Weather & Market Fundamentals

As part of their role, energy managers are often required to stay apprised of the latest market and weather factors impacting energy prices.

Constellation’s team of market analysts and meteorologists offer customers insight into the supply and demand factors that impact energy prices and share updates in our Energy Market Intel Webinars and in our Weekly Gas Storage and Weekly Energy Market Update email communications.

In order to help clear up some of the most confusing terms in the industry, read through the energy terms below separated by two categories: 1) Power and Gas Terms and 2) Weather Terms. These terms will give you more insight into the inner workings of the energy market, allowing you to walk away a more informed consumer.

Understanding Power and Gas Terms

  • Bcf – Billion cubic feet – standard unit of measurement for natural gas supply/demand - 1,000,000 MMBtu = 1 Bcf. 

  • Btu – British thermal unit – A British thermal unit is a unit of measurement that represents the amount of energy needed to heat a pound of water by one-degree Fahrenheit at or near 39.2⁰ F. This is an important measurement in understanding energy bills. 

  • Driving Season – Driving season is defined by the time between Memorial Day and Labor Day weekends. 

  • Dry Gas – Natural gas that consists of mostly methane, producing little condensable heavier hydrocarbon compounds, such as propane and butane, when brought to the surface. In the U.S., dry gases are defined as those that contain less than 0.1 gallon of condensables per 1,000 cubic feet of produced gas. 

  • Electricity – A property of matter created by the movement of electrons. This "movement" is initiated usually by a generator fueled by any number of energy resources such as coal, uranium, water (hydropower) or directly converted from solar radiation in photovoltaic cells. Electricity is not energy per se, but the "carrier" of energy that originates in fossil fuel and renewable energy sources. 

  • Electric Generation – The process of producing electric energy or transforming other forms of energy into electric energy. Also, the amount of electric energy produced or expressed is measured in watt-hours (Wh). 

  • Energy – The capacity for doing work. Energy has several forms, some of which are easily convertible and can be changed to another form useful for work. Most of the world's convertible energy comes from fossil fuels that are burned to produce heat that is then used as a transfer medium to mechanical or other means to accomplish tasks. Electrical energy is usually measured in kilowatt-hours (Kwh), while heat energy is usually measured in British thermal units (Btu). 

  • Exports – A good or service produced in the reference country and shipped for sale or trade to another country. For example, the U.S. is now a global exporter of liquefied natural gas. 

  • Forward Market – A financial market in which financial instruments or commodities are traded for future delivery. 

  • Fuel – Any substance that can be burned to produce heat; also, materials that can be fissioned in a chain reaction to produce heat. 

  • Fuel Consumption – The amount of fuel used for gross generation, providing standby service, start-up and/or flame stabilization. 

  • Futures – Standardized forward contracts traded on a centralized exchange. 

  • GWh – Gigawatt hour – 1 billion watts used for one hour. 

  • Henry Hub – A distribution/delivery point for natural gas located in Louisiana, Henry Hub is used as a domestic and global benchmark for natural gas futures traded on the NYMEX exchange. 

  • Imports – A good or service brought into the referenced country. 

  • Injections – In reference to underground natural gas storage, when physical natural gas is stored underground to be pulled out and used later. 

  • Liquefied natural gas (LNG) – Liquefied natural gas is composed of methane and some mixture of ethane used to convert natural gas to liquid form for ease and safety of storage transport. It is cooled to approximately -256⁰ Fahrenheit so that it can be transported from countries with a large supply of natural gas to countries that demand more natural gas than they produce.

  • MMBtu – One million British Thermal Units – standard unit of measurement for natural gas financial contracts (also equal to 1 dekatherm). 

  •  MMcf – Million cubic feet – standard unit of measurement for natural gas supply/demand ~1,000 MMBtu = 1 MMcf.

  • MWh – Megawatt-hour – 1 million watts used for one hour. 

  • Natural Gas – A fuel burned under boilers and by internal combustion engines for electric generation. These include natural, manufactured and waste gas. 

  • NYMEX – The abbreviation for New York Mercantile Exchange, which trades in futures exchange of energy and other commodities. 

  • Outer Years/Back end of curve – Depending on curve length, typically refers to a five-year curve; the back-end of the curve is the last 2-3 years. 

  • Pipelines - A key method for moving natural gas from producing regions to consumption points. There are interstate pipelines and intrastate pipelines that face different regulatory requirements.

  • Power Burn – Natural gas consumed for power generation. 

  • Production - Natural gas production is measured in one million cubic feet (MMcf)/day or a billion cubic feet (Bcf)/day.

  • Prompt/Front Month or Prompt/Front Year – The contract term with an expiration date closest to the current date. 

  • Spot Market – A financial market in which financial instruments or commodities are traded for immediate delivery (or “on the spot”). 

  • “Spot” time period – This can refer to next day or even two days out delivery. “Cash” markets refer to same day, as in you have to pay cash (no credit). 

  • Storage – Measured in cubic feet; physical natural gas is stored underground to be used later. 


  • Tcf – Trillion cubic feet. 

  • Wet Gas – Natural gas that consists of an appreciable proportion of hydrocarbon compounds heavier than methane (e.g., ethane, propane, and butane). In the U.S., wet gases are defined as those that contain more than 0.1 gallon of condensables per 1,000 cubic feet of gas. 

  • Withdrawals – Refers to physical natural gas being removed from underground storage to supply the market with additional inventory during a time of high demand (i.e., during winter).

Understanding Weather Terms

  • Analog Year – This is a period in time (usually a season, or a “year”) that we have data for (normally 1950-present) that has similar key meteorological parameters that are similar to present conditions. Typically, the larger parameters include: the state of the El Niño – Southern Oscillation; Atlantic and Pacific water temperature profiles; tendency for blocking, snow and ice cover in the northern hemisphere; the amount of drought and/or wet ground present; and stratospheric wind patterns.  

  • Blocking - Refers to large-scale patterns in the atmospheric pressure field, most commonly at the jet stream level or about 20,000 feet. These anomalous patterns causes the weather pattern to stall, or become “blocked,” redirecting storms northward or southward. These blocks can remain in place for several days or even a few weeks, leading to stormy or cold or warm spells (sometimes extreme).

  • Cold Front – Occurs when cold and dry air advance into warmer and more humid air. This abruptly lifts and cools the air along the front, producing clouds and precipitation. The collision along cold fronts can be violent, producing severe weather and tornadoes. 

  • Degree Days – A key component of measuring the energy needed to heat or cool residential homes and businesses is a degree day. The starting temperature is 65 degrees F. A heating degree day (HDD) is a measure of how much the daily average temperature (average of the maximum and minimum) is below 65⁰ F. A cooling degree day (CDD) is how much warmer the average temperature is above 65⁰ F. Heating and cooling degree days can be population-weighted (i.e., PWHDD or PWCDD). 

  • ENSO – Acronym for El Niño/Southern Oscillation; the interaction between the atmosphere and ocean in the tropical Pacific that results in a variation between below-normal and above-normal sea surface temperatures and dry and wet conditions over the course of a few years, particularly those in the central Pacific or region 3.4. 

  • El Niño – Above-normal temperature anomalies greater than a half degree celsius or more for a period of 90 days.

  • Jet Stream – A narrow variable band of very strong predominantly westerly air currents encircling the globe several miles above the earth. The two main jet streams that affect our weather in North America are the Polar and subtropical jet streams. 

  • La Niña – Below-normal temperature anomalies greater than a half degree celsius or more for a period of 90 days.

  • Polar Jet Stream – Carries cold, Canadian air south. 

  • Polar Vortex – A large area of low pressure and cold air surrounding the Earth’s poles that weakens in summer and strengthens in winter. “Vortex" refers to the counter-clockwise flow of air that helps keep the colder air near the Poles. During winter in the Northern hemisphere, the polar vortex will sometimes expand and send cold air southwards with the jet stream. 

  • Snow Water Equivalent (SWE) – The amount of water contained within snowpack; it can be thought of as the depth of water that would exist if you melted the snowpack.

  • Subtropical Jet Stream – Carries warm and humid air masses north. 

  • Weather Front – Occurs where two different air masses meet, and sometimes collide, which most of the time produces active weather in terms of wind, clouds and precipitation.

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