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Glossary of Terms

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Balancing: The process of managing a customer's natural gas supply to match the customer's daily usage with the customer's confirmed pipeline delivery of natural gas supplies.

Basis: The value differential in price between two points. (i.e., NYMEX vs. Houston Ship Channel)

BTU: One British Thermal Unit: The quantity of heat required to raise the temperature of one pound of water, one degree Fahrenheit.

Cashout: Cost of liquidating the monthly imbalances.

Curtailment: Notification that end-user’s gas might be cut short or interrupted per the contract requirements. A reduction in gas deliveries or gas sales necessitated by a shortage of supply.

Daily Imbalance: Difference between the nominated volume and the actual daily usage.

Firm Service: The highest quality sales or service offered to customers — no planned interruption. This includes both a firm commodity and transportation.

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

Interruptible Service: Gas service that is subject to interruption at the option of any party. Tariffs or rates for interruptible service are cheaper than firm.

Monthly Imbalance: Accumulation or total of daily imbalances for the month.

Nomination: A request for a physical quantity of gas to be delivered at a specific point.

LDC: Local Distribution Company — the regulated utility.

Line Loss: A percentage of gas received by a pipeline or LDC that is retained to compensate for lost and unaccounted for gas in a pipeline system.

MCF: 1,000 cubic feet.

NYMEX: New York Mercantile Exchange: The commodity exchanges based in New York where natural gas futures contracts and other energy futures are traded.

Telemetry: Technology that allows remote measurement and reporting of natural gas consumption. Measurement information can be accessed through pipeline websites.