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Natural Gas





The Library

Definitions of Commonly Used Natural Gas Terms

A-C  | D-F | G-L | M-Q | R-S | T-Z

British thermal Unit (Btu)

A unit of gas measurement. It is the quantity of heat required to raise one pound of water one degree Fahrenheit at or near its point of maximum density.

Burner Tip Price

When a natural gas fired furnace or stove is turned on, gas is burned to create heat.  This burning of the fuel marks the end of a process that sent natural gas from places such as Louisiana, Oklahoma, or Canada, through interstate pipelines and through local distribution utility pipes to Wisconsin residences and businesses.  The price paid for the gas that is burned is referred to as the burner tip price.  Since this is the end of the process, this price must reflect not only the cost of the natural gas itself, but also all the costs of finding, pumping, transporting, and delivering the gas.


Industrial customers have an opportunity to direct deliveries of gas from a supplier other than the traditional supplier. They may "bypass" their local distributor by tapping directly into a pipeline.


A unit of measurement for natural gas and water. It is short for hundred cubic feet. The average residential household uses 100 Ccf of gas per month. However, actual usage varies greatly with the weather.


The production of electricity and useful thermal energy from the same energy source. Natural gas is the most common fuel in the conversion of waste heat to electricity.

Combined Cycle Generation

A system that generates electricity using a gas turbine or a heat recovery boiler and a steam turbine in tandem.

Commodity Price

The price of gas at the site of production is referred to as the commodity price or wellhead price. Of all the cost components, natural gas commodity prices are by far the most unstable and the least predictable.  It is clear that these prices move around quite a bit from month to month and from year to year. Natural gas price volatility is among the highest of all commodities that are traded on major market exchanges.  The price can unexpectedly double in a matter of months.  It can also tumble by 50 percent just as fast.

Core/Non-Core customers

A core customer means a residential or small commercial customer who typically must take additional distributor-bundled service of sales and transportation. Non-core refers to large commercial and industrials customers with sufficient gas volume to purchase gas supplies and capacity from suppliers other than the local utility.

Customer Classes

Utility customer classes include residential, commercial, industrial, and electric generation.


Complaint means a statement or question by any person, whether a utility customer or not, concerning a wrong, grievance, injury, dissatisfaction, illegal action or procedure, dangerous condition or action, or failure of a utility to meet a utility obligation.


Customer means the party billed for payment of bills issued for use of utility service at a given premises.

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Degree Days

A formula to calculate heating or cooling value. A common calculation would be to add a particular day’s high and low temperatures, divide by two, and subtract that average temperature from a base level.


A unit of heating value equal to 10 Therms or one million Btu's. Approximately, 1 Mcf=1MMBtu= 1Dth.

Deferred Payment Agreement

An agreement entered into by a customer and a utility for payments applied against a previously incurred debt or deposit amount in addition to payment of current bills.   

Denied or refused service

This means a utility has refused to provide present or future service to a customer, occupant or premises.


Disconnection means an event or action taken by the utility to terminate or discontinue the provision of service, but does not include a customer-requested termination of service.


Rights-of-way (R/W) and easements are defined as the right to pass over, through, or underneath property owned by another party or a right afforded to a person to make limited use of another's real property. The most typical type of right-of-way is granted in the form of blanket and private easements.  A blanket easement may be granted by a municipality to a utility for installing their facilities on road rights-of-way.  In the case of a private easement, the landowner grants the utility permission to install a cable or building facility on the privately owned property.  This easement is filed with the county register of deeds and will appear on the property deed.

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A hub is a place where market participants can gain access to multiple providers of supplies and services.  For example, Wisconsin buyers frequently obtain gas at the Chicago area hub, where several natural gas pipelines interconnect.

Incentive Ratemaking

A way to set market-based rates for gas supply or transportation.  This theory has allowed regulated companies to keep overhead costs low by allowing them to make a profit on their services that are not tied to rates.


Local distribution company, also known as the local utility.p

Liquefied Natural Gas (LNG)

A method to store natural gas. Natural gas can be converted to a liquid state by pressure and severe cooling, and then returned to its original form to be used as a fuel.

Local distribution service rates

These rates reflect the utility's cost of maintaining and operating its local system for distributing natural gas to homes and business.

The Low Income Home Energy Assistance Program (LIHEAP) 

The Low Income Home Energy Assistance Program (LIHEAP) provides financial assistance with fuel costs and restoration of utility services during the winter heating season to eligible low-income households. Assistance to income-eligible homeowners and landlords to repair or replace furnaces to become more energy efficient is also available. 

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Natural gas

A hydrocarbon gas that is usually obtained from underground sources, often in association with petroleum and coal deposits. It generally contains a high percentage of methane and inert gases.

New residential customer

A customer who has not received utility service in his or her name during the previous 6 months from the utility from which service is requested.


Companies that buy and resell gas or broker gas for a profit. They also provide transportation and balancing services, and monitor deliveries.


One thousand cubic feet.


One million cubic feet.


The resident or residents of a premises to which utility service is provided.


The period of greatest gas demand. The peak period in Wisconsin is during the winter months.

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Rate of Return

The percentage set by the Commission that a local utility is authorized to earn on its investment.

 Spot Market

A market for short-term, specified volumes of gas supplies and capacities. 

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Therm means 100,000 British thermal units (Btu).  A common measure of gas sold to residential customers.  (Sometimes also expressed as Ccf.)

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