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Alternate Fuel-A stand-by system frequently found at large industrial plants; used as a back up energy supply, the plant can switch to the stand-by fuel when the utility's system requirements force an interruption of gas service. Most common alternate fuels are #2 and #6 fuel oil and propane.

Appalachian Gas-Gas destined for the northeastern U.S., which originates in the Appalachian region (i.e. Ohio, Kentucky, West Virginia, Indiana) of the country. This type of gas is more reliable than southwest gas since it is injected into the pipeline on the downstream side of the major system bottlenecks.

Base Rate-The rate charged by a utility to physically deliver gas to end use locations. Monies collected under the base rate are used to maintain the system, provide emergency service, and operate the utility. In addition, utility profit is derived from an authorized portion of the base rate.

Balancing-A key provision of F.E.R.C. Order #636 and local gas companies; it requires shippers to match the volumes injected into the pipeline and the volumes removed from the pipeline, either exactly, or within specified tolerances. The accounting is done on a daily or monthly basis and often involves penalties and cash outs.

Broker-A company, other than a pipeline or LDC, that introduces sellers and buyers in the hopes of completing a transaction. The broker's profit is a portion of the seller's margin. Unlike a marketer, a broker does not take title to any gas.

Btu-British Thermal Unit. Scientifically, a measurement of heat; specifically, the amount of heat required to raise the temperature of one pound of water from 67 to 68 degrees Fahrenheit, at sea level.

Burner Tip Price-The total price of gas to the end user including commodity cost, all transportation costs, all reductions for shrink and utility charges.

Btu Factor-Factor used to convert one MMBtu to one Mcf or vice versa.

Bypass-Method by which a customer gains access to direct deliveries of gas from a supplier other than its traditional supplier. In the past, distributors have "bypassed" one pipeline by building an interconnect into another system. Industrial customers may "bypass" their local distributor by tapping directly into a pipeline. The ultimate bypass, according to some analysts, is when a company switches from gas to another fuel altogether.

Capacity-The amount of space that is physically available in the pipeline. In the post Order #636 era, utilities have frequently assigned their own pipeline capacity rights to transportation customers. With the assignment of this capacity also comes the liability for reservation/demand charges that can erode any savings that might otherwise be realized.

Cash Out-A situation that arises when receipts of gas into the pipeline do not match deliveries (see "balancing"). If a shipper over-delivers, the pipeline buys the excess volumes at a specified rate, usually below market rates. If a shipper under-delivers, the pipeline sells the deficient volumes to the shipper at a premium rate.

Casinghead Gas-Natural gas produced from a well that primarily produces oil.

Ccf-One hundred cubic feet; a measure of gas volume.

CD Service-Contract Demand Service. An obsolete transaction between an interstate pipeline and a local distribution company. Under this service classification, the interstate pipeline contracts to supply and deliver a specified quantity of gas to the utility. More recently, pipelines have gotten out of the merchant functions and now serve as common carriers.

City Gate-Physical location where gas is delivered by a pipeline to a local distribution company.

Comparability-A key concept in recent years, it is the pursuit, by independent marketers, to have made available to them, the same services that have traditionally been reserved for utilities. The three components of utility service are: firm transportation, storage, and "no notice" service.

Curtailment-A situation in which a transporting pipeline, in order to meet firm sales and/or transport obligations, restricts deliveries of interruptible gas. A curtailment could be total or partial (e.g. a 20% reduction in deliveries). Likewise, a curtailment could be system wide or localized.

Direct Purchase Gas-Also called self help or transportation gas. The concept by which a gas consumer may seek out his own source of natural gas (rather than simply buying it from his local utility) and pay pipelines and utilities for delivery services.

Dth-One Dekatherm (or 10 therms). Equal to 1 MMBtu. See also MMBtu.

EBB-Electronic Bulletin Board. The standard vehicle for communications with all pipelines and some utilities. Tariff information, gas scheduling, customer usage reports, etc. are available electronically, (with proper identification), through the use of a computer and modem. In addition, many pipelines and utilities, as well as a number of Public Service Commissions, have Internet sites on the World Wide Web.

F.E.R.C.-Abbreviation for Federal Energy Regulatory Commission. An official organization in Washington which decides: who can move gas, how much gas they can move, where they can get it, where they can send it, and how much they'll pay to send it.

Firm Service-The highest quality sales or transmission service offered to customers under a filed rate schedule which anticipates no planned interruption.

Fixed Price-A pricing mechanism in which, as the name implies, the price is set for the entire term of the contract.

Flex-A rate discount offered by a pipeline or LDC in response to a competitive challenge, usually an alternate fuel or a competing pipeline.

Force Majeure-The legal term used to describe situations in which a party to a contract is excused from his or her obligations under that contract. Reasons to invoke this provision are situations over which the party has no control such as: war, hurricanes, ice storms, earthquakes, or other "acts of God."

GCR-The actual cost of gas (Gas Cost Recovery) that the utility pays to producers and pipelines. By law, a utility cannot earn a profit on the sale of gas (see "base rate"). Cost of gas is a direct pass through to sales customers.

Gas Bank-Difference between over deliveries and actual usage that will be carried over into the next month.

GISB-Gas Industry Standards Board- Industry standard for gas sales/purchase agreements. GISB now replaced by NAESB, North American Energy Standards Board, Inc.

G.R.I.-Gas Research Institute. A charge paid for all gas transportation to sponsor research projects directed toward increasing use of gas, the charge is collected by the last interstate pipeline to handle the gas.

Indexed Price-A pricing mechanism in which the monthly price fluctuates according to prevailing market conditions.

Interruptible Service-Gas service which is subject to interruption when pipeline system requirements require. Because of this potential risk (although it is generally negligible), the cost of interruptible service is lower than other forms of service.

Interruption-A situation in which an LDC, in order to meet firm sales and/or transport obligations to high priority customers, restricts deliveries of interruptible gas.

Interstate pipeline-A pipeline, subject to Federal law, engaged in the transportation of gas from one or more states to one or more other states.

Intrastate pipeline-A pipeline, subject to state law, engaged in the transportation of gas within a single state.

LDC-Local Distribution Company. (To the layman, this is the local gas utility company.)

Marketer-A company, other than a pipeline or LDC, that buys and resells gas for a profit. Unlike a Broker, a marketer actually takes title to the gas.

Marketing Affiliate-A gas marketing company that is a subsidiary of or affiliate of an interstate pipeline or an LDC. Under earlier F.E.R.C. rules, pipelines must make available to ALL shippers (via Electronic Bulletin Board) any information released to their affiliate. Unfortunately, at the state level, this is not always the case. Often, a casual contact with an LDC regarding a potential transport customer is immediately transferred to the marketing affiliate.

Mcf-One thousand cubic feet; a measure of volume; equal to ten Ccf.

MDQ-Maximum Daily Quantity. Maximum amount an end-user can ship on a pipeline on any given day.

NAESB- See GISB

MMBtu-One million Btu's. The unit by which producers and pipeline quantify gas amounts. See also Dth.

Nominate-To place an order for a certain quantity of gas.

"No Notice" Service-A service classification directed by F.E.R.C. Order #636. An "unbundled" version of CD Service, No Notice provides for the physical delivery, but not the sale of gas destined for LDCs' system supply.

NYMEX-New York Mercantile Exchange. The commodity exchange based in New York City where the natural gas futures and options contracts and other energy futures are traded. Although NYMEX is routinely used for price discovery in the eastern half of the United States, more recently, the Kansas City Board of Trade has begun trading a futures contract that is more applicable for the mid-continent region of the country.

Order #436-Landmark order issued by the F.E.R.C. which outlines the policies and procedures of first come-first serve, "open access" interstate gas transportation.

Order #636-A more recent edict issued by the F.E.R.C. Intended to be the final words of wisdom regarding gas deregulation, it has had the effect of causing all in the industry to question their own sanity.

PSC/PUC-Public Service Commission/Public Utilities Commission. Agency that regulates intrastate pipelines and local distribution companies. This agency performs at the state level, the same function the F.E.R.C. performs at the Federal level.

Reservation Charge-A fixed monthly charge for firm transportation service which is based on maximum daily contract quantity. This fee, which is the price for guaranteed capacity, is paid regardless of the physical throughput.

SF/V Rate Design-Straight Fixed/Variable. A rate methodology mandated by F.E.R.C.'s Order #636 which essentially requires pipelines to recover all fixed costs attributable to firm transportation service through reservation and/or demand charges.

Shrink-What happens to gas when it travels through a pipeline. (i.e. A certain quantity of gas goes into the line, and a lesser quantity comes out the other end.) Also called, variously: fuel, company use, lost, unaccounted for. In reality, transporting pipelines take a percentage of every customer's gas to use in powering the compressors that push the gas through the pipeline.

Southwest Gas-Gas originating from the southern U.S., generally, Louisiana and Texas and/or offshore Gulf of Mexico waters.

Storage-One of the three components of traditional utility service that is now available (on a limited basis) to independent marketers. Gas is purchased in the summer and injected into huge salt caverns or depleted gas wells; in the winter, when extra gas is needed, the gas is pumped back into the pipeline.

Tariff-Document published by every pipeline (and most LDCs) which identifies different classes of service, qualifications to be placed in a particular class, and cost of receiving gas under each class.

Telemetering-The process of electronically reading a gas or electric meter, storing the data, and reporting the information to a computer at some remote location. Some telemetry units call the central computer at prearranged times; others are capable of receiving calls from the central computer and transmitting reports on demand.

Therm-A unit of heat equal to 1/10 Dth.

T-O-P-Take or Pay. Surcharges paid to many pipelines and some LDCs to retire old contractual liabilities with producers. These liabilities were incurred in the days prior to deregulation.

Transition Costs-Costs incurred by pipelines to implement the restructuring provisions of Order #636. According to the Order, pipelines will be allowed to recover all such costs, provided they are prudently incurred.

WACOG-Weighted Average Cost of Gas. One type of pricing mechanism.

Wellhead-The original physical source of gas.