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Glossary of Energy Market TermsCompiled by Energybuyer.org NAERO (North American Electric Reliability Organization) - Concept that NERC could be given legal control as a non-regulated entity to formulate and enforce transmission rules, chartered by FERC. Naked - A long or short market position taken without having an offsetting short or long position. Name Give-Up Model - During online power trading, this process allows anonymous trading until a purchase or sale is made, at which point the name of the counterparty is revealed (i.e., "given up"). Such counterparties are usually on a list of pre-credit approved firms to avoid trading with parties having questionable credit. NARUC (The National Association of Regulatory Utility Commissioners) - An advisory council composed of governmental agencies of the fifty States, the District of Columbia, Puerto Rico and the Virgin Islands engaged in the regulation of utilities and carriers. "The chief objective is to serve the consumer interest by seeking to improve the quality and effectiveness of public regulation in America." NAS (Network Access Service) - Description of service level to Local Distribution Companies under which they may transmit power at a fixed price anywhere within a network; sometimes described as “license plate” pricing NASUCA (The National Association of State Utility Consumer Advocates) - NASUCA includes members from 38 states and the District of Columbia. It was formed "to exchange information and take positions on issues affecting utility rates before federal agencies, Congress and the courts." Native Load Customers The wholesale and retail customers on whose behalf the Transmission Provider, by statute, franchise, regulatory requirements, or contract, has undertaken an obligation to construct and operate the Transmission Provider's system to meet the reliable electric needs of such customers. Natural Gas - A naturally occurring mixture of hydrocarbon and nonhydrocarbon gases found in porous geological formations beneath the earth's surface, often in association with petroleum. The principal constituent is methane. Natural Gas Act (NGA) - Federal law enacted in 1938 that established FERC's authority to regulate interstate pipelines. Natural Gas Policy Act (NGPA) - Federal law that updated the NGA and set guidelines for deregulation of new gas supplies and continued regulation of old supplies. Natural Monopoly - A situation where one firm can produce a given level of output at a lower total cost than can any combination of multiple firms. Natural monopolies occur in industries which exhibit decreasing average long-run costs due to size (economies of scale). According to economic theory, a public monopoly governed by regulation is justified when an industry exhibits natural monopoly characteristics. NCSL (The National Conference of State Legislatures) - A national advisory council which provides services to state legislatures "by bringing together information from all states to forge workable answers to complex policy questions." NERC - See North American Electric Reliability Council. NERTO (North East Regional Transmission Organization) - conceptual name for grouping of two or more ISOs in the Northeast (e.g., NY ISO, NE ISO, PJM, Ontario IMO); attempts to create such a grouping effectively ended in late 2002 due to widespread opposition by states and transmission owners. Netback - The difference between the cost of crude oil and the selling price of the resulting refined products (heating oil and gasoline). Net Capacity Resource - The total owned capacity, plus capacity available from independent power producers, plus the net of total capacity purchases and sales, less the sum of inoperable capacity, and less planned outages. Net Capability - The maximum load carrying ability of the equipment, exclusive of station use, under specified conditions for a given time interval, independent of the characteristics of the load. (Capability is determined by design characteristics, physical conditions, adequacy of prime mover, energy supply, and operating limitations as cooling and circulating water supply and temperature, headwater and tailwater elevations, and electrical use.) Net Dependable Capacity - The maximum capacity a unit can sustain over a specified period modified for seasonal limitations and reduced by the capacity required for station service or auxiliaries. Net Energy for Load - The electrical energy requirements of an electric system, defined as system net generation, plus energy received from others, less energy delivered to others through interchange. It includes system losses but excludes energy required for storage at energy storage facilities. Net Generation - Gross generation minus plant use from all electric utility owned plants. The energy required for pumping at a pumped storage plant is regarded as plant use and must be deducted from the gross generation. See also Gross generation. Net Internal Demand The metered net outputs of all generators within a system, plus the metered line flows into the system, less the metered line flows out of the system, less Direct Control Load Management and, less Interruptible Demand. Net Position - A position not offset by a countervailing position; i.e., the opposite of a spread. Net Present Value (NPV) - Calculation of an asset’s worth, taking into account how the value of money will change over the lifetime of an asset. Net Schedule - The algebraic sum of all scheduled transactions across a given transmission path or between Control Areas for a given period or instant in time. Net Summer Capability - The steady hourly output, which generating equipment is expected to supply to system load exclusive of auxiliary power, as demonstrated by tests at the time of summer peak load. Net Winter Capability - The steady hourly output which generating equipment is expected to supply to system load exclusive of auxiliary power, as demonstrated by tests at the time of winter peak load. Network Customers - Entities receiving transmission service pursuant to the terms of the Transmission Provider's Network Integration Tariff. Network Integration Transmission Service - Network Integration Transmission Service allows a Transmission Customer to integrate, plan, economically dispatch, and regulate its Network Resources to serve its Network Load in a manner comparable to that in which the Transmission Provider utilizes its Transmission System to serve its Native Load customers. Network Integration Transmission Service also may be used by the Transmission Customer to deliver non-firm energy purchases to its Network Load without additional charge. Network Service - Ability to move power anywhere within a given region (typically a NERC region or ISO) without regard to exact origin or end point. New Gas - Gas produced from new formations and fields or drilling after April 1977. NFA - National Futures Association. NMR (Network Meter Reading) - NMR is a type of AMR in which a network is used to collect, transmit and analyze meter data. Some advanced meter functions may be implemented in the network rather than in the meter at the Service End Point. See also AMR (Automatic Meter Reading). Nodal Pricing - Wholesale pricing at Nodes. Nodes - Point at which transmission lines intersect with each other or interface with distribution systems (often substations containing transformers that step down voltage). Nonbypassable Charge - Any of a number of charges that would apply to all end-users of electricity, and could not be bypassed except by totally disconnecting from the grid. Includes systems benefits charges, public goods charges, wires charges, access charges, and the like. Typically is a fee of some kind for use of the wires or access to the grid. Non-coincident Peak Load - The sum of two or more peak loads on individual systems that do not occur in the same time interval. Meaningful only when considering loads within a limited period of time, such as a day, week, month, a heating or cooling season, and usually for not more than one year. Non-Core Customer - A customer who has several fuel choices and does not rely only on a utility as a resource for continued heat and other energy services Non-Firm Power - Power or power producing capacity supplied or available under a commitment having limited or no assured availability. Non-Firm Transmission Service - Point-to-point transmission service that is reserved and/or scheduled on an as-available basis and is subject to interruption. Non-firm Transmission Service is available on a stand-alone basis as either Hourly Non-firm Transmission Service or Short-Term Non-firm Transmission Service. Non-jurisdictional - Utilities, ratepayers and regulators (and impacts on those parties) other than the state-regulated utilities, regulators and ratepayers in a jurisdiction considering restructuring. Examples include utilities in adjacent state and non-state regulated, publicly owned utilities within restructuring states. Nonutility Power Producer - A corporation, person, agency, authority, or other legal entity or instrumentality that owns electric generating capacity and is not an electric utility. Nonutility power producers include qualifying cogenerators, qualifying small power producers, and other nonutility generators (including independent power producers) without a designated franchised service area, and which do not file forms listed in the Code of Federal Regulations, Title 18, Part 141. NOPR (Notice of Proposed Rulemaking) - A designation used by the FERC for some of its dockets. Normal Market - A market is deemed "normal" when carrying charges are reflected in higher prices for increasingly distant futures contract months. North American Electric Reliability Council (NERC) - A council formed in 1968 by the electric utility industry to promote the reliability and adequacy of bulk power supply in the electric utility systems of North America. NERC consists of eleven regional reliability councils and encompasses essentially all the power regions of the contiguous United States, Canada, and Mexico. The NERC Regions are: ASCC - Alaskan System Coordination Council ECAR - East Central Area Reliability Coordination Agreement ERCOT - Electric Reliability Council of Texas MAIN - Mid-America Interconnected Network MAAC - Mid-Atlantic Area Council MAPP - Mid-Continent Area Power Pool NPCC - Northeast Power Coordinating Council SERC - Southeastern Electric Reliability Council SPP - Southwest Power Pool WSCC - Western Systems Coordinating CouncilFPCC - Florida Power Coordinating Council Notional - Risk management term for describing the dollar value of a single unit, such as the incremental cost of fuel to overcome an additional degree-day of heating NOx - Nitrous oxides. NRTA (Northwest Regional Transmission Association) - A subregional transmission group within the Western Regional Transmission Association. Nuclear Fuel - Fissionable materials that have been enriched to such a composition that, when placed in a nuclear reactor, will support a self-sustaining fission chain reaction, producing heat in a controlled manner for process use. Nuclear Power Plant - A facility in which heat produced in a reactor by the fissioning of nuclear fuel is used to drive a steam turbine. NUG (non-utility generator) - A generation facility owned and operated by an entity who is not defined as a utility in that jurisdictional area. NYCA - New York Control Area; that part of the State whose transmission and generation assets are under control of the NY ISO. NYMEX - New York Mercantile Exchange: A physical marketplace in which various commodities (including electricity, oil, and natural gas) are changed.
OASIS (Open-Access Same-Time Information System) - An electronic posting system for transmission access data that allows all Transmission Customers to view the data simultaneously, as required and defined in FERC Order 889. OATT - Open access transmission tariff: FERC-mandated pricing regime that ensures non-discriminatory use of transmission systems by all LSEs. Obligation to Serve - The obligation of a utility to provide electric service to any customer who seeks that service and is willing to pay the rates set for that service. Traditionally, utilities have assumed the obligation to serve in return for an exclusive monopoly franchise. Offer - A motion to sell a financial product at a specified price. Also known as ask. OFGEM - Office of Gas and Electricity Markets (British version of FERC). Off Peak - Those hours or other periods defined by contract or other agreements or guides as periods of lower electrical demand. Off-Peak Gas - Gas that is to be delivered and taken on demand when demand is not at its peak. Offset - The elimination of a current long or short position by the opposite transaction; a sale offsets a long position; a purchase offsets a short position. Ohm - The unit of measurement of electrical resistance. The resistance of a circuit in which a potential difference of 1 volt produces a current of 1 ampere. Oligopoly - A few sellers who exert market control over prices. On Peak - Those hours or other periods defined by contract or other agreements or guides as periods of higher electrical demand. OPEC - The acronym for the Organization of Petroleum Exporting Countries, oil-producing and exporting countries that have organized for the purpose of negotiating with oil companies on matters of oil production, prices, and future concession rights. Open - The price at which the commodity or security starts a trading day. Open Architecture – Standardization, documentation, and publication of meter system parameters that allow data to be exchanged among authorized parties from an access point to the point at which data are of billing quality. Generally used in discussions of meter standards that allow any supplier of power to accept data from any meter that follows an "open architecture" specification, thus avoiding proprietary meter standards that could obsolete a customer's metering should he wish to switch to a provider using a different meter spec. Opening Price - The price for a given commodity generated by trading through open outcry at the opening of trading on a commodity exchange. Open Interest - Total number of contracts in a commodity or options market that are still open, meaning they have not been exercised, closed out, or allowed to expire. Also called a "commitment." Open Order - A resting order that is good until canceled. Operable Nuclear Unit - A nuclear unit is "operable" after it completes low power testing and is granted authorization to operate at full power. This occurs when it receives its full power amendment to its operating license from the Nuclear Regulatory Commission. Operating Criteria - The fundamental principles of reliable interconnected systems operation. Operating Guides - Operating practices that a Control Area or systems functioning as part of a Control Area may wish to consider. The application of Guides is optional and may vary among Control Areas to accommodate local conditions and individual system requirements. Operating Instructions - Training documents, appendices, and other documents that explain the Criteria, Requirements, Standards, and Guides. Operating Policies - The doctrine developed for interconnected systems operation. This doctrine consists of Criteria, Standards, Requirements, Guides, and instructions and apply to all Control Areas. Operating Procedures - A set of policies, practices, or system adjustments that may be automatically or manually implemented by the system operator within a specified time frame to maintain the operational integrity of the interconnected electric systems.
Operating Requirements - Obligations of a Control Area and systems functioning as part of a Control Area. Operating Reserves:
Operating Standards - The obligations of a Control Area and systems functioning as part of a Control Area that are measurable. A Standard may specify monitoring and surveys for compliance. Operating Transmission Limit - The maximum value of the most critical system operating parameter(s) which meets: (a) precontingency criteria as determined by equipment loading capability and acceptable voltage conditions, (b) transient performance criteria or, (c) postcontingency loading and voltage criteria. Options - An option is a contractual agreement that gives the holder the right to buy (call option) or sell (put option) a fixed quantity of a security or commodity (for example, a commodity or commodity futures contract), at a fixed price, within a specified period of time. May either be standardized, exchange-traded, and government regulated, or over-the-counter customized and non-regulated. See also American Option, European Option. Opt Out - A right of an individual end-use customer to decide not to buy from a given aggregator. Typically used in situations where one or more aggregators are identified as the primary suppliers in an area, as in the case of a standard offer, a competition for a competitive franchise, a community access entity, or a co-op. OTC (Over-the-Counter) - A virtual marketplace in which participants buy and sell bilaterally among themselves commodities based on offers posted on electronic bulletin boards, or offered by phone; differs from an exchange wherein all pay a price posted on the exchange’s board at a given time. Outage - The period during which a generating unit, transmission line, or other facility is out of service. Forced Outage The removal from service availability of a generating unit, transmission line, or other facility for emergency reasons or a condition in which the equipment is unavailable due to unanticipated failure.
Out-of-the-Money - An option that has no intrinsic value. For calls, an option whose exercise price is above the market price of the underlying future. For puts, an option whose exercise price is below the futures price. Overbought - A technical opinion that the market price has risen too steeply and too fast in relation to underlying fundamental factors. Overlap Regulation Service - A method of providing regulation service in which the Control Area providing the regulation service incorporates some or all of another Control Area's tie lines and schedules into its own Automatic Generation Control/Area Control Error equation. Oversold - A technical opinion that the market price has declined too steeply and too fast in relation to underlying fundamental factors
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