Industry Terms

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California Independent Systems Operator (Cal ISO)
A non-profit, independent system operator created in March 1998 to manage the flow of electricity along the long distance, high-voltage power lines that make up the bulk of California's transmission system. The Cal ISO also operates a bid-based real-time energy market as well as several other markets to acquire grid support services (i.e., ancillary services).

California Power Exchange (Cal PX)
A power exchange in California created to operate a bid-based, centralized market for forward (day-ahead and day-of) power sales. The Cal-PX suspended trading on January 30, 2001. On March 9, 2001, the Cal-PX filed for bankruptcy protection.

Call Option
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.

Callable Swap
A swap in which the fixed-rate receiver has the right to terminate the swap after a certain time if rates rise. Also known as a cancelable swap.

Cap
A call option on forward interest rates. A cap gets more expensive as the yield curve steepens and as the volatility of the underlying interest rate increases.

Cap Trade
Cap and trade is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants.

Capacitor
A transmission element designed to inject reactive power into the transmission network. Also utilized to increase voltages, reduce loadings and increase available kW output from generators. Capacitor ratings typically given in Magavars.

Capacity (Electric)
The real power output rating of a generator or system, typically in megawatts, measured on an instantaneous basis. The amount of electric power delivered or required for which a generator, turbine, transformer, transmission circuit, station or system is rated by the manufacturer. The maximum power that can be produced by a generating resource at specified times under specified conditions.

Capacity (Gas)
The maximum amount of natural gas that can be produced, transported, stored, distributed or utilized in a given period of time under design conditions.

Capacity Charge
One element of a two-part pricing method used in power transactions (energy charge is the other element). The Capacity Charge, sometimes called Demand Charge, is assessed on the amount of capacity being purchased or demanded. The Capacity Charge is typically expressed in $/kW month (kilowatt-month).

Capacity Peaking
The capacity of facilities or equipment normally used to supply incremental gas or electricity under extreme demand conditions. Peaking capacity is generally available for a limited number of days at a maximum rate.

Captive (Core) Customer
Any customer that is inelastic or, in the case of electricity, can not readily purchase power from suppliers other than the local utility, even if they have the legal right to do so. Captive electricity customers are generally considered to be residential customers. The commercial and industrial customers, in contrast, are thought to be more mobile. This mobility, or lack thereof, related to the restructuring debate since the larger customers can threatened to leave the area (causing higher rates as fewer customers share the bill or fixed or sunken costs) or are able to win greater concessions in a negotiated process through their buying power.

Carbon Capture and Storage
An approach to mitigate global warming by capturing carbon dioxide (CO2) from large point sources such as fossil fuel power plants and storing it instead of releasing it into the atmosphere.

Carbon Credits
Carbon credits are a key component of national and international emissions trading schemes. They provide a way to reduce greenhouse effect emissions on an industrial scale by capping total annual emissions and letting the market assign a monetary value to any shortfall through trading.

Carbon Dioxide (CO2)
A gaseous substance at standard conditions composed of one carbon atom and two oxygen atoms, produced when fossil fuels are burned, and is thought to be a major contributor to the "greenhouse effect." Combustion of natural gas emits only about 50% as much carbon dioxide as combustion of coal.

Carbon Emission
Carbon that enters the atmosphere as a result of burning carbon-based fuels, chiefly coal, oil and natural gas. For a given unit of energy, coal combustion emits roughly twice as much carbon dioxide as natural gas, and oil falls in between.

Carbon Footprint
Carbon footprint is a measure of the amount of carbon dioxide or CO2 emitted through the combustion of fossil fuels; in the case of an organization, business or enterprise, as part of their everyday operations.

Carbon Offset
The act of mitigating ("offsetting") greenhouse gas emissions.

Carbon Tax
A tax on energy sources which emit carbon dioxide.

Carriage
The transportation of a third party's natural gas by a pipeline as a separate service for a fee, as contrasted with the pipeline's transportation of its own system supply natural gas.

Carrying Charge
The costs of storing a physical commodity, including storage costs, insurance, interest and/or opportunity costs.

Cash-Out
Procedure in which shippers are allowed to resolve imbalances by cash payments, in contrast to making up imbalances with gas volumes in-kind.

CCF
Measure of volume of natural gas used. You are charged based on therms, the heat content of the natural gas.

City Gate (City Station Town Border Station)
Location at which natural gas ownership passes from one party to another, neither of which is the ultimate consumer; the point at which interstate and intrastate pipelines sell and deliver natural gas to local gas distribution companies.

City Gate Rate (Gate Rate)
The rate charged a distribution utility by it's suppliers. It refers to the cost of the natural gas at the point at which the distribution utility historically took title to the natural gas.

City Tax
Customers who receive service in a city/town that charges a tax.

Class of Service
A group of customers with similar characteristics (e.g., residential, commercial, industrial, etc.) that are identified for the purpose of setting a rate for service.

Clean Coal Technologies
Processes designed to burn coal with little or low emissions, including coal with either high sulfur content or high ash content that might make it unattractive as a fuel.

Coal Gasification
A controlled process of reacting coal, steam and oxygen under pressure and elevated temperature to produce coal gas. The gas created has a low heating value, but catalytic upgrading can be employed to produce high Btu pipeline-grade gas.

Cogeneration
1. Any of several processes which either use waste heat produced by electricity generating to satisfy thermal needs or process waste heat to electricity or produce mechanical energy. 2. The use of a single prime fuel source in a reciprocating engine or gas turbine to generate both electrical and thermal energy to optimize fuel efficiency. The dominant demand for energy may be either electrical or thermal. Usually it is thermal with excess electrical energy, if any, being transmitted into the local power supply companies' lines.

Cogenerator
An entity owning a generation facility that produces electricity and another form of useful thermal energy (such as heat or steam), used for industrial, commercial, heating or cooling purposes.

Collar
A hedging strategy. Simultaneously buying a cap and selling a floor. Collars effectively look in a rate for borrowing costs: The cap sets a maximum possible borrowing rate for the life of a contract, while the floor establishes a minimum rate for borrowing costs. Also referred to as a Fence or Min-Max.

Combined Cycle Unit
An electric generating unit that consists of one or more combustion turbines and one or more boilers with a portion of the required energy input to the boiler(s) provided by the exhaust gas of the combustion turbine(s).

Combustion Turbine (CT)
A fuel-fired turbine engine used to drive an electric generator. Combustion turbines, because of their generally rapid firing time, are used to meet short-term peak demands placed on power systems.

Commodity Charge (or Rate)
A charge per unit of service actually delivered to the buyer.

Commodity Costs
Those costs that are allocated on the basis of actual use of service.

Common Carrier
A facility obligated by law to provide service to all potential users without discrimination, with services to be prorated among users in the event capacity is not sufficient to meet all requests. Interstate oil pipelines are common carriers, but interstate natural gas pipelines are not.

Competitive Transition Charge (CTC)
A charge some states may allow for utilities to recover stranded costs.

Conjunctive Billing
Combining energy or other items of two or more meters/services into single quantities for the purpose of billing as if the bill were for a single meter/service.

Conservation
Demand-Side Management (DSM) strategy for reducing generation capacity requirements by implementing programs to encourage customers to reduce their load during many hours of the year. Examples include utility rebate and shared savings activities for the installation of energy efficient appliances, lighting and electrical machinery, and weatherization materials. A resource produced by increasing the efficiency of energy use, production or distribution.

Consumer
The ultimate user of natural gas, as contrasted to a "customer" who may purchase natural gas for resale.

Contango Market
A term used in futures trading meaning that prices are progressively higher in succeeding delivery months than in the nearest delivery month.

Contract Adjustment
Under Order No. 636, the ability of customers to reduce, in whole or in part, their firm purchase and/or transportation obligations under contracts with their pipeline suppliers. Firm transportation, in contrast to firm sales, cannot be reduces unless the pipeline agrees or an alternative purchaser is found at the maximum price.

Cooling Tower
A structure used to vent steam produced in the generation or power.

Cooperative, Rural Electric (Co-Op)
Co-Op is the common used term for an electric cooperative. Electric cooperatives can generate and/or purchase wholesale power, arrange for the transmission of that power, and then distribute the power to serve demand of customers. Co-Ops typically become involved in ancillary services such as energy conservation, load management and other demand side management programs in order to serve their customers at least cost.

Coordinated Operation
The operation of two or more interconnected electrical systems or a group of hydroelectric plants to achieve greater reliability and economy.

Cost Classification
In the context of FERC gas rate methodology, the classification of costs between demand and commodity components for purposes of pipeline rate design.

Cost of Service Tariff
A tariff specifying that the entity providing the service will be reimbursed for its cost of service, including a specified rate of return on the rate base.

Cover
In futures trading, to close out a short futures position.

Cubic Foot
The most common unit of measurement of gas volume; the amount of gas required to fill a volume of one cubic foot under stated conditions or temperature, pressure and water vapor.

Curtailability
The right of a transmission provider to interrupt transmission when system reliability is threatened or emergency conditions exist.

Curtailable Rate
An option offered by utilities to customers who can accept specified amounts of service reduction in return for reduced energy rates.

Customer Charge
A fixed monthly amount to cover the cost of providing service to a location.

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