Energy Market — page 2 of 2

Energy Market terms

101. Local distribution company (LDC) (LDC) Any firm, other than a natural gas pipeline, engaged in the transportation or local distribution of natural gas and its sale to customers that will…
102. Locational installed capacity Installed capacity in a specific location (e.g., New York City), rather than in a broader area (e.g., anywhere in New York State).
103. Locational marginal price The market-clearing price for electricity at the location the energy is delivered or received.
104. long A term signifying ownership of securities. "I am long 100 XYZ," means that the speaker owns 100 shares of XYZ.
105. Loop flow Unintended or unscheduled flow of electricity through a line or system.
106. Losses Energy (kilowatt-hours) and power (kilowatts) lost in the operation of an electric system, principally as waste heat in electrical conductors and…
107. Margin requirement The margin requirement is the minimum amount the Federal Reserve, in Regulation T, requires you to deposit in a margin account before you can trade…
108. Marginal electric generating unit In organized wholesale markets, the price of the marginal source of electricity usually sets the price of the unit providing the next increment or…
109. Mark-to-market Adjustment of the book value or collateral value of a security – including a security such as a multiyear contract – to reflect current market value…
110. Market Traditionally, a securities market was a place - such as the New York Stock Exchange (NYSE) - where members met to buy and sell securities.
111. Market capitalization Value of a corporation as determined by the market price of its issued and outstanding securities.
112. Market concentration A measure, usually an estimate, of the market share of a participant or groups of participant in the overall market or a submarket (a given region…
113. Market liquidity The ease, or lack thereof, with which a buyer can buy or a seller can sell at a prevailing price in a marketplace.
114. Market participant A market buyer or a market seller, or both, that meets reasonable creditworthiness standards established by the market operator.
115. Market power The ability of any market participant with a large market share to significantly control or affect price by withholding production from the market…
116. Market structure The rules, mechanisms and processes, under which a market operates to form prices, provide benefits and introduce risks to participants, and ultimately…
117. MCF An abbreviation for one thousand cubic feet of natural gas with a heat content of 1,000,000 Btus, or 10 therms.
118. Megawatt (MW) (MW) A measure of instantaneous electric power consumption or production. Equal to one thousand KW.
119. Megawatthour (MWh) (MWh) 1,000 kilowatt-hours or 1 million watt-hours.
120. Merchant generator A generating plant built with no energy sales contracts in place.
121. Mothballed capacity A power plant that is out-of-service, but is being maintained in such a condition that an operator can bring it back into service.
122. National balancing point (NBP) (NBP) Location of wholesale natural gas trading in the United Kingdom; a key reference point for spot and forward market natural gas transactions in Europe.
123. Native load Wholesale and retail customers that the electric transmission provider is obligated to serve.
124. Natural gas A hydrocarbon gas obtained from underground sources, often in association with petroleum and coal deposits.
125. New York Mercantile Exchange (Nymex) The centralized exchange where CFTC–sanctioned natural gas and electricity futures are traded in the United States.
126. Nitrogen oxide (NOx) (NOx) NOx is a key pollutant in the formation of acid rain and ground-level ozone (smog).
127. North American Electric Reliability Council (NERC) (NERC) A council formed in 1968 by the electric utility industry to promote the reliability and adequacy of bulk power supply in the electric utility systems of…
128. NOx Budget Trading Program (NBP) (NBP) An ozone season cap-and-trade program intended to help states meet their NOx state implementation plan (SIP) required reductions.
129. NOx State Implementation Plan (SIP) (SIP) Building upon analyses done by the Ozone Transport Assessment Group (OTAG), this rule was finalized by the Environmental Protection Agency (EPA) in 1998.
130. Nymex ClearPort It is the execution and clearing platform for transactions not listed for open-outcry on Nymex.
131. Off-Peak The period of low energy demand, as opposed to maximum, or peak, demand.
132. On-Peak A block of (usually 16) hours in each week-day when demand is at its peak. On-peak definitions for physical electricity vary by North America Electric…
133. Open Access The ability to send or wheel electric power to a customer over a transmission and distribution system that is not owned by the power generator (seller).
134. Open outcry When exchange-based commodities traders shout out their buy and sell orders or use a combination of words and hand signals to negotiate an order, it's…
135. Operating reserves That capability above firm system demand required to provide for regulation, load forecasting error, equipment forced and scheduled outages, and local…
136. Outage A discontinuance of electric power supply.
137. Peak load, peak demand These two terms are used interchangeably to denote the maximum power requirement of a system at a given time, or the amount of power required to supply…
138. Peaking capacity Power generation equipment or system capacity to meet peak power demands.
139. Peakshaving LNG facility A liquefied natural gas plant that supplies a gas pipeline system during peak-use periods. During slack periods the liquefied gas is stored.
140. Physical basis Describes a physical natural gas purchase for the following month where the price is tied to the closing price of the expiring Nymex futures contract.
141. Pivotal supplier A power supplier whose capacity must be used to meet peak demand and whose capacity exceeds the market’s supply margin.
142. Plant factor The capacity factor of an entire generating facility including all available generating units. (See also capacity factor)
143. Power marketer A business entity engaged in buying and selling electricity. Power marketers do not usually own generating or transmission facilities.
144. Power purchase agreement Guarantees a market for power produced by an independent power producer and the price at which it is sold to a purchaser.
145. Price discovery The process of making prices visible and readily available to interested parties and, in some cases, the public.
146. Price/Earnings Ratio (P/E Ratio) (P/E Ratio) A company’s stock price divided by its annual earnings, a widely used equity valuation measure.
147. Project financing A form of asset-based financing in which a firm finances a discrete set of assets (the project) on a stand-alone basis.
148. Ramp rate The rate at power system load or generator output varies, or the limits to such rates due to mechanical or reliability considerations.
149. Real-time market An electricity market that settles–determines the price–for one-hour periods or less during the day of delivery.
150. Real-time pricing The instantaneous pricing of electricity based on the cost of the electricity available for use at the time the electricity is demanded by the customer.
151. Reference price The settlement price of a derivatives contract, based on a particular location and commodity; An estimated electricity offer price based on operating and…
152. Regional Transmission Organization (RTO) (RTO) A voluntary organization of electric transmission owners, transmission users and other entities approved by the Commission to efficiently coordinate…
153. Reliability must run (RMR) (RMR) A unit that must run for operational or reliability reasons, regardless of economic considerations. Also called a reliability agreement.
154. Reserve margin The percentage of installed capacity exceeding the expected peak demand during a specified period.
155. Residual fuel oil Heavy fuel oil produced from the residue in the fractional distillation process rather than from the distilled fractions. No.
156. Retail unbundling Disaggregating electric utility service into its basic components and offering each component separately for sale with separate rates for each component.
157. Ring-fencing Techniques used to isolate the credit risk of a subsidiary within a corporation from the risk of its affiliated companies.
158. risk management The process, distinct from risk assessment, of weighing policy alternatives, in consultation with all interested parties, considering risk assessment and…
159. Rolling blackouts A controlled and temporary interruption of electrical service. They are necessary when a utility is unable to meet heavy peak demands because of an…
160. Safe harbor The ability of management to discuss in good faith a company's prospects and financial projections with analysts and investors without fearing litigation.
161. Sendout (Natural Gas) Volume of natural gas that is re-gasified and delivered into the downstream natural gas grid from an LNG terminal.
162. Short position If you sell stock short and have not yet repurchased shares to replace the ones you borrowed, you are said to have a short position in that stock.
163. Single settlement system A market structure that provides only a real-time market.
164. Spark spread The difference in price between electricity purchased from the grid and electricity generated from, for example, purchased natural gas.
165. Spot market Commodities and foreign currencies are traded for immediate delivery and payment on the spot market, also known as a cash market.
166. Spread trading Buying one instrument/commodity and selling another, with a view to profiting from the change in the gap between the two markets.
167. Steam plant A plant in which the prime mover is a steam turbine. The steam used to drive the turbine is produced in a boiler where fossil fuels are burned.
168. Sulfur dioxide (SO₂) (SO2) SO2 is a key pollutant in the formation of acid rain and contributes to the formation of fine particles that are associated with significant negative…
169. Swaps An exchange of streams of payments over time according to specified terms. A common type is a fixed-for-floating swap, in which one party agrees to pay a…
170. Therm A unit of heat containing 100,000 British thermal units (Btu).
171. Time-of-use pricing A rate design imposing higher charges to customers during periods of the day when higher demand is experienced.
172. Tolling agreement An agreement whereby a party moves fuel to a power generator and receives kilowatt hours (kWh) in return for pre-established fees.
173. Transaction costs Costs, such as commissions and spreads, incurred when buying or selling assets. Large bid-ask spreads are an indication of high transaction costs.
174. Transmission To cause spread of germs.
175. Transmission loading relief (TLR) (TLR) A NERC procedure that allows reliability coordinators to curtail transactions (among other actions) to mitigate potential or actual operating security…
176. Transparency Transparency is a measure of how much information you have about the markets where you invest, the corporations whose stocks or bonds you buy, or the…
177. Turbine A device for converting the flow of a fluid (air, steam, water, or hot gases) into mechanical motion.
178. Two-settlement system A system under which the price for electricity on any given day is established and settled both on a day-ahead and a real-time basis.
179. Unconventional natural gas A term applied to natural gas that is difficult and expensive to find and produce; if found, it often is bypassed in favor of more easily obtainable…
180. Uplift Charges from an RTO/ISO collected outside of the market-clearing commodity price; these charges can include payments to reliability must run (RMR) units…
181. Usage charge A charge levied on power suppliers or their customers for the use of transmission or distribution lines and facilities.
182. Virtual bidding In two-settlement electricity markets, financial transactions that allow participants to hedge against the risk that real-time and day-ahead prices will…
183. Voice broker A trading intermediary matching buyers and sellers using traditional telephone confirmation.
184. Volatility The term volatility indicates how much and how quickly the value of an investment, market, or market sector changes.
185. Voltage reduction 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…
186. Volumetric risk The effect on revenue of fluctuations in demand for a product or service.
187. Watt (W) (W) The unit of electrical power equal to 1 ampere under a pressure of one volt. A Watt is equal to 1/746 horsepower.
188. Watthour (Wh) (Wh) The electrical energy unit of measure equal to 1 watt of power supplied to, or taken from, an electric circuit steadily for one hour.
189. West Texas Intermediate (WTI) (WTI) Also known as Texas Sweet Light, is a type of crude oil used as a benchmark in oil pricing and the underlying commodity of New York Mercantile Exchange's…
190. Wholesale electricity markets The purchase and sale of electricity from generators to resellers (who sell to retail customers) along with the ancillary services needed to maintain…
191. Winter heating season The November 1 through March 31 period, during which most natural gas use for space heating takes place.
192. Zeebrugge European continental terminus of the Interconnector and Bacton-Balgzand pipelines linking the United Kingdom market with European gas receipts.
193. Zonal price A pricing mechanism for a specific zone within a control area.