an accounting standard, titled Financial Instruments: Recognition and Measurement, issued by the International Accounting Standards Committee. IAS 39 is similar, but much less complex, than the US Financial Accounting Standards Board FAS 133.

    see IntercontinentalExchange

    see International Energy Agency

   the difference between hourly scheduled electricity deliveries and hourly metered deliveries. Typically, energy imbalances are eliminated during a future period by returning energy in kind under conditions similar to those when the initial energy was delivered. When energy imbalances exceed a prespecified threshold (for example, +/–1.5% of the scheduled transaction), imbalances are resolved through monetary payments.

   the volatility level that, assuming a certain pricing model, equates the calculated value of the option to its current market price. H

   an option that can be exercised and immediately closed out against the underlying market for a cash credit. The option is in-the-money if the underlying futures price is above a call option’s strike price or below a put option’s strike price. see also at-the-money, out-of-the-money

   the imbalance of routine energy flows back and forth between a power generator and the centres of demand. These imbalances are typically settled through exchanges of physical product.

   a non-utility power generating company.

   (US) entity responsible for ensuring the efficient use and reliable operation of the transmission grid and, in some cases, generation facilities. Individual ISOs cover either a single state (e.g., the California ISO) or a region (e.g., the Midwest ISO). ISO responsibilities vary by jurisdiction, but can include co-ordinating scheduling for transmission transactions; overseeing the instantaneous balancing of generation and load; managing and redispatching generation in system emergencies; managing operating reserves; ensuring new transmission facilities are built when and where needed; and co-ordinating transmission payments. In some cases, ISOs are also responsible for managing power exchange activities.

   a numerical value assigned to a group of commodities, stocks or prices in order to give an indication of market trends.

   the process of placing natural gas in underground storage or the producing reservoir in order to maintain pressure.

   a weekly newsletter produced by publishing company Platt’s that covers the activities of the Federal Energy Regulatory Commission.

   a US term that refers to the amount of generation that meets load plus a certain percentage or margin set using a probabilistic model. The extra margin ensures reliability during a maximum emergency.

   a hedge combining more than one distinct price risk. For example, crude oil is usually priced in US dollars. A producer of crude oil whose home currency is, say, the pound sterling would be exposed to both US dollar currency risk and crude oil price risk. A possible integrated hedge would be a quanto product, which would hedge the price of crude oil in pounds sterling. see also exchange option

   a gas pipeline running from Bacton in Norfolk, England, to Zeebrugge in Belgium. It opened in October 1998 and allows Britain to export gas to, or import gas from, continental Europe for the first time.

   Atlanta, Georgia-based Intercontinental-Exchange is an internet-based market placefor the trading of over-the-counter (OTC) energy, metals and other commodity products. It represents a partnership of the leading energy companies and financial institutions and was launched in August 2000. It also now offers clearing-house services for clearing of OTC trades through the London Clearing House Limited. The exchange is also referred to by its acronym ICE.

   futures or options trading techniques that entail buying one month of a contract and selling another month of the same contract. For example, buying a June electricity contract and simultaneously selling a September electricity contract. A market participant can profit (or lose out) as the price difference between the contracts widens or narrows.

   power-generating equipment that can vary its level of output in response to changes in electricity demand. Normally operated on a daily cycle to serve on-peak loads during the day but not off-peak loads during nights and weekends.

   The International Energy Agency (IEA), based in Paris, is an intergovernmental organisation that acts as energy policy adviser to 28 member countries. Founded during the oil crisis of 1973-74, the IEA’s initial role was to co-ordinate measures in times of oil supply emergencies. Its mandate has broadened to incorporate the ‘three Es’ of balanced energy policy making: energy security, economic development and environmental protection. Current work focuses on climate change policies, market reform, energy technology collaboration and energy research.

   formerly an independent London energy exchange, in June 2001 the IPE became a wholly owned subsidiary of IntercontinentalExchange. In 2005 its name was changed to ICE Futures and trading was shifted onto an electronic trading platform. This exchange has futures and options contracts for energy products including Brent blend crude oil, gasoil natural gas, electricity (baseload and peakload), coal contracts and carbon emission allowances.

   gas or electricity sales that are subject to interruption for a specified number of days or hours during times of peak demand or in the event of system emergencies. In exchange for interruptibility, buyers pay lower prices. see also firm service, firm (uninterrupted), non-firm service

   the difference between the underlying price and the strike price of an option.

   a European Union proposal in 2002 to upgrade the 1993 Investment Services Directive, which covers investment services and regulated markets. The updated proposal would require energy firms wishing to trade financial products and certain cash-settled commodity derivatives instruments to be authorised as investment firms.

   an electricity utility owned by a group of investors, the shares of which are traded on public stock markets.

    see International Petroleum Exchange

    see independent power producer

   the International Swaps and Derivatives Association (Isda) over-the-counter derivatives master agreement was drawn up by the New York-based trade association in 1987 and revised in 1992 and 2002. The agreement is commonly used for contracts in various energy derivatives markets, especially the US gas market.

    see independent system operator