oil, refined products, or natural gas from an origin to a destination

THERM: Basic measurement of the heat content of natural gas. One therm equals 100,000 BTUs, the heat content of just less than 100 cubic feet of gas. A dekatherm equals ten therms or 1 million BTUs.

TRANSPORTATION: Delivery of gas by the utility to the customers burner tip through utility pipelines.

TRANSPORTATION CUSTOMER: A customer who buys their gas from a third party, but utilizes the utility's pipeline system to have that gas transported to their burner tip.

UNBUNDLED SERVICE: The separation and representation of fees for pipeline or utility services in individual components such as transportation, sales, or storage. These fees are charged for each service based on the individual cost only.

UPSTREAM PIPELINE: The pipeline delivering natural gas to another pipeline at a receipt point.

USAGE: The gas actually used by a customer.

UTILITY: See public utility.

WITHDRAWAL: Pulling gas from underground storage caverns back into the pipeline system.