We realise that there are many complex terms and abbreviations used within the energy industry. And that this can sometimes hinder the decision-making process for your business energy contracts. With this in mind, we have created a comprehensive glossary of energy terms and abbreviations to aid the understanding of fundamental energy terminology.

We’ll be reviewing and adding to our glossary on a regular basis, keeping you up to date with any new terms or trending subjects within the energy industry.

Be sure to add this page to your favourites as your useful energy terms reference guide.

A

AAHEDC (Assistance for Areas with High Energy Distribution Costs)

The AAHEDC charge helps cover the cost of supplying electricity to more remote areas of the country such as the north of Scotland. The charge can still be commonly referred to as Hydro Benefit

Replacement Scheme which was replaced by AAHEDC upon the enforcement of the Energy Act 2004. This charge is billed at published rates.

Account Management Fee

A charge for general management (admin/billing etc.) of the account by the energy supplier. This charge is agreed at the start of a contract and fixed for the contract duration.

Anthropogenic removals

This is the term used to describe the removal of greenhouse gases (GHG) from the atmosphere.

AMR (Automated Meter Reading)

Automated Meter Reading is a technology used to automatically collect data such as energy consumption, diagnostics. Eliminates the requirement for manual meter reading.

AQ (Annual Quantity)

This relates to the amount of energy – gas specifically – that a site is expected to use for the duration of the year.

ASC (Agreed Supply Capacity)

This is the agreed amount of electrical load that must be supplied by your DNO (Distribution Network Operator) to your energy supply, at all times.

B

Baseload

Refers to the minimum level of demand needed by the grid at any given time. It can also be the minimum (constant) level of demand by a consumer or group of consumers.

Bearish

When referring to a Bearish energy market, there are indications that there will be a downward trend in the market, potentially leading to lower energy prices.

BEMS (Building Energy Management System)

A BEMS is the integration of various controls, software and technology used to optimise the energy performance of a building.

Big Six

The Big Six refers to the six largest energy suppliers within the UK. As of March 2024, these are; British Gas, Octopus Energy, E.ON Next, OVO, EDF Energy and Scottish Power.

Biofuel

This is any fuel that is produced from organic matter such as plants. Best-known examples are ethanol and biodiesel.

Biomass

Biomass energy is produced from natural resources that can be replenished such as wood, waste, residues and other organic sources. This is a renewable energy.

BM (Balancing Mechanism)

This refers to the mechanism used by the ESO (Electricity System Operator) to balance the electricity supply and demand on the electricity transmission network.

BMS (Building Management Systems)

Building Management Systems are computer-based control systems that are implemented to monitor, manage and optimise a building’s operations such as lighting, air conditioning, fire safety and energy/heating.

BSUoS (Balancing Service Use of System)

BSUoS costs are incurred by the National Grid for the control and security aspects of balancing the national transmission network. The charges are then recovered from generators and suppliers.

BREEAM – (Building Research Establishment Environmental Assessment Method)

This is a way of measuring a building’s environmental performance, with considerations to design, carbon emissions during construction and completion, and the social impact. Ratings vary from ‘Acceptable’ to ‘Outstanding’.

Bullish

A bullish energy market is when prices are rising and there are indications that they will continue to rise.

C

Capacity Charge

A charge agreed between the consumer and DNO for having an Agreed Supply Capacity (ASC) for electricity and Supply Offtake Quantity (SOQ) for gas with the DNO. The charge is applied per unit of capacity (measured in kVA for electricity or kWh for gas). Applicable to Half Hourly Meters only.

Cap-and-trade

Also known as emissions trading and regulated by the government, cap-and-trade limits or caps the amount of emissions that can be resulted from industrial activities. Elements capped are specific chemicals, particularly CO2.

Carbon Budget

This is the set budget for how much greenhouse gases can be emitted over a set period of time.

Carbon Credits

One of the methods used for carbon offsetting. When a business funds a project that removes or reduced CO2 they receive a carbon credit. One carbon credit typically represents the reduction of one metric tonne of CO2.

Carbon Offsetting

A method used by organisations to offset their carbon dioxide (CO2) emissions by funding projects that remove an equivalent amount of CO2 from the atmosphere.

If you would like for information on carbon offsetting, or how the Consultiv team can help with this, click here.

CCA (Climate Change Agreement)

Climate Change Agreements (CCAs) are voluntary agreements that can be implemented by energy-intensive sector organisations to help reduce their contribution to the Climate Change Levy (CCL).

CCL (Climate Change Levy)

This is a UK government-imposed tax to encourage reduction in gas emissions and greater efficiency of energy used for business or non-domestic purposes. CCL is chargeable only on units/kWh and was implemented in April 2001.

CCUS / CCS (Carbon Capture, Usage and Storage Subsidy / Carbon Capture and Storage)

Is the process of capturing carbon dioxide (CO2) emissions prior to them being released into the atmosphere. Once captured, the CO2 is compressed, transported, and stored (this could be in deep ocean sites, emptied oil/gas reservoirs – where the gas is isolated from the atmosphere).

CfD (Contracts for Difference)

A CfD is a long-term agreement between an electricity producer and the Low Carbon Contracts Company (LCCC). This contract allows the producer to secure a stable revenue at a predetermined rate (the Strike Price) for the contract’s duration. Under the CfD, payments can be exchanged between LCCC and the generator in both directions.

CfD Interim Rate Levy

CfDs support new investment in all forms of low-carbon generation (renewables, nuclear, Carbon Capture and Storage (CCS)). It has been designed to provide efficient and cost-effective price stabilisation for new generation by reducing exposure to the volatile wholesale electricity price.

CfD Operational Levy

This covers the operational costs to administer the scheme.

CHP (Combined Heat and Power)

Referring to the simultaneous production of both heat and power. Achieved by capturing the waste heat from generating energy and then utilising it to heat buildings.

CM (Capacity Market)

This is a regular payment for reliable sources of capacity to ensure the security of electricity supply.

CM (Capacity Market ) Levy

The CM levy offers the opportunity to all capacity providers (new and existing power stations, electricity storage and capacity provided by demand side response) of a steady, predictable revenue stream on which they can base their future investments. They must then deliver energy when required or face penalties. The cost of capacity is passed on to the user.

CM Settlement Costs Levy

Covers the cost to administer the scheme.

Commodity Charge

This cost covers the energy consumed i.e. the commodity cost. This rate will vary month to-month depending on the trades made.

Consultancy Fee

A fee agreed between the customer and the consultancy for the management of the utility account. This fee is usually fixed for the contract duration. It is usually a p/kWh fee although can be a fixed fee per annum or a share of savings model.

Contango

This term is used to describe when future energy prices are higher than the current spot price.

D

DC (Data Collector) and DA (Data Aggregator) charges

Set charges for the cost of a DC and DA to manage and monitor the electricity consumed.

Charges for the DA agent appointed to aggregate the meter reading data which is received from the DC and subsequently forwarded to the supplier.

DCs are organisations accredited to carry out data collection for HH metering systems. The DC is appointed by suppliers to retrieve and validate metering data and forward it, by metering system, to the DA.

The DC may be appointed by the customer but must always be accredited and contracted to the customer’s supplier.

DEC (Display Energy Certificate)

A DEC is required for any public building that covers an area greater than 250m2. The certificate acts as an official document to display the energy performance of a building.

Deemed Contract

This is when a consumer has either reached the end of their contract and has not renewed, or when a new tenant has moved into a premises and started to use energy without an energy contract. A Deemed Contract is a rolling contract that generally lasts until the consumer signs a formal contract with a supplier.

DIP (Data Integration Platform) Charge

The DIP charge relates to the administration cost of the system used to manage the MHHS scheme.

Decarbonisation

This is the term given to the process of removing and reducing the amount of carbon emissions emitted into the atmosphere from greenhouse gases.

DESNZ (Department for Energy Strategy and Net Zero)

A ministerial department whose main responsibilities are ensuring security of energy supply, achieving net zero commitments and sustainable economy growth.

DSR (Demand Side Response)

Also referred to as Demand Response (DR), is a method used by the grid operators to manage electricity consumption by balancing demand and supply.

DUoS (Distribution Use of System) charges

Charges relating to electricity/gas being delivered from grid to meter point include: Daily Standing Charge, Capacity Charge (p/kVA/day) and unit rates (p/kwh) Super Red, Red, Amber, Green as follows:

Distribution Losses

Charges relating to electrical losses which occur as electricity is transmitted through the lines of the distribution system (from Grid Supply Point (GSP) to meter). Determined by the use of Line Loss Factors (LLF), multipliers used to scale energy consumed at GSP.

DN/DNO (Distribution Network/Distribution Network Operator)

A company licensed to distribute electricity within the UK.

E

EMR (Electricity Market Reform)

Under EMR, the Government introduced a new Contracts for Difference Feed-in Tariff (CfD FiT) as part of its plan to promote new investment in electricity generation. This scheme was implemented in April 2015 and will eventually replace RO around 2037. CfD is split into two charges, the CfD Operational Levy and CfD Interim Rate Levy.

Elexon Settlement

Elexon manage the financial aspects of the day-to-day settlement of the system. They ensure that generators and suppliers pay and get paid for the electricity they produce and consume. The Elexon charge is billed at published rates.

EII (Energy Intensive Industry) Subsidy

EII relief has increased to 100% from April 2024 and has been expanded to include Capacity Market.
Essentially, all non-domestic customers, including EIIs, will pay approximately an additional £1/MWh on their bills. Then, one year after delivery, EIIs will directly receive rebates via the Network Charging Compensation Scheme.

ESL (Energy Intensive Support levy)

EIIs will be compensated for 60% of their network charges (TNUos, Duos and BSUos) from April 2024. Unlike the exemption scheme, EIIs won’t be exempt from network charges, but will have a compensation scheme. They will be required to pay, then provide evidence on the network charges they have incurred in order to receive 60%c compensation the next year. This will be funded by a new EII Support Levy, coming into effect from April 2025.

EPBD (Energy Performance of Buildings Directive)

The EPBD is an EU (European Union) legislation which comprises of a framework to improve the energy performance and efficiency of buildings.

EPC (Energy Performance Certificate)

With ratings from A-G, the EPC indicates how energy efficient a property is.

ESG (Environmental, Social and Governance)

Involves the detailed measurement of how an organisation is performing against their long-term environmental, social and governance commitments.

ESOS (Energy Savings Opportunity Scheme)

A mandatory scheme that requires all large businesses within the UK to report on their energy consumption and recognise any energy saving opportunities.

ETS (Emissions Trading Scheme)

A scheme implemented by the government which provides economic incentives for organisations to reduce their greenhouse gas (GHG) emissions.

Excess Capacity Charge

A penalty charge for exceeding the sites Available Supply Capacity (ASC). This is collected via the supplier on behalf of the network operator.

F

FiT (Feed-in Tariff scheme)

This scheme works alongside the RO and is designed to incentivise new investment in small scale electricity-generating devices (i.e. solar panels). It was first introduced in April 2010 and operates by rewarding participants through payment for the electricity generated. The costs to fund the scheme will be recovered by all suppliers and are therefore passed onto customers.

Fixed Energy Supply Contract

This is when an energy contract is signed at a set price for a specified period of time.

Flexible Energy Supply Contract

Often used by larger energy consumers, flexible energy procurement involves the purchase of energy at wholesale prices

FMD (Fuel Mix Disclosure)

This is an annual requirement for electricity generators to disclose the fuel used in order to generate the energy they are supplying.

G

GT (Gas Transportation) Charges

These charges cover the cost of transporting gas from where it enters the UK to the end user. The cost also covers maintenance, safety and security of the network and in the development new gas connections. The transportation charge is invoiced per kWh.

GGL (Green Gas Levy)

The Green Gas Levy places obligations on licensed gas suppliers to make quarterly levy payments, in order to fund the Green Gas Support Scheme (GGSS). It first hit end users bills in April-June 2022 and is collected by your supplier. BEIS announces the levy rate by 31 December in the preceding year. All business energy consumers of the UK gas network pay the levy as a very small part of the daily charges included in their bills that are related to non-gas costs such as transmission and distribution charges.

Green Hydrogen Levy

The aim is to support move away from fossil fuels by funding hydrogen production. In 2023, the government announced the levy wouldn’t be paid for by domestic energy consumers.

Greenwashing

Considered a type of deceptive marketing used by organisation to make their sustainability efforts appear more than they actually are.

H

Hedging

When energy is purchased in advanced, protecting the purchaser from any unexpected price surges

HH (Half Hourly) Meter

A Half Hourly Meter automatically captures and sends automatic readings from your electricity meter to your energy supplier every half hour.

HVAC (Heating, Ventilation and Air Conditioning)

Often used as an abbreviation when referring to various systems and technologies used within a building to control heating and air-cooling equipment.

I

Imbalance Charge

A charge to cover the costs of managing the difference between forecast consumption data and actual consumption.

Interconnector

Interconnectors carry electricity, often used to connect electricity systems between countries. They can run under the sea, underground or via high-voltage overhead cabling.

IoT (Internet of Things)

A collection of services and software used to integrate various devices by exchanging data over the internet or other communications networks.

L

LNG (Liquified Natural Gas)

When natural gas (mainly methane) is liquified for ease of storage and transportation.

Load Profile

Broadly refers to the amount of energy used on a daily and/or seasonal basis.

Losses

When energy travels from the point of entry through the Distribution Network (DN) and transmission network to the consumer, there is an element which can be ‘lost’ (through heat for electricity and shrinkage for gas). For electricity, the losses can be accounted for as an uplift to the consumption or as a separate rate, whereas gas shrinkage is accounted for prior to the determination of network rates.

M

MCM (Million Cubic Meters)

A (large) unit used for the measurement of natural gas.

MCF (Thousand Cubic Feet)

A unit used for the measurement of natural gas.

MAM (Meter Asset Manager)

A Meter Asset Manager is professional who is responsible for the installation, maintenance, commission and removal of gas supply meters,

Maximum Demand

This is the maximum demand (peak) of power (kW or KVA) required during a specified period.

Meter Asset Charge

A charge for the provision, installation and maintenance of industrial measurement (diaphragm, rotary or turbine meters). These charges vary depending on how much gas the meter can pass in a given time.
The charge may also include fees relating to other assets on site, including corrector, dataloggers and Advanced Modular Reactors (AMRs) where available.

Meter Operator

A Meter Operator (MOP) is a licenced company that install and maintain electrical and gas meters for businesses.

MHHS (Market-wide Half-Hourly Settlement)

MHHS enables meters to record and deliver half-hourly data accurately. It provides more accurate data about the energy consumed, reducing estimated bills and helping to deliver more accurate energy supply invoices.

MPAN (Meter Point Administration Number)

This is a unique 13-digit number used to identify an electricity supply point.

MPRN (Meter Point Reference Number)

This is a unique 6-11 digit number given to your gas meter that is used by energy providers to identify a domestic/business property gas supply.

Meter Reading Charge

Set charges for the cost of reading your meter.

N

NBP (National Balancing Point)

A UK virtual trading location for purchasing, selling and exchanging natural gas.

Negative Emissions

When the removal of CO2 from the atmosphere supersedes the amount being emitted.

Net Zero

When the carbon emissions being released into the atmosphere are balanced by the methods of CO2 removal.

NHH (Non-Half-Hourly) (meters)

Often used in smaller businesses with a lower energy demand. NHH meter readings are usually taken manually and do not record automatically record consumption.

Nuclear Subsidy

The nuclear Regulated Asset Base (RAB) model is a method of funding future nuclear projects, in particular Sizewell C. It allows investors to receive a guaranteed return on investment for the lifetime of the asset, providing vital support for their design, construction, commissioning, and operation. It’s anticipated to be launched in 2024.

O

Ofgem

Ofgem is the independent energy regulator for the UK

P

Pass-through Charges

Pass-through charges/costs apply to energy suppliers to cover the cost of other companies that operate and maintain the electricity network. Costs are in relation to transmission, distribution and other network services.

Peak Demand

This is a consumer’s peak/maximum amount of energy required from the electrical grid within a set time period.

Power Factor

Commonly indicated by percentage, the power factor is used to convey energy efficiency i.e. a low power percentage suggests less efficient power usage.

PPA (Power Purchase Agreement)

A long-term contractual agreement to purchase renewable energy, at a fixed price for a period of time. This is usually between you (the consumer) and the renewable energy generator. However, there are instances where the energy supplier may also be involved.

R

Ratchet Charge

The Ratchet Charge is a penalty charge for exceeding the site’s daily metered Supply Offtake Quantity (SOQ) between October and May. This is collected via the supplier on behalf of the NO. (This charge is usually invoiced separately).

RCRC (Residual Cashflow Reallocation Cashflow)

Often included in BSUoS and administered by Elexon, the UK’s Balancing and Settlement Code (BSC) charges for making sure all parties involved in distributing, supplying and measuring energy supply are paid appropriately. The charge is for each half-hour and may be positive or negative.

Reactive Power

Reactive Power charges are applied if there is a large amount of power being wasted, as more current needs to flow to provide the same output. This puts an additional strain on the distribution network, potentially increasing costs for the NO. This charge contributes to offsetting these costs.

REGO (Renewable Energy Guarantees of Origin) Scheme

When energy suppliers provide visibility on the proportion of how much of the energy provided is sourced from renewables. The process of which provides REGOs – certificates which act as guarantees that ‘x’ amount of energy has been supplies from renewable sources.

Renewable Premium

If a ‘green energy’ contract has been signed, a renewable uplift will be applied to the consumption.

ROC (Renewable Obligation Certificates)

ROCs are issued by Ofgem to accredited renewable energy producers. This reassures the energy purchaser that they are getting energy from an eligible renewable source.

S

Science-based Target

When referring to a science-based target within the energy sector, this is the target for reducing the GHG emissions that aligns with climate science.

Scope 1 Emissions

An organisation’s emissions that are generated from greenhouse gas (GHG) i.e. boilers, furnaces, vehicles.

Scope 2 Emissions

The CO2 emissions an organisation generated indirectly.

Scope 3 Emissions

The CO2 emissions associated with the organisations a company deals with in their supply chain, both purchasing and the impact their products/service have when their customers use them.

SECR (Streamlined Energy and Carbon Reporting)

This is a mandatory scheme for larger companies within the UK. It involves the reporting of energy use and carbon emissions being published within their annual reports issued to the Companies House.

Find further information on how Consultiv Utilities can help with your SECR here.

Shape Fee/Swing Premium

A charge to cover costs of purchasing or selling energy associated with turning a customer’s load profile into a baseload.

Smart Meter

An electronic device used to collect energy recordings such as electric consumption, voltage levels and power factors. This information is automatically communicated to both the consumer and supplier, enabling accuracy and clarity on consumer behaviour and customer billing.

Spot Price

This name is given to the current price quoted for energy that is being considered for immediate purchase.

Standing Charge

This is a daily charge that is set by your supplier, contributing to costs related to installation, maintenance, and administration. Although the standing charge set by your supplier, it is capped by Ofgem to ensure charges remain within reasonable limits. Ofgem then review the cap amount every three months. The residual charging element of your standing charge is dictated by your agreed supply capacity.

Strike Price

A predetermined price in which an option contract can be exercised.

Sub-meter

Sub-meters are additional meters that are installed to measure energy usage after it has reached the main utility meters. They are used to measure individual elements such as specific equipment, different departments or a separate section of a building.

Super Red, Red, Amber and Green Unit Charges

Distribution charges levied according to consumption at peak, intermediary, and off-peak times. In general:

• Red covers peak periods such as the afternoon slot at 4pm.
• Amber covers the daytime period.
• Green covers nights and weekends, though the unit charges and time bands vary between distribution companies.
• Super Red charges are for Extra High Voltage (EHV) sites only, broadly covering the period 4pm – 7pm.

SOQ (Supply Offtake Quantity)

Also known as Standard Offtake Quantity, this refers to the amount of energy a consumer is obligated to purchase or consume over a specific period.

T

Take-or-pay

Take-or-pay is when a buyer is obligated to either takes or pay for a minimum amount of energy whether it is required or not.

TCFD (Task Force on Climate-related Financial Disclosures)

A global organisation that consists of climate-related disclosures and information for businesses to refer to when disclosing their governance, risk management, strategy, metrics and targets related to climate change.

TCR (Targeted Charging Review)

Initiated by Ofgem, TCR is a legislation put in place for energy suppliers to follow when recovering costs for transmission and distribution charges.

TNUoS (Transmission Network Use of System) Charges

TNUoS charges are regulated charges that are levied on all electricity users in the UK by the National Grid. This is for transporting electricity from power stations to the distribution networks.

Tolerance Breach

A fee arising from excess or shortfall quantities of energy taken outside the agreed tolerance range. The tolerance can be applied each month if the annual tolerance has been breached, or for each month’s breach in tolerance.

TPI (Third Party Intermediary)

A TPI is an organisation or individual that offers advice relating to energy procurement/management such as an energy broker.

Transmission Losses

Charges relating to electrical losses which occur as power is transmitted through the lines of the transmission system, from generation source to Grid Supply Point (GSP).

Triads

These are the top three half-hourly peaks of national energy demand on the grid. These are taken during the ‘Triad season’ which is November to February whilst energy demand is likely to be at its highest.

Trigeneration

This is when the generation of three outputs at once i.e. electricity, cooling and heating.

U

Unidentified Gas (UIG) Charge

This charge covers the cost of unidentified gas which is taken off the system but is not directly attributed to a particular shipper. The reasons for such losses may include theft of gas, consumption on unregistered meters or pipe leaks/shrinkage. The true rate is the annual UIG volume by Local Distribution Zone (LDZ) multiplied by the average monthly System Average Price (SAP). However, many suppliers will apply the forward SAP price included within AUG (Allocation of Unidentified Gas) statements for pricing purposes.
Note: If gas supply is daily-metered these charges do not apply since all quantities of gas through DMs are accounted for.

V

VAT (Value-Added Tax)

Levied on the sale of goods or services by UK businesses. VAT is collected on behalf of HMRC
by companies.

Virtual lead party (VLP) supplier reconciliation

Payments to support load management of aggregators

W

Wholesale energy / market

Wholesale energy involves the purchasing and selling of energy products in the wholesale market by energy producers and retailers.

 

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