Industry Terms

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Back-up Power
Power provided by terms of the contract to a customer when normal source is unavailable.

Backwardation
In the context of futures trading, a market condition in which futures prices are gradually lowered in the future months of delivery.

Balancing
Equalizing the volumes of gas withdrawn from a pipeline system with the volumes of gas injected into the pipeline. Penalties may be assessed for transportation imbalances beyond specified tolerances.

Base Load
The minimum amount of electric power or natural gas delivered or required over a given period of time at a steady rate. The minimum continuous load or demand in a power system over a given period of time usually not temperature sensitive.

Base Load Capacity
The generating equipment normally operated to serve loads on an around-the-clock basis.

Base Load Plant
A plant which is normally operated to take all or part of the minimum continuous load of a system, and which consequently produces electricity at an essentially constant rate. These plants are operated to maximize system mechanical and thermal efficiency and minimize system operating costs. A base load plant is typically characterized by relatively high fixed costs and low unit operating costs. Traditionally, coal and nuclear plants and some high efficiency steam electric plants have been considered as base load plants.

Base Rate
A charge normally set through rate proceedings by appropriate regulatory agencies and fixed until reviewed at future proceedings. It is calculated through multiplication of the rate from the appropriate electric rate schedule by the level of consumption. It does not include components that may vary from billing cycle to billing cycle, such as fuel.

Basis
In the context of futures trading, the difference between the futures price for a given commodity and the comparable cash or spot price for the commodity.

Basis Swap
A basis swap involves swapping one floating rate index for another. An interest rate swap in which payments are on a different floating-rate basis, e.g., three-month versus six-month. Also known as a floating/floating swap. A basis swap enables the user to lock in a differential between two grades, two product types or two locations of a commodity. This tool is used to fine-tune energy price risk management. (A swap on the differential between a petroleum product and crude oil is often referred to as a "crack spread" swap.)

BCF
The abbreviation for 1 billion cubic feet of natural gas.

Best Efforts Service
Service offered to customers under rate schedules or contracts that anticipate and permit some interruption on short notice, generally in peak-load seasons, by reason of the claims of firm service customers.

Bilateral Contracts
A function of retail wheeling in which a generator and a user establish a contract for the supply of electricity bypassing the existing utility structure and producing stranded costs for the utility. In a restructured electrical world, a bilateral contract could be used to establish a price for electrical supply over a certain duration and would remove the risk associated with the spot market.

Billing Cycle
The regular periodic interval used by a utility for reading the meters of a customer for billing purposes. Usually meters are schedules to be read monthly or bimonthly.

Billing Demand
The demand charge that the customer actually pays for the reservation of capacity or facilities used, regardless of consumption. Billing demand may be based on a contract maximum, a contract minimum or a previous peak or maximum demand and, therefore, may not necessarily coincide with the actual measured demand for the billing period. Also referred to as Ratchet, or Ratcheted Demand Charge.

Biomass Conversion
The process by which organic materials, such as wood waste or garbage, are burned for direct energy or electrical generation, or by which these materials are converted to synthetic natural gas.

British Thermal Unit (BTU)
The amount of heat energy necessary to raise the temperature of one pound of water one degree Fahrenheit.

Boiler
A device for generating steam for power, processing or heating purposes, or for producing hot water for heating purposes or hot water supply. Heat from an electrical combustion source is transmitted to a fluid contained within the tubes in the boiler shell. This fluid is delivered to an end-user at a desired pressure, temperature and quality. Boilers are often classified as steam or hot water, low pressure or high pressure, capable of burning one fuel or a number of fuels.

Boiler Fuel
Fuels suitable for generating steam or hot water in large industrial or electrical generating utility applications.

British Thermal Unit (Btu), Dry
A measure of the heating value of natural gas that is free of moisture, or contains less than 7 pounds per Mcf of water vapor. Condition under which natural gas is usually delivered for first sales.

Broker
A third party (person or company) that earns a profit by establishing a transaction between a willing Seller and Purchaser without ever taking ownership.

Bulk Electric System
The aggregate of electric generating plants, transmission lines and related equipment. The term may refer to those facilities within one electric utility or within a group of utilities in which the transmission lines are interconnected.

Bundled Base Rate
The tariff rates in effect prior to the implementation of open access.

Bundled Sales Service
The sale and/or transportation of natural gas or electricity under one rate, which does not differentiate separate rate components for the sale, transportation, storage or gathering services associated with such sale or transportation.

Burner Capacity (Burner Rating)
The maximum Btu per hour that can be released by a burner while burning with a stable flame and satisfactory combustion.

Burner Tip
The end of the transportation of natural gas from the wellhead, and the point of consumption.

Buyout
A swap is closed and settled at current price.

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