Glossary of Terms
A
AMR
Automated Meter Reading (AMR) is a physical product that replaces the current 'Dumb' electricity/gas/water meter. Currently most buildings have 'Dumb' meters, which need to be read manually, meaning that they are often read irregularly. If AMR is utilised, the 'Dumb' meter would either be replaced by a 'Smart' meter or a data logger which can increase reading frequency and billing accuracy. AMR allows energy prices to be substantially reduced by eliminating 'estimated billing'. It is conservatively estimated that 2% of annual energy costs can be saved by installing AMR. With subsequent demand side management this can increase to as much as 15%.
Annual Offtake
The expected or nominated annual consumption of gas at a supply point.
Annual Quantity (AQ)
The annual quantity consumed by site, measured in kilowatt hours (kWh).
Asymmetrical Margining
A collateralization agreement between the counterparties that requires more stringent margin coverage from either counterparty, usually because of a difference in credit rating.
Availability
The agreed level of electricity supply capacity made available by both the networks and the suppliers to meet a customer’s highest likely monthly demand – measured in kVA. Also described as Supply Capacity. The site cannot exceed this specified amount without financial penalty and a modified connection agreement.
Availability charge
Electricity availability chargers are based on an agreed level of required capacity and should be set at just above the anticipated maximum demand.
B
Backwardation
When the price of near delivery months of futures or physicals contrasts trades at a premium to more distant months, i.e. future prices are lower than current prices (also known as an inverted market).
Balancing and Settlement Code (BSC)
The BSC contains the rules and governance arrangements for the electricity balancing and settlement in Great Britain.
Barrier to Entry
A factor that may restrict a firm’s entry into a market.
Baseload
The load continuously supplied by generators into the electricity networks over a period of time that demand does not fall below.
Bearish
A market in which prices are falling.
BETTA
British Electricity Transmission and Trading Arrangements
Bid-offer Spread
The difference between the price quoted for an immediate sale (bid) and an immediate purchase (ask); often used as a measure of liquidity.
Big Six
The name collectively given to the six companies that supply most of the energy to domestic households in the GB market. They are: Centrica plc (three retail brands, British Gas, Scottish Gas and Nwy Prydain in England, Scotland and Wales respectively), E.ON UK, Scottish and Southern Energy (SSE), RWE npower, EDF Energy and ScottishPower.
Bilateral Credit Arrangements
An arrangement to provide credit agreed directly between two counterparties, rather than through an exchange or clearing house.
Brent
Commercial UK North Sea oilfield – Brent Crude is widely used as a standard or reference price against which other crude oil grade prices may be fixed.
Broker
Handles orders to buy and sell. For this service, a commission is charged which, depending upon the broker and the amount of the transaction, may or may not be negotiated.
Bullish Market
A market in which prices are rising.
C
Carbon Reduction Commitment (CRC)
The Carbon Reduction Commitment (CRC) is a mandatory emissions-reduction standard in the UK. CRC aims for a carbon reduction of 1.2 million tonnes by 2020 and an 80% cut in carbon emissions by 2050. With the exception of transportation fuels, CRC covers all forms of energy, including electricity, gas, fuel and oil.
Carbon Trading
The ability to trade (both sale and purchase) within the European Union Emissions Trading Scheme (EU ETS).
Cash-Out Arrangements
Arrangements whereby generators and suppliers pay or are paid for imbalances, i.e. shortages and surpluses.
CCT
Clean Coal Technology. Technologies used to reduce the emissions that are produced as a by-product of burning coal.
CCGT
Combined Cycle Gas Turbine. A gas fired electricity generation plant.
Churn
The ratio of traded volume of a commodity to throughput or generated output, or some other measure denoting physical consumption of the traded commodity.
Clearing
The centralised process whereby transacted business is recorded and positions are maintained.
Clearing House
An organisation which guarantees the performance and settlement of futures and options contracts, e.g. the London Clearing House.
Climate Change Agreement (CCA)
Certain intensive energy users have been granted discounts to the Climate Change Levy, up to 80%, in return for reaching agreed emissions reduction targets. The energy user must join a Climate Change Agreement through their sector association in order to take part in the scheme. The energy user must meet certain criteria in order to be eligible to join a CCA.
Climate Change Levy (CCL)
Tax introduced in April 2001 to incentivise energy efficiency and help meet the UK’s environmental commitments made at the Kyoto Conference. Levy is charged on non-domestic use of energy supplied to the consumer and covers electricity, coal, gas and LPG.
Counterparty Risk
The risk that a counterparty to a contract defaults and does not fulfil obligations.
Credit Risk
Possibility of default. Failure to make required payments on a timely basis or to comply with other conditions of an obligation or agreement.
Contango
Market situation in which prices in succeeding delivery months are progressively higher than in the nearest delivery month (also known as Forwardation and is the opposite of Backwardation).
Curve
The curve, so-called because its components form a curve when plotted, is made up of those periods following the end of the present calendar month.
D
Data aggregator
The organisation appointed to aggregate electricity meter reading data received from the data collectors to forward to suppliers.
Data Collector
The organisation responsible for collecting, processing and validating the meter reading data which is then passed on to the data aggregator.
Datalogger
Device fitted to a meter that can record, store and transmit readings and measurements.
Day Ahead
The price of a commodity for delivery on the following day.
Day-Ahead Market
A form of a spot market.
Display Energy Certificate (DEC)
Display Energy Certificates (DECs) show the energy usage of a building, the Operational Rating, and help the public see the energy efficiency of a building, based on the energy consumption of the building (gas, electricity and other meters). The DEC should be clearly displayed at all times and visible to the public. A DEC is always accompanied by an Advisory Report that lists cost effective measures to improve the energy rating of the building.
Display Energy Certificates are required for buildings with a total useful floor area over 1,000m2 that are occupied by a public authority and institution providing a public service to a large number of persons and therefore visited by those persons.
Government Procurement Service has established an Energy Bureau Service, delivered by leading utilities management business TEAM. Information about the framework can be found on (insert hyperlink).
Distribution losses
Charges relating to electrical losses that occur as electricity is transmitted through the lines of the DNO.
Distribution Network Operator (DNO)
Manages the installation and upkeep of their cabling and the distribution of electricity from the point where it leaves the transmission system to the supply point. They are also often referred to as the host Regional Electricity Company (REC). There are fourteen distribution companies, each covering a discrete geographical region of Britain.
E
EHV
Extra High Voltage.
Emission Allowance
Typically, emissions reduction schemes set a cap for total emissions for each participant over a
period and allocate each participant tradable units, called emissions allowances, up to the cap.
Participants buy and sell emissions allowances and at the end of the period must hold allowances or credits equal to their actual emissions to be in compliance. See EU allowances and UK Allowances.
EFA
Electricity Forward Agreement.
EFA Blocks
Six four-hourly blocks within the EFA day (being 23.00 hours to 23.00 hours in the immediately following day).
Elexon
The Balancing and Settlement Code Company (BSCCo) created by the Balancing and Settlement Code (BSC). Elexon procures, manages and operates services and systems which enable the balancing and imbalance settlement of the wholesale electricity market.
Estimated Annual Consumption (EAC)
A calculated estimate of energy usage for a customer.
European Union Emissions Trading Scheme (EU ETS)
The EU ETS is a greenhouse gas emission trading scheme covering the energy intensive sectors of the EU Member States. Sectors covered by the system includes: power generation, cement, glass, ceramics, steel, aluminium and pulp and paper, which are termed ‘trading sectors’.
Exit Zone
A geographical gas distribution area wholly contained within a local distribution zone which groups supply points together that, on a peak day, receive gas from the same national transmission system offtake point(s). Supply points in the same exit zone attract the same exit capacity charge rate.
F
Firm Gas
A guaranteed supply of natural gas that will not be subject to interruption.
Forward Contract
As a futures contract (below) but terms are privately negotiated and not standardised.
Forward
The trading of commodities to be delivered at a future date. Delivery can be physical and can be bespoke and is normally struck bilaterally.
Forward trading
Refers to delivery in the front month and after, and may include trades months and years ahead of delivery. Forward trading generally consists of trades over a longer duration than prompt and spot trading, with contracts for delivery over months, winter or summer seasons or years.
FSA
The Financial Services Authority, which regulates the financial services industry. It is an independent nongovernmental body, given statutory powers by the Financial Services and Markets Act 2000. It is a company limited by guarantee and financed by the financial services industry.
Future
A contractual agreement to buy or sell a particular commodity or financial instrument at a predetermined price in the future; normally a future is a standardised contract bought/sold across an exchange.
Futures Contract
An agreement to purchase or sell a commodity for delivery in the future.
G
Gas Hub
A physical or virtual point within a gas transmission system where gas enters the network, a point used as a reference e.g. for balancing or trading.
Gas Year
Period commencing 0600 1st October through to 0600 1st October the following year.
Gate Closure
The point in time by which all Contract Notifications and Final Physical Notifications must be submitted for each settlement period. Parties should not change their positions other than through instruction by the SO after gate closure. It is currently set at one hour before the start of the relevant settlement period.
Generator
Producer of electricity.
Good Quality Combined Heat and Power (GQ CHP)
The simultaneous generation of heat and power. The power output is usually electricity, but may include mechanical power. Heat outputs can include steam, hot water or hot air for process heating, space heating or absorption chilling.
Grid supply point
Point between transmission and distribution systems where responsibility for electricity supply transfers from National Grid Transco to the local REC.
GSP
Grid Supply Point – point between transmission and distribution systems where responsibility for electricity supply transfers from NGC to the local REC.
GTMA
Grid Trade Master Agreement, generic framework covering energy trading between counterparties,
GW
Gigawatt = 1,000 megawatts.
H
Half hourly data (HHD)
Electricity consumption data recorded every half hour and collected by the metering system.
Half hourly (HH) metered
Describes measurement of electricity consumption in half hourly intervals through a meter complying with the relevant Code of Practice (COP) – COP3 for 1MW+ sites or COP5 for sites with demand over 100kW and up to 1MW.
Typically used on large sites (e.g. office blocks, arenas, museums). Government Procurement Service HH framework is supplied by EDF, more information about the framework can be accessed here (hyperlink)
Hardening
A price which is gradually stabilising, or a slowly advancing market.
Hedging
Deals based on the future price of a good or service instead of dealings based on the daily price of a good or service. This enables those purchasing a good or service to reduce the risk of short term price movements.
Host Rec
A historic term used to describe the Regional Electricity Companies in the Electricity Act 1989.
HV
High Voltage. Supply voltage above 1000v (1kV).
I
I&C sector
Industrial and commercial sector. The non-domestic sector in general rather than any specific group of customers.
Interconnector
Gas pipeline linking the UK and the Continent, e.g. from Bacton to Zeebrugge.
Interruptible Gas
Gas supply that may be interrupted by Transco or supplier to assist in maintaining the
Transmission/Distribution system, allowing supplies to firm gas consumers when there is a
constraint on the system. Customers with an interruptible gas supply need to have an alternative
power supply to switch to should an interruption to the gas supply occur.
J
K
Kilovolt-ampere (kVA)
A unit of apparent power, equal to 1,000 volt-amperes; the mathematical product of the volts and amperes in an electrical circuit.
Kilo-watt Hour (kWh)
Standard unit of measurement for both gas and electricity consumption.
L
Line Loss Factor
6th, 7th and 8th number of the 21 digit Meter Point Administration Number.
Line-Pack
Method used for providing short-term gas storage in which natural gas is compressed in
transmission pipelines, providing additional amounts of gas to meet limited peak demands.
Liquid Market
Market in which buying and selling can be accomplished with minimal changes in price.
Market in which there are sufficient trades to accurately reflect fundamental influences on the market price.
Liquefied Natural Gas (LNG)
Gas that is stored in liquid form for the purpose of transportation.
Local Distribution Zones (LDZ’s)
There are 12 LDZ's in the UK managed by 4 Distribution Network Operators (DNO). Gas is delivered to the LDZ's via the National Transmission System (NTS) and they in turn supply the end user. This is achieved via a less pressurised system than the NTS.
M
Maximum demand (MD)
The highest average demand occurring in a half hour period. Maximum Demand tariffs comprise: a) fixed monthly charge; b) an availability charge per kVA of the highest demand expected; c) a price per unit for day and night units; d) a maximum demand charge based on the measured maximum number of units used in a half hour period in the month.
Meter operator agreement
Agreement between the customer and the nominated meter operator.
Meter operator
The organisation appointed to install and maintain metering equipment.
Meter Point Administration Number (MPAN)
Unique 21 digit number assigned to electricity meter(s) Meter Point Reference Number (MPRN)
The number given to uniquely identify every gas meter in the country. MPRNs should not be confused with the gas supplier account number or the meter serial number printed on the meter itself. The format of an MPRN is quite standard and consists of between 6 and 10 numerical digits only.
Meter/Timeswitch Code (MTS Code)
3rd, 4th and 5th number of the 21 digit Meter Point Administration Number.
MPAS
Meter Point Administration Service. Provides information regarding electricity supply to properties in their distribution network areas and regulates the registration process between electricity suppliers.
MW
Megawatt – 1,000 kW.
MWh
Megawatt/hour – 1,000 kWh.
N
National Grid Transco
Operates the high voltage national electricity transmission network and the gas transportation networks in England and Wales.
National Transmission Systems (NTS)
The high pressure network of pipes that transports gas between the terminals, storage facilities and Local Distribution Zones for local distribution.
NGC
National Grid Company. Owns high voltage national network.
Nominated consumption
Annual quantity of gas nominated by the customer as their estimated consumption requirement.
Non Daily Metered (NDM)
A meter that is read monthly or at longer intervals. For the purposes of daily balancing, the consumption is apportioned, using an agreed formula, and for supply points consuming more than 73.2MWh pa, reconciled individually when the meter is read.
Non-half hourly metered
Sites using under 100kw. Typically domestic and small sites (e.g. small doctors' surgery, youth club). Government Procurement Service NHH framework is supplied by British Gas; more information about the framework can be accessed here (hyperlink).
O
Outturn
The final price for that period of consumption that has just passed.
P
Power factor
The proportion of total electricity supplied to a site that is converted into useful energy output, as opposed to the wasted reactive power.
Producer
A company that explores for gas, drills the wells and extracts gas from available areas,onshore and offshore.
Profile Class
1st and 2nd number of the 21 digit Meter Point Administration Number. The profile class lets suppliers denote the appropriate standard pricing product for sites. The following table illustrates the various codes for each profile class and provides guidance to the related standard pricing product.
| Profile | Code |
| Profile Not Applicable (Half Hourly) | 00 |
| Domestic Unrestricted | 01 |
| Domestic Day / Night | 02 |
| Business Unrestricted | 03 |
| Business Day / Night | 04 |
| Maximum Demand with 0-20% load factor | 05 |
| Maximum Demand with 21-30% load factor | 06 |
| Maximum Demand with 31-40% load factor | 07 |
| Maximum Demand with over 41% load factor | 08 |
Prompt
The ‘prompt market’ is defined as any period up to the end of the present calendar month.
Public registration system
System for registering electricity supplies using Supply Numbers and MPAN’s.
Q
R
Reactive power charge
Charge for reactive energy if the average power factor falls below a preset level, normally 0.9
REC
Regional Electricity Company – area distribution company.
Renewable energy
Generation of electricity from infinite resources, e.g. wind power or hydro-electricity.
Renewables obligation
An obligation on electricity suppliers to source a specified percentage of the total electricity supply to their customers in Great Britain from eligible renewable sources. This must be evidenced by Renewable Obligation Certificates.
Renewable Obligation Certificates
Tradable certificates issued by generators for each whole megawatt-hour of electricity generated from eligible renewable sources. ROCs can be converted into emissions allowances in the UK Greenhouse Gas Emissions Trading Scheme.
Rough storage
The UK’s largest gas storage facility, just offshore in the North Sea, which enters the national transmission system via the Easington terminal in East Yorkshire.
RPI
Retail Price Index.
S
Settlement charge
A flat fee to cover the collection of electricity data by the data collector.
Shipper
An organisation that contracts with National Grid Transco for the use of network code transportation and storage services.
S-Number
See Supply number
Soften
A market price that is slowly declining.
Spot Market
Market in which goods or services are traded for immediate delivery at the prevailing price, i.e. the spot price.
Standing charge
A charge designed to average over and recover from all customers on each tariff the elements of cost which are independent of consumption. Includes the costs associated with metering, billing and customer services.
Supplementary number
MPAN top line. Indicates the profile class and meter and time switch details.
Supplier
Responsible for supplying end-users with energy and billing them appropriately for their energy consumption.
Supply Capacity
The agreed level of electricity supply capacity made available by both the networks and the suppliers to meet customer’s highest likely monthly demand – measured in kVA
Supply Number
Unique 21 digit number assigned to electricity meter point(s)
T
Terawatt
1,000 Gigawatts.
Therm
An imperial unit of energy, largely replaced by the metric equivalent: the kilowatt hour (kWh). 1 therm equals 29.3071 kWh.
Transco
Transco provides gas transportation, metering and meter reading services throughout Great Britain for the companies that supply domestic, industrial and commercial consumers.
Triad
The three half-hourly periods in the year with peak electricity consumption, with each period at least 10 days apart, used to calculate the Transmission Charge for the NGC system.
U
UK ETS
UK Greenhouse Gas Emissions Trading Scheme – UK’s voluntary emissions trading scheme for greenhouse gases, which started in April 2002.
Unmetered Electricity Supply (UMS)
An Unmetered Supply is electronic equipment that is connected to the Distribution Network without a meter recording its energy consumption. All unmetered supplies are issued with an EAC Certificate.
Typical unmetered supplies include street lights, roadside telecoms cabinets, phone boxes, etc.
Upstream
The exploration for and extraction of crude oil and natural gas.
V
Volatility
Measurement of the change in price over a given period.
W
Wattage
An amount of power, especially electric power, expressed in watts or kilowatts.
The electric power required by an appliance or device.
A Measurement of electricity.
X
XoServe gas meter point system
XoServe manages all the information relating to the 22 million gas supply points in Britain (consisting of both domestic and industrial/commercial premises). This is known as Supply Point Administration, and the information is vital as it is used in the transfer processes which enable gas supply competition to operate effectively in the UK.