Glossary Of Terms
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M
MM
Symbol in the energy market denoting one million, e.g. MMBTU = millions of British thermal units.
M&T
an energy efficiency technique based on the standard management axiom stating that “you cannot manage what you cannot measure”. M&T techniques provide Energy Managers with feedback on operating practices, results of energy management projects, and guidance on the level of energy use that is expected in a certain period.
MAKE-UP GAS
In a gas buyer’s contract there are often terms which allow the buyer to take make-up gas in contract periods after it has been paid for but not taken. There may be a limit to the amount of make-up the buyer can recover in any given period.
MAQ
In Gas, Maximum annual quantity
MARKET MAKER
An energy trader or energy trading firm which is prepared to buy and sell in the cash or derivatives market to provide a two-sided (bid/ask) market and greater liquidity.
MARGIN
See futures contract.
MARKET-ON-CLOSE
An order to buy or sell a specified amount of futures contracts at the price when the market closes.
MARKET RISK
Market risk is the risk that value will be lost due to a change in some market variable, such as commodity or equity prices, interest rates or foreign exchange rates. The market risk of a derivatives position may arise from a change in the value of the underlying or from other sources such as implied volatility or time decay (theta).
MARK-TO-MARKET
To mark-to-market is to calculate the value of a financial instrument (or portfolio of such instruments) at current market rates or prices of the underlying. Marking-to-market on a daily (or more frequent) basis is often recommended in risk management guidelines.
MDQ
Maximum daily quantity. The upper limit for the amount of gas a buyer may take in a single 24-hour period.
MDV
Mean Daily Volume.
MEAN REVERSION
The process under which prices constantly revert over time to an equilibrium level. A concept much discussed with reference to the hotly debated topic of how to price forward power in a deregulated market.
MEGAJOULE (MJ)
One million joules (sometimes MMJ).
MEGAWATT (MW)
One million watts (sometimes MMW).
METERS
Equipment used to measure the movement of gas or electricity flowing across various points in the system. Where meters giving daily volume consumption are used, the sites are known as daily metered (DM) sites. At smaller supply points, readings are taken at longer intervals and these are called non-daily metered (NDM) sites.
METRIC TON (tonne)
A metric ton is 2204.62 pounds (lbs).
MMBTU
Millions of British Thermal Units.
MMSCFPD
Millions of cubic feet of gas per day.
MOVING AVERAGE
The average of commodity prices constructed for a period as short as a few days or as long as several years which shows trends for the latest interval. For example, a thirty-day moving average includes yesterday’s figures; tomorrow the same average will include today’s figures and will no longer show those for the earliest date included in yesterday’s average. Every day it records figures for the latest day and drops those for the earliest day.
MUTUAL OFFSET SYSTEM
A margining system for derivatives exchanges in which positions on different exchanges can be offset with each other. If a participant has a long position on one exchange but a short position on another in a fungible (compatible) contract, they can reduce (or eliminate) margin payments on one exchange because overall exposure has been reduced by netting over the two exchanges.
MW
Megawatt (1000 KW)