Natural Gas Terms and Definitions. Deregulation of the retail natural gas market has opened up a host of new decisions for natural gas customers. Whether you're new to natural gas choice or a seasoned veteran, the terms highlighted in this glossary will help decipher natural gas industry terms, abbreviations, acronyms, and natural gas industry players' roles and responsibilities.

Glossary Sections:

Shopping for Natural Gas

The terms shown in this section of the glossary can help natural gas customers navigate unfamiliar terminology and gain confidence about natural gas shopping decisions.

Customer Service Charge

Fixed monthly charge that includes the cost of maintaining and reading meters and billing customers.

Distribution Charge or Delivery Charge

A charge that covers the cost of delivering gas to your home or business, including storing gas and the capital and operating costs of the gas distribution and pipeline system. This charge varies based on the amount of gas used each month.

Early Termination Fee

A charge assessed by the supplier to the customer when the customer breaks the contract prior to the expiration of the contract term.

Energy Choice

The ability for customers of an investor-owned utility to select from many alternative suppliers of natural gas or electricity. Selecting an alternative energy supplier will not affect the delivery of energy. The delivery of natural gas or electricity will continue to be done by the local utility. Also known as Deregulation, Retail Energy Choice, Retail Energy Competition, Retail Open Access.

Gas Cost Recovery (GCR) Rate

The actual cost of natural gas that the local utility pays to purchase gas for the customer's use. The cost is passed through to the customer without mark-up or profit to the utility. The GCR is not based on current market price, but on the utility company's actual cost of the natural gas.

Retail Price Adjustment

This factor is added on to the Standard Choice Offer rate in Ohio. The retail price adjustment is set on April 1st and is determined annually by an auction process. The retail price adjustment reflects the winning bidder's price to deliver natural gas from the production area to the utility's service area.


The unauthorized switching of a customer's account to another competitive energy supplier without the customer's consent.

Standard Choice Offer (SCO)

The SCO rate varies each month and represents the costs associated with securing natural gas for customers. The SCO includes generation and transmission costs. It does not include distribution and delivery costs. Customers who do not participate in the gas choice program in Ohio are assigned to an alternative supplier at the SCO rate. The SCO rate is based on the NYMEX month-end settlement price, plus a retail price adjustment. The retail price adjustment is set on April 1st of each year.

Supply Charge

Price of natural gas offered by a supplier.

Terms and Conditions

A contract between a competitive retail natural gas supplier and a customer that outlines fees, length of service, and other important information.

Transportation Cost

Cost related to the actual transportation of natural gas through the natural gas transmission pipeline to the local utility or LDC.

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Natural Gas Industry & Infrastructure

The natural gas industry has many components and participants. In this section of the glossary, we highlight terminology to help natural gas customers understand the roles and responsibilities surrounding the business of deregulated natural gas.


An entity that purchases electricity or natural gas and serves as an intermediary for a large number of consumers, bargaining on their behalf for electricity and related services. The group "aggregates" or combines into one large customer for purposes of negotiation, and purchases the commodity as a single customer for the group.

Alternative Natural Gas Supplier

A term for a competitive energy supplier offering natural gas to customer's in deregulated markets.


An agent or intermediary that arranges for the purchase and sale of electricity, transmission, and other services between buyers and sellers. A broker does not take title to the energy involved in the transaction.

City Gate

Location where gas ownership passes from the gas supplier to a local utility or LDC at a measuring or regulating station.

Competitive Retail Natural Gas Supplier

Term for an Ohio competitive energy supplier certified by the PUCO and selling natural gas to customer's in deregulated markets.

Federal Energy Regulatory Commission (FERC)

A U.S. government agency that regulates interstate electricity sales, wholesale electric rates, natural gas pricing, oil pipeline rates, and gas pipeline certification.

Gas Main or Mainline

A gas distribution line to which a service line is connected.

Gathering System

A network of pipelines which move gas from individual wells to compressor stations, processing points, or main trunk pipelines.


Central locations where gas supplies from a variety of sources are aggregated and sold.

Interstate Gas

Gas transported in interstate pipelines to be sold and consumed in states other than the state in which the gas was produced.

Investor-Owned Utility

A stockholder-owned utility company that provides public utility services to retail customers for a profit.

Local Distribution Company (LDC)

Commonly referred to as the local utility, a LDC owns and operates distribution pipelines and delivers gas from interstate pipelines to the customer's home or business.


A certified natural gas supplier that takes title to natural gas for the sale to retail customers.


The North American Mercantile Exchange (NYMEX) is a public market where natural gas and other commodities are sold and traded.

Public Utility Commission

A state agency comprising elected or appointed regulators that oversee utility rates (including electric, natural gas, telecom, water, taxi, etc.) and services, under applicable FERC or other federal agency guidelines.

Renewable natural gas (RNG)

Natural gas that originates from biogas collected at landfills, municipal wastewater treatment facility digesters, agricultural digesters, and separated municipal solid waste digesters. Commonly used to meet various cellulosic biofuel requirements and, after processing, is indistinguishable from pipeline-quality natural gas.


A riser connects an above ground natural gas meter to the service line.

Service Line

The gas piping from the mainline to the meter in a customer's home.

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General Terms

This section of the glossary includes general terms about natural gas and how it's measured.

British Thermal Units (BTUs)

A quantity of heat required to raise the temperature of one pound of liquid water by one degree Fahrenheit.


The total volume of gas that can flow through a pipeline over a given period of time, considering factors such as pipeline diameter, pressure, and time interval.


A unit of measure for natural gas representing one hundred cubic feet.


A unit of measure for natural gas representing one thousand cubic feet.


Underground sandstone formation where natural gas is stored. Storage provides a way for local utilities to balance daily supply needs.


A unit of measure for natural gas representing the measure of heat content. One therm is equal to 100,000 BTUs.


A published description of rates, rate schedules, or general terms under which a product or service will be supplied. Tariffs are approved by a regulatory agency. With respect to natural gas, tariffs generally relate to the cost of delivering natural gas, and the operation and maintenance of natural gas transportation and distribution assets.


Process of separating energy utility services into basic components and offering each component for sale, with separate charges for each component. Some services may be regulated, while others are open to competition. Some services may be mandatory, while others may be optional. With unbundling, the various energy services and related charges will be listed as separate line items on a customer bill.

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