Glossary of Natural Gas Terms

Pipeline Marketing Associates, Inc.

Agent/Agency Agreement: Legal representation for buyers or sellers relating to natural gas negotiations with shippers,LDC’s, and other contractual agreements.

BCF: Billion Cubic Feet (or at 60 Degrees F and 14.68 PSI: 100,000 Dekatherms or 100,000 MMBTU)

BTU: British Thermal Unit, A unit of energy measurement or heating value of natural gas and other fuels.

Burner Tip: The point at which natural gas is consumed.

Bundled Sales Service: A service where the utility provides the commodity and all delivery components including the delivery the gas to the end user. Also known as “retail” sales.

CCF: One hundred cubic feet. A volumetric measurement of natural gas used my most metering equipment. Usually converted to BTU based on average temperature and pressure (Conversion Factor). Equal to 1 Therm at 60 Degrees F and 14.68 PSI.

City Gate: Connection between the LDC and the interstate pipeline system where title or responsibility of the delivery of the gas changes from the supplier to the LDC.

Commodity: Natural gas purchased from producers exclusive of interstate transportation and other related delivery costs.

Conversion Factor: A factor used to change CCF or MCF to Therms, Dekatherm (DTH), or BTU measurements such as BTU or MMBTU. This conversion factor is necessary due to the fact that LDC’s meter gas in CCF and Gas is bought and burned in MMBTU or DTH.

CCG: Commodity Cost of Gas is the LDC's cost of gas delivered to end users, usually excluding operating expense, interstate transportation costs, depreciation, taxes, and return on investments. See Also GCR.

Cubic Foot: The metered measurement of gas by LDC’s, usually expressed in CCF (hundred cubic feet).

Customer Choice: Specific programs approved by utility regulatory agencies to open LDC’s markets to approved gas providers.

Degree Days: A weather measurement specific to a 24 hour period, usually expressed in total number of “heating degree days” or “cooling degree days” for a season or year to date. Calculated by adding the days high and low temperatures and dividing by two, and subtracting the result from a reference point (in the US - 65 degrees Fahrenheit).

Dekatherm (DTH): 10 Therms, 1,000,000 btu’s, 1 MMBTU; A measurement of the “burn ability” or heating value of natural gas and the unit at which most gas is bought.

Distribution Charge: The fee for gas delivery service provided by a local distribution company when a customer buys gas from a supplier/marketer. If a customer buys the gas from a supplier/marketer, the local distribution company delivers the gas to them through its pipeline to the meter.

Deregulation: Removal or relaxation of rules or controls governing a business or service operation such as utilities.

EIA: Energy Information Agency (US Government energy reporting agency– a good source for market and storage data and forecasts)

End User: The natural gas consumer.

FERC: Federal Energy Regulatory Commission. The US government body that presides over interstate transportation of natural gas.

Firm Service: Non-interruptible gas delivery where all customer’s gas is provided by one supplier. This is almost always the method used to buy gas from a supplier. Sometimes used to refer to gas required for end users with essential human needs (e.g. hospitals, health-care facilities and residences).

GCR: Gas Cost Recovery is the LDC's cost of gas delivered to end users, usually excluding operating expense, interstate transportation costs, depreciation, taxes, and return on investments. See also CCG.

Imbalance fee: The charge assessed to a supplier/marketer when the amount of natural gas nominated (purchased) does not equal the amount of natural gas used.

Interruptible Service: An agreement which allows the local distribution company to temporarily halt the distribution of natural gas to a customer whose marketer did not deliver the gas to the LDC or in the case of an Operational Flow Order by the LDC.

LDC: Local Distribution Company (usually a regulated utility) which owns and operates the local pipeline system and metering, etc. that delivers natural gas to the consumer.

Marketer: Any entity, other than the LDC, that sells natural gas to customers. Also known as a supplier or broker.

MCF: 1,000 cubic feet of natural gas. A unit of measure for the volume of gas used.

MDQ/ Maximum Daily Capacity: The maximum amount of natural gas which can be delivered through a pipeline on any given day or, in the case of an end user, the maximum historic daily consumption.

MMBTU: 1,000,000 BTU or 1 Dekatherm

Meter: The mechanical device that measures the amount of gas delivered.

Nomination: A projection of anticipated consumption for a specific customer or pool of customers made by the marketer or supplier and delivered to the utility prior to end user’s consumption.

NYMEX: New York Mercantile Exchange; the most common “index” for natural gas purchases assumes delivery at the Henry Hub Natural Gas Terminal in Louisiana.

Operational Flow Order (OFO): An order issued by LDC’s or interstate pipeline companies when weather, natural disaster or demand issues require that they either restrict flow into or out of their system to maintain pressure tolerances.

Peak Day: The 24-hour period of greatest natural gas consumption within a single natural gas utility.

Pipeline Fuel: Gas “siphoned off a pipeline system to operate compressors to pressurize and move the gas through the system.

Pool: A group of individual natural gas customers which are treated as one customer by a marketer for balancing purposes.

Producer: Natural Gas drilling and exploration company.

Retainage or Shrinkage: Natural gas kept by a utility or pipeline to recover "lost" or unaccounted for natural gas. Includes pipeline fuel consumed by compressor stations used to pressurize pipeline system.

Service Line: Pipeline which carries gas from the distribution main to the customer's meter

Supplier: A non-regulated buyer and seller of natural gas. Also known as a marketer or broker.

Storage: Placing natural gas in a holding facility for removal and use at a later date.

TCF: Trillion Cubic Feet

Therms: A measurement of gas equal to 100,000 btu.

Throughput: The volume of natural gas delivered to customers.

Transition Cost: Costs which are being passed on to utilities from interstate pipeline companies as a result of federally-mandated restructuring of the natural gas pipeline industry.

Transmission Mains: Pipelines installed for the purpose of transmitting gas from a source (s) of supply to one or more LDCs, large volume customers, or a pipeline which interconnects supply sources.

Transportation (Distribution) Service: Service encompassing volumes of gas owned by the ultimate consumer and delivered to the ultimate consumer's meter by the transporter.

Unbundled Rates: Deriving individual rates for separate components of a bundled service.

Unbundled Service: A non-packaged service where a customer can purchase the natural gas from a third party (supplier) and the local distribution company delivers the gas through its pipeline to the customer's home.

Wellhead Gas: Gas purchased directly from producer or market priced gas.