Glossary of Terms
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As in “fair” rate of return. In ratemaking “fair” is a subjective term requiring significant study to support the proposed level.
- Federal Energy Regulatory Commission (FERC)
An agency of the government of the United States created by an Act of Congress, the Department of Energy Organization Act, in 1977. This Act transferred to the FERC most of the former Federal Power Commission’s interstate regulatory functions over the electric power and natural gas industries. The Act also transferred from the Interstate Commerce Commission the authority to set oil pipeline transportation rates and to set the value of oil pipelines for ratemaking purposes. In 1978, Congress passed the Natural Energy Act, broadening the FERC’s jurisdiction and regulatory functions. The FERC now also regulates producer sales of natural gas in intrastate commerce. The FERC establishes uniform ceiling prices for each of several categories of natural gas, and these prices apply to all sales on a nationwide basis.
- FERC Out
Contract provisions enabling a company to get out of gas purchase contracts based upon regulatory changes that are detrimental to the company.
- Financial Hedging
A transaction entered into for the purpose of protecting the value of a commodity or security from adverse price movement by entering an offsetting position in a related commodity or security.
- Firm Transportation Service (FTS)
Transportation services for which facilities have been designed, installed, and dedicated to a certified quantity. Firm transportation service takes priority over interruptible service.
- Fixed Cost
Certain costs which in the aggregate do not vary in amount regardless of the quantity of gas sold or transported. See VARIABLE COSTS.
- Fixed Price
A price that is agreed upon by two parties and cannot change, regardless of subsequent fluctuations in market price.
- Fixed Variable
A classification method that assigns 100% of fixed costs to the demand component of the rate.
The process of separating liquid hydrocarbons removed from natural gas into propane, butane, ethane and the like. Fractionation can also refer to separating various petroleum liquids from crude oil.
- Franchise Tax/Fee
- Functional Unbundling
Pricing each aspect of a service separately, such as the generation, transmission and distribution of electricity, or the production, transportation and storage of natural gas.