Insights / Energy Sector Jargon Buster

Energy Sector Jargon Buster

20th August 2017

As part of Drax’s dedication to making energy simple, we’ve created a useful jargon buster. You may have come across some of the following acronyms and terminology on your electricity bills and other documents:

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Actual Read: A meter read taken by the customer.

Baseload contracts: A Baseload contract represents an amount of power (expressed in MW) delivered in a flat profile over the duration of the contract. For example 1MW of baseload power bought for one day (24 hours) will deliver 24MWh of electricity over its duration.

Bearish behaviour: A period of price decreases.

Brent Crude Oil benchmark: A benchmark crude or marker crude is a crude oil that serves as a reference price for buyers and sellers of crude oil. There are three primary benchmarks: West Texas Intermediate (WTI); Brent Blend; and Dubai Crude.

Bullish behaviour: A period of price increases.

Cashout prices: This is an alternative term for “Energy Imbalance” prices – the System Sell Price (SSP) or System Buy Price (SBP) – used to settle the difference between contracted generation or consumption and the amount that was actually generated or consumed.

CCGT: Combined Cycle Gas Turbine

CCL: Climate Change Levy - A tax on energy usage; the aim is to encourage users to improve energy efficiency.

CoS: Change of supplier

CoT: Change of Tenancy

Day-ahead baseload price: Contracts traded for physical delivery during the next day.

DC: Data Collector – the organisation responsible for determining the amount of electricity supplied, to ensure the customer can be billed correctly. To do this, the DC will visit a customer’s meter point, or remotely obtain the data via a secure network.

Deemed Read: A meter read estimated by the Data Collector.

Distribution Network: The network that carries lower voltage electricity (that’s been converted from the high voltage transmission network) to industrial, commercial and domestic consumers.

DNO: Distribution Network Operator – a company licensed to distribute electricity in the UK. These companies own and operate the cables and towers that bring electricity from the national transmission network to our homes and businesses.

EAC: Estimated Annual Consumption – measured in kWh per annum.

Electrical contractor: The business that performs specialised construction work related to the design, installation, and maintenance of electrical systems.

Embedded generation: Generation plants that are connected to the distribution network rather than the transmission network.

Estimated Read: Where a supplier has estimated the electricity read based upon previous consumption.

EUA: European Union Allowance – this refers to the carbon credits traded in the EU Emissions Trading Scheme (ETS). ETS members can buy or sell their allowance units through the carbon market.

Fixed Product: A fixed product is a contract where you fix your costs for the length of the contract term. This effectively manages your budget by reducing your exposure to market volatility and unexpected budget shocks.

Flexible Product: A flexible product is a contract that gives businesses the power to control when and how they buy electricity throughout the contract term. This lets them take advantage of wholesale price movements.

Fundamentals: Shorthand for the fundamental reasons that determine “bearish” and “bullish” behaviour, besides the trading patterns (up or down) of the stock. Analysts can expect these fundamentals to have an impact upon the price or the perceived value of the stock.

kW: Kilowatt – A measure of power, 1kW = 1000 watts

kWh: Kilowatt-hour – The usual unit of electricity

MOP: Meter Operator – the company that goes to a site, fits meters and provides on-going meter maintenance. A MOP contract is a legal requirement for all half-hourly supplied meters.

MPAD: Metering Point Address Details – Also known as the ‘site address’, this is the actual site of the meter.

MPAN: Metering Point Administration Number – Also known in the industry as ‘S number’ or ‘Supply number’, this identifies a unique electricity supply point. To find out more about MPANs and what they mean, see our explanation.

MTC: Meter Time Switch Code – This indicates how many registers (set of meter reads or dials) your electricity meter has, and what times they operate throughout the day.

NBP: The Office of Gas and Electricity Markets defines NBP as follows: ‘Britain’s wholesale gas market involves the buying and selling of natural gas in Britain after it has arrived from offshore production sites. These include liquefied natural gas (LNG) terminals, storage sites, pipelines from other countries (such as Norway) and through interconnectors with Europe (in Belgium, Holland and Ireland). The wholesale gas market in Britain has one price for gas irrespective of where the gas comes from. This is called the National Balancing Point (NBP) price of gas and is usually quoted in price per therm of gas.'

OPEC (Organisation of the Petroleum Exporting Countries): OPEC is a permanent intergovernmental organisation of 14 oil-exporting developing nations that coordinates and unifies the petroleum policies of its Member Countries.

PC: Profile Class – Used where half-hourly metering isn’t installed, the Profile Class provides the electricity supplier with an expectation about how electricity will be consumed throughout the day.

PPU: Pence Per Unit –The usual method used for charging customers.

Prompt: Electricity for delivery within the current calendar month. This includes Day Ahead and Week Ahead contracts.

RDD: Regular Direct Debit – A regular amount that the customer pays monthly to cover their estimated consumption. This amount can change if the payments aren’t in line with the usage.

Risk premium: In reference to gas and electricity futures and other commodities, risk premium refers to the difference in price between the spot/cash market (i.e. for immediate delivery) and the price specified in the contract for delivery at a later date. This reflects the fact that the seller may have supply issues in the future, and may have to pay higher prices (e.g. for raw materials) to deliver the commodity at the time specified in the contract. The risk premium may also account for the cost of storage, or uncertainty around future supplies.

SED: Supply end date

Single cashout prices: Prices that are used to settle the difference between contracted and actual generation, and demand.

Spark Spread: The spark spread is the theoretical gross margin that a gas-fired power plant would achieve by selling a unit of electricity, having bought the fuel required to produce that unit of electricity.

SSD: Supply start date

STOD: Seasonal Time of Day –A supply tariff applying to electricity supplied at different unit rates according to the time of day and season.

System margin: The margin of error between supply and demand, as managed by National Grid (the System Operator).

tC02e: tonnes per C02 equivalent - the standard unit of measurement used in carbon accounting, to quantify greenhouse gas (GHG) emissions. CO2 refers to carbon dioxide.

Transmission Network: The network of pylons and cables that transmits higher voltage electricity from power stations (where it’s produced) to wherever it’s needed across the UK.

VDD: Variable Direct Debit – The adjustable amount that the customer pays monthly to cover their billed consumption.

If you need any further help, visit the Support section where you’ll find a number of useful guides and FAQs.

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