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Glossary of Terms


Account agent
A third party who is authorized to purchase, manage and/or bill for natural gas service. For example, when you sign a contract with a supplier, that supplier becomes your account agent and is authorized to buy natural gas on your behalf. The account agent may also be authorized to receive bills from the utility and other information that would otherwise be sent directly to you.

Billing cycle
The amount of time covered by one bill.

Budget Plan
A payment option that divides a customer's estimated costs into equal monthly payments. This type of plan allows customers to pay the same amount on their bill each month over a specified period of time.

Commodity
The natural gas you use, not including any services provided by the supplier or utility.

Customer Select
A program offered by Nicor Gas that allows all residential and business customers to choose their natural gas supplier.

Delivery charges
Charges that cover the operating and distribution costs of the utility. Also called distribution charges.

Deregulation
Separating the service of purchasing natural gas from the distribution function of the utility. This allows other nonregulated suppliers the opportunity to sell natural gas to customers. The utility continues to deliver the natural gas.

Fixed pricing
A constant price for natural gas (either per therm or per bill) that is maintained over the entire life of a contract. Changes in the market price of natural gas will not affect the price you pay.

Letter of agency
A written agreement that a customer switching gas suppliers must sign to authorize the new supplier to purchase gas on the customer's behalf.

Market-based or index pricing
An offer for natural gas at a price that is tied to one or more natural gas market benchmarks or indicators. Some of these are Natural Gas Intelligence, Gas Daily and NYMEX. This type of pricing generally fluctuates and follows the current market price of gas over the life of the contract.

NYMEX
An acronym for the New York Mercantile Exchange where contracts for commodities, including natural gas, are traded. At the NYMEX, natural gas futures and options contracts are traded which establish future pricing directions. Suppliers may use the NYMEX to establish their pricing offers.

Single billing
A service provided by either Nicor Gas or a supplier which offers one bill containing charges from both Nicor Gas and the supplier.

Storage banking
Placing gas in storage (usually during the summer) and withdrawing gas from storage (usually in the winter).

Supplier/marketer
A company other than the local utility that supplies natural gas to customers.

Therm
The basic unit for measuring natural gas use.

Utility affiliate
A supplier/marketer that is owned all or in part by the same corporation that owns the local utility.

Variable pricing
A price that may fluctuate over the life of a contract, sometimes tied to a market index (see Market-based or index pricing).

Weighted Average Cost of Gas (WACOG)
An average cost of gas based on your gas use. If you use more gas in a given billing period, that month's gas price carries more weight in the calculation. If you use less gas in a billing period, that month's gas price carries less weight. Since gas costs change throughout the year, this is an accurate way to figure out a customer's average yearly price per therm.