Glossary of Terms

Glossary of Terms

Natural Gas Glossary

The terms used by the natural gas industry can be confusing even to avid industry members. New terms are quickly emerging as the industry becomes more competitive and meets the challenges of a rapidly changing marketplace. The following glossary defines some of the more widely used terms.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Balancing – Making deliveries and withdrawals of gas equal; balancing may occur on a daily, monthly or seasonal basis with penalties associated with imbalances.

British thermal unit (BTU) – A measure of the heating value of gas.

Capacity – The quantity of pipeline or storage space for which an LDC (local distribution company) or customer contracts.

Capacity release/assignment – The release or assignment of a specific right to firm pipeline or storage space on an interstate natural gas pipeline.

City gate – Location where gas ownership passes from a gas supplier to an LDC at a measuring or regulating station, usually near a city limit.

Cogeneration – Production of electricity and useful heat energy from the same energy source.

Commodity rate – The charge per each unit of gas actually purchased or transported.

Company service line – Installed by the gas company and usually extends from the gas main to the customer's property line, where it terminates at a curb valve.

Cost of service – The LDC's cost of doing business, including operating expenses, depreciation, taxes, and fair return on investment.

Customer service line – Starts at the curb valve and extends to the meter. This portion of the service line is installed and owned by the customer unless rate contracts specify otherwise.

Curb box – A ground level receptacle that covers the curb valve installed by the gas company. It is the point at which the customer service line begins.

Curtailment – A plan to reduce deliveries during a short-term emergency for balancing a utility's natural gas requirements with its natural gas supplies.

Customer charge – A fixed amount paid monthly by the customer.

Degree days – A measure of the coldness of weather to determine heating requirements. Degree days for a 24-hour period are calculated by adding the day's high and low temperatures and dividing by two, and subtracting the result from a reference point, usually 65 degrees Fahrenheit.

Demand charge – The fixed rate (or rent) for the portion of pipeline capacity needed to serve a customer; a reservation fee for space.

Design day – A 24-hour period of the theoretically greatest gas volume demand; used by utilities as a basis for designing purchase and transportation contracts, facilities and delivery capacity.

Distribution system – Mains, service lines, and equipment of the local utility, which carry or control the flow of gas to the end-user's meter.

Excess capacity – Capacity that is temporarily not needed by a transmission pipeline or LDC to meet customer needs.

FERC Order 436/500 – Order issued by the Federal Energy Regulatory Commission requiring pipelines to offer interstate transportation of gas to any user on a non-discriminatory first-come, first-served basis.

FERC Order 636 – Order issued by the Federal Energy Regulatory Commission to encourage competition in the natural gas industry; results included greater supply-planning risks for LDCs as transmission pipelines unbundled their services, the release of unused capacity and transition costs. It also resulted in leaving the merchant function to LDCs.

Firm service – Service offered to customers under rate schedules or contracts that anticipate no interruptions.

Futures contract – Contracts that obligate the seller to deliver and the buyer to purchase a commodity at a fixed price at a specified date; often no gas is exchanged and the contracts are used as a price hedging mechanism.

Gas cost recovery (GCR) – Provision of regulatory rules permitting an LDC to recover from customers, on a dollar-for-dollar basis, the prudent amount it pays in purchase costs for the gas supplied to customers.

Gas main or mainline – A gas-distribution line to which a service line is connected. Columbia owns, services and maintains the gas mains serving your community and all the others where we have distribution operations.

Gathering system – A network of pipelines that move gas from individual wells to compressor stations, processing points or main trunk pipelines.

House line – The term applied to the gas piping from the meter to your gas equipment and appliances. Customers are responsible for these lines.

Hubs – Central locations where gas supplies from a variety of sources are aggregated and sold.

Human needs customers – Customers who use natural gas for essential human needs, e.g., homes, hospitals, nursing homes.

Incentive ratemaking – Ratemaking that offers incentives for LDCs to take greater risks to meet the needs of an increasingly competitive marketplace in a manner that exceeds the traditional regulatory approach; a bridge between a traditional monopoly and unregulated competition.

Interruptible service – Service offered to customers under rate schedules or contracts that anticipate and permit interruption of service on short notice.

Interstate gas – Gas transported in interstate pipelines to be sold and consumed in states other than that state in which the gas was produced.

Intrastate gas – Gas sold and consumed in the state where it was produced and not transported in interstate pipelines.

LIHEAP (Low income home energy assistance program) – Federal program to provide financial assistance to low income households for paying their energy bills.

Marketer – An unregulated third party who takes title and resells the gas product to end-users.

Maximum allowable operating pressure – Pressure levels set by government standards for different sizes/types of pipe.

Mercaptan – Odorant added to natural gas by the LDC.

Merchant function – The activity of an LDC that purchases gas for resale to customers.

Methane – A hydrocarbon (CH4), which is colorless, odorless and lighter than air; the major component of natural gas.

Obligation to serve – Duties of a public utility to serve all with adequate service in a safe, efficient and non-discriminatory manner.

Off-system sales – Sales by a utility to a customer outside of its current traditional market.

Pass through – The flow of utility costs to customers on a dollar-for-dollar basis; no profit earned.

Peak day – Highest 24-hour usage of gas during a year; for an LDC this usually occurs in the winter heating season.

Performance based programs – A new form of ratemaking that motivates LDC performance to exceed traditional prudent levels in order to better meet the needs of the increasingly competitive marketplace.

Rate base – The amount of money the LDC invests in facilities to serve the public plus the amount of working capital needed to keep the company going.

Rate case – Proceeding before a public utility commission by which a utility seeks a change in the rates it charges to its customers.

Service line – The gas piping from our main to the meter in your home.

Spot market – A market characterized by short-term, interruptible (or best efforts) contracts for specified volumes of gas; participants may be any of the elements of the gas industry, including producer, transporter, distributor, customer, brokers and marketers.

Standby service – Back-up service to a primary source of gas for transportation customers; often a customer receives primary service from another source, but contracts for standby from an LDC.

Storage – Underground sandstone formation where natural gas is stored; storage provides a method for LDCs to balance daily supply needs.

Tariff – A published description of rate schedules and general terms and conditions under which an LDC product or service will be supplied.

Throughput – The volume of gas put through an LDC's lines over a given time period; includes sales and transportation volumes.

Transmission system – Pipelines that transmit gas from a source of supply to one or more distribution systems, large volume customers or another pipeline; operate at higher pressures than distribution systems.

Unbundling – Transmission and distribution companies historically provided a single service that included the gas commodity, movement of the gas to the customer, gas storage, and customer service. Greater competition has caused this single service to be separated or unbundled into its components or groups of components.