The availability factor of a power plant is the percentage of the time that an electricity generating plant is available to produce electricity. Availability refers to the agreed level of electricity supply capacity made available by both the networks and the suppliers to meet the consumer’s highest likely monthly demand and is measured in kVA. The site cannot exceed this specified amount without financial penalty and a modified connection agreement. It is also often described as Supply Capacity. See also: Capacity Factor.
Calorific Value (CV)
Calorific value (or heating value) refers to the amount of energy released as heat when fuel is burned. CV represents the amount of heat or energy in any given volume of gas and is generally calculated monthly by the transporter, allowing for variations in the quality of gas. CV can be measured wet (with water vapour) or dry (after the vapour has been removed). Gross calorific value (GCV), or higher heating value (HHV), refers to the amount of heat released during combustion. Net calorific value (NCV), or lower heating value (LHV), is determined by subtracting the heat of vaporisation from the higher heating value (HHV). Natural gas prices are based on these values. In short, GCV describes the heat produced after vapour is condensed into a liquid, while NCV does not.
The rated load-carrying capability of electrical equipment, such as generators of transmission lines. It can be measured in megawatts or megavolt-amperes. Capacity also often refers to the volume of natural gas in transportation pipelines. These can be located either onshore or offshore. Output is measured in millions (or billions) of cubic meters.
Carbon Reduction Commitment (CRC)
The Carbon Reduction Commitment (CRC) is an innovative climate change scheme that incentivises large businesses in the UK to improve energy efficiency and cut CO2 (carbon dioxide) emissions. Participants must purchase and surrender emission allowances. Allowances can be bought an annual fixed-price sales or traded on the secondary market. One allowance must be surrendered for each tonne of CO2 (carbon dioxide) emitted. The scheme is designed to shift awareness and encourage changes in behaviour and infrastructure, particularly at a senior level.
The CRC plays an integral role in the UK's strategy to reduce CO2 emissions not already covered by Climate Change Agreements (CCA) or the EU Emissions Trading System (EU ETS). The scheme was introduced in April 2010 but was recently replaced by the Emissions Trading System (UK ETS) following Brexit.
Climate Change Levy (CCL)
The Climate Change Levy (CCL) is a charge introduced by the UK government on non-domestic fuel. Its aim is to encourage businesses to increase their energy efficiency and reduce carbon dioxide emissions. The levy is applied as a specific rate per nominal unit of energy, and there is a separate rate for each category of taxable commodity. The rates are based on the energy content of each commodity and are expressed in kWh for gas and electricity and in kgs for liquid petroleum gas. The levy is a single stage tax imposed at the time of supply to industrial and commercial consumers rather than at the time of use.
Climate Change Committee (CCC)
The Climate Change Committee (CCC) is an independent statutory body established under the Climate Change Act 2008. Its purpose is to advise the UK government on emissions targets. The CCC regularly reports to Parliament on greenhouse gas reduction progress, provides advice on setting and meeting carbon budgets, and conducts independent analysis of climate change science, economics, and policy.
Refers to the futures market. Includes everything beyond the current month going forwards.
Data Collector (DC)
The Data Collector (DC) is the organisation responsible for collecting, processing and validating the meter reading data. For half-hourly (HH) metered supplies, the half-hourly data collector (HHDC) retrieves consumption data from the meter to produce estimates. Half-hourly data is a history of the customer's electricity consumption for each half-hour period.
For non-half-hourly metered supplies (NHH), the Non-Half-Hourly Data Collector (NHHDC) determines consumption in advance by calculating the difference between the two last meter reads. This information is annualised to produce Annual Advance (AA) data that the supplier pays on.
These calculations are then passed on to the Data Aggregator (DA).
Data Aggregator (DA)
Data Aggregators (DA) are appointed by suppliers to aggregate metering data received from Data Collectors (DC). This information is passed on to the suppliers.
A datalogger is a device fitted to a meter that can record, store, and transmit readings and measurements.
A measure of the variation of one day’s temperature against a standard reference temperature, typically 65 degrees Fahrenheit (18 degrees Celsius). Degree-days are used as a base for temperature-related weather derivative deals. There are both cooling degree-days (CDDs) and heating degree-days (HDDs). CDD swaps are typically used to stabilise revenue over a specific period of time.
For example, a company may take out a 30-day CDD swap with a reference temperature of 65 degrees F, with an average daily temperature of 70 degrees F. The company is then due 150 (30 x 5) degree-days multiplied by the sum of money agreed for each degree-days. If the firm had taken out an HDD swap, it would have owed the same amount of money.
Distribution Network Operators
Distribution Network Operators (DNOs) are companies licensed by Ofgem to carry electricity from the high voltage transmission grid to industrial, commercial, and domestic users. They also manage the installation and upkeep of their cabling and are responsible for allocating the core Meter Point Administration Number used to identify supply points. These systems form an online database of electricity supply points, known as the Electricity Central Online Enquiry Service (ECOES).
As of 2021, there are 14 licensed DNOs in the UK that are responsible for regional distribution areas. DNOs are also known as Regional Electricity Companies (REC).
Elexon is the balancing and settlement code company that procures and provides services to administer and implement the Balancing and Settlement Code (BSC). The BSC is a multi-party contract that establishes rules for electricity suppliers. Elexon provides end-to-end management for the BSC and is responsible for comparing actual versus estimated volumes of energy consumed to stabilise the market.
According to the BSC, suppliers can purchase electricity from the generator of their choice, and consumers can choose which supplier to provide them with power. These companies make up the UK's wholesale electricity market. The BSC ensures that imbalances in wholesale electricity supply and demand are settled accurately.
Signatories to the BSC contribute to the costs of Elexon. Charges are levied to recover the costs of running Elexon.
A guaranteed supply of natural gas that will not be subject to interruption.
Forward Price Curve
A projection of the future price of a commodity or financial instrument over time. It is usually based on actual transactions.
Electricity generation is the process of generating electric power from sources of primary energy. In the electric power industry, generation constitutes the stage before delivery (transmission, distribution, etc.) to consumers or its storage. The amount of energy produced is measured in watt hours.
Electricity is typically generated in power plants by electromechanical generators driven by heat engines. Engines can be fuelled by combustion, nuclear fission, or the kinetic energy produced by flowing water or wind (hydro and wind power).
Devices that convert mechanical energy obtained from external sources into electrical energy. Mechanical energy can be produced by steam, wind, gas, and water turbines and internal combustion engines. Generators provide nearly all of the power for electrical grids. Most power stations contain one or more generators and tend to burn fossil fuels, such as coal, oil, and natural gas. These finite sources of energy contribute to our carbon footprint through CO2 emissions.
A unit of power equal to one billion watts, or 1,000 megawatts. GW are often used to describe the capacity of large power plants or power grids.
The electricity transmission system of any given area.
In the UK, The National Grid manages the network and distribution of electricity and gas for all homes and businesses. It is made up of high-voltage power lines, gas pipelines, interconnectors, and storage facilities. Both Distribution Network Operators (DNOs) and Independent Distribution Network Operators (IDNOs) develop, operate, and maintain local electricity distribution networks.
Gigawatt hours are a unit of energy representing one billion watt hours and is equivalent to one million kilowatt (kWH). Gigawatt hours are used to measure the output of large electricity power stations. A kWH refers to the steady power of one kilowatt running for one hour and is equivalent to 3.6 million joules (megajoules).
Half-Hourly Data (HH data)
Electricity consumption data recorded every half hour and collected by the metering system. Half-hourly (HH) metered data is sent to the half-hourly data collector (HHDC) to produce usage estimates. Half-hourly data is a history of the customer's electricity consumption for each half-hour period.
For non-half-hourly metered supplies (NHH), the Non-Half-Hourly Data Collector (NHHDC) determines consumption in advance by calculating the difference between the two last meter reads.
Describes the measurement of electricity consumption in half hourly intervals through a meter complying with the relevant Code of Practice. Data is collected by fully remote Automatic Meter Reading (AMR) technologies (such as Smart Meters), allowing for accurate billing with no need for estimation.
High voltage electricity is equivalent to approximately 1000 volts (1kV) but can depend on context. According to the International Electrotechnical Commission, high voltage refers to 1000 V for alternating current or 1500 V for direct current.
Voltages over approximately 50 V are enough to cause injury or damage.
HV has innumerable industrial, military, and scientific applications. HV is used in electrical power distribution, cathode ray tubes, and can generate X-rays and particle beams.
Industrial and Commercial (non-domestic sector).
A unit of power equal to 1,000 Watts.
Kilowatt hour (kWh)
Equal to using a constant load of 1 kW for one hour. One kWh is equal to 0.03413 Therms.
Kilovoltampere. Unit of measurement for electricity available capacity and in some cases maximum demand. Referred to as KVArh when used to measure reactive power.
Liquefied Petroleum Gas (LPG)
Gas usually propane or butane, derived from oil and put under pressure so that it is in liquid form. Often used to power portable cooking stoves or heaters and to fuel some types of vehicle, e.g. some specially adapted road vehicles and forklift trucks.
The ratio between average and peak usage for electricity or gas customers. The higher the load factor, the smaller the difference between average and peak demand.
low voltage (LV)
Electricity supply voltage below 1,000 volts.
Market risk is the risk that values will be lost due to a change in some market variable, such as commodity or equity prices, interest rates or foreign exchange rates. The market risk of derivatives position may arise from a change in the value of the underlying market or from other sources such as implied volatility or time decay (theta).
maximum annual quantity [MAQ]
Annual quantity of gas multiplied by the MAQ percentage.
The highest average electricity demand occurring in a half hour period. Maximum demand tariffs comprise of 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 one half hour period in the month.
A unit of power equal to 1,000,000 watts
meter point reference number
Gas meter reference number.
Meter Operator (MO or MOP)
The Meter Operator or MO or MOP is the organisation appointed to install and maintain metering equipment.
meter operator agreement
Agreement between the customer and the nominated meter operator.
Meter Point Administration Number [MPAN]
Unique 21 digit number assigned to electricity meter(s) by MPAS under PRS (two tier number printed on electricity invoices preceded by an S. Top line referred to as Supplementary, bottom line as Core). Also known as Supply Number.
Microgeneration is the generation of zero or low-carbon heat and power by individuals, small businesses and communities to meet their own needs. Microgeneration refers to a number of different sustainable or highly efficient fossil fuel technologies that can generate heat and/or electricity in the domestic and commercial sector. Some forms of micro power use fuels or energy sources that produce no greenhouse gases and are therefore, classed as renewable energy, thus helping to combat climate change. Wind turbines, micro-hydro systems, heat pumps and Micro-Combined Heat and Power [CHP] are just three of the many types of small scale generation technologies which can help to attain at least two of the energy policy objectives; reductions in CO2 emissions and reliability of supply.
Meter Point Administration Service. Provides information regarding electricity supply to properties in their distribution network areas and regulates the registration process between electricity suppliers.
Megawatt hour -“ 1,000 kWh. A 1 MW power-generating unit running for 1 hour produces 1 MWh of electrical energy.
National Grid (NG)
NG owns, operates and develops the high-voltage electricity transmission network in England and Wales and Great Britain’s principal natural gas transportation system.
The designation by National Grid Transco of a gas supply point as being interruptible, allowing Transco the right to interrupt the gas supply for operational reasons.
Annual quantity of gas nominated by the customer as their annual estimated consumption requirement.
non-half hourly (NHH)
Properties with an MD under ~100kW. The Data Collector records the readings and other information using special handheld devices. The information from these devices is downloaded into the NHH DC system and forwarded via D10 dataflow to the Supplier.
Office of Gas and Electricity Markets (Ofgem)
A regulatory body set up by the government to ensure that the electricity market companies operate under a single set of conditions. They regulate such things as prices, business terminology and rules for communication between the market players (Customers, Suppliers, Distributors, Generators, Agents etc).
Period of relatively low system demand. These periods often occur in daily, weekly, and seasonal patterns; these off-peak periods differ for each individual electric utility.
The proportion of total electricity supplied to a site that is converted into useful energy output, as opposed to the wasted reactive power.
Rreactive power charge
Charge for reactive energy if the average power factor falls below a preset level, normally 0.9.
Renewables Obligation [RO]
An obligation on electricity suppliers to source a specified percentage of the total electricity supplied to their customers in Great Britain is from eligible renewable sources. This must be evidenced by Renewable Obligation Certificates.
Control and limitation of the risks faced by an organization due to its exposure to changes, in financial market variables, such as foreign exchange and interest rates, equity and commodity prices, or counterparty creditworthiness.
It may be necessary because of the financial impact of an adverse move in the market variable (market risk); because the organization is ill-prepared to respond to such a move (operational risk); because a counterparty defaults (credit risk); or because a specific contract is not enforceable (legal risk).
Market risks are usually managed by hedging with financial instruments, although a form may also reduce risk by adjusting its business practices (see natural hedge). While financial derivatives lend themselves to this purpose, risk can also be reduced through judicious use of the underlying assets – for example, by diversifying portfolios.
All commodity futures markets are affected to some extent by an annual seasonal cycle or ‘seasonality’. This cycle of pattern refers to the tendency of market prices to move in a given direction at certain times of the year.
A flat fee to cover the collection of electricity data by the data collector.
For the UK network each Half-hour during the day to which the system is balanced.
A company that transports gas along a pipeline system. Shippers need to be registered with the local regulatory body. In the UK gas market terms, a shipper is a company that buys gas ‘at the beach’ and pays Transco to transport the gas along the pipeline system.
Process by which a shipper informs National Grid Transco it wishes to supply gas to a new customer supply point.
Small and medium-sized enterprises.
See Supply Number.
The market where energy commodities are traded in cash/physically and delivered immediately, not as futures.
The price of a security or commodity in the cash market.
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.
Outlet of the gas metering facility at the customer’s premises to which an MPR is assigned or point at which electricity meter is fitted and to which MPAN is assigned.
Unique 21 digit number assigned to electricity meter point(s) by MPAS under PRS. A two tier number printed on electricity invoices preceded by an S, the top line being referred to as supplementary data and the bottom line known as the core MPAN. Also known as S-Number.
In a buyer’s contract, take-or-pay is the obligation to pay for a specified amount of gas, whether this amount is taken or not. Depending on the contract terms. Under-takes or over-takes may be taken as make-up or carry-forward into the next contract period. When it is credited into another contract period, this is called make-up gas.
Published standard charges applied to gas and electricity supplies that are not on a bespoke negotiated contract.
The imperial unit of measurement for a quantity of gas, equivalent to 100,000 British thermal units. One Therm is equal to 29.3071 kWh.
The gas system operator, part of NG.
Transmission use of System (TuoS) charges
TuoS charges are raised by the National Grid to Suppliers for their use of the national grid transmission network. These charges are normally passed on to the customer as part of the unit price shown on the bill. In the case of Supply Only Billing (SOBS) the TuoS charges are shown separately to the Supply charges and can change during the contract period as they are reviewed annually.
Transmission use of System Reconciliation (TRIAD)
The National Grid (NG) determines the three highest demands on the network between November and February. The average of the three demands is used by NG to calculate demand based transmission charges. Each customer’s demand during the three periods of highest demand, as published by the NG, is used to calculate the charge. each period at least 10 days apart, used to calculate the transmission charge for the NGC system.
National network for movement of power between power station and local distribution networks.
Terawatt – one million megawatts.
Terawatt hour = 1,000 GWH.
A measure of the variability of a market factor, most often the price of the underlying instrument. Volatility is defined mathematically as the annualised standard deviation of the natural log of the ration of two successive prices. The actual volatility realised over a period of time (the historical volatility) can be calculated from recorded data.
Unit of electrical energy equivalent to the power of one watt operating for one hour.
Price paid on the open markets for energy only i.e. excluding transportation and distribution charges, supplier margins etc.